RECENT DEVELOPMENTS IN CANADIAN LAW: TORT … · RECENT DEVELOPMENTS IN CANADIAN LAW: TORT LAW ......

RECENT DEVELOPMENTS INCANADIAN LAW: TORT LAW

Lewis N. Klar*

There have been significant develop-ments in the law of torts during the pastfive years. There has been a decidedlyconservative trend in negligence law,especially in English cases, but else-where as well. This survey will discussthe developments which have occurredin all the major areas of tort, with aparticular focus on Canadian law. TheSupreme Court of Canada has becomefairly active with respect to tort lawmatters, and developments occurringthere will be highlighted.

Ces cinq dernieres ann'es, il y a eudes changements importants dans ledomaine du droit des delits. Une ten-dance nettement conservatrice s'estmanifest~e dans le domaine du droit dela n~gligence, particulierement dansles affaires 6tudi~es en Grande-Bretagne; mais cette tendance s'estmanifest~e ailleurs 6galement. Danscette 6tude, l'auteur discute des chan-gements apparus dans tous les princi-paux domaines du droit des dilits, eninsistant particulierement sur le droitcanadien. La Cour supreme du Canadas'est prononc~e assez souvent sur desquestions touchant le droit des dilits,et l'auteur souligne les changementsque la Cour a suscitis.

* Professor of Law, University of Alberta.

1991] Recent Developments in Canadian Law: Tort Law 179

I. INTRODUCTION ......... .......................... .. 183

II. DEVELOPMENTS IN NEGLIGENCE LAW .................. 184

A. Reformulating the Duty Formula: The Death ofA nns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184

B. The Liability of Public Authority ............... 190

1. Express Statutory Liability .............. 190

2. Negligent Statements .................. 192

3. The Policy/Operational Dichotomy ........... 193

C. Recovery of Pure Economic Loss ................ 196

1. The Negligent Statement Cases ............... 197

2. Undertakings ...................... 202

3. Relational Losses .................... 204

4. Faulty Products .................... 206

D. The Duty to Assist Others ................. 209

E. Professional Negligence ...................... 211

1. The Contract/Tort Overlap ................. 212

2. Standard of Care ........................ 216

3. Medical Malpractice .................. 219

4. Legal Malpractice ................... 221

F. Products Liability ...................... 223

G. Proof of Causation: The Death of McGhee ........ 225

H. Multiple Causes ....................... 229

I. Remoteness ......................... 232

J. Defences ........................... 234

1. Contributory Negiligence ............... 234

2. Voluntary Assumption of Risk ............ 236

3. Illegality ......................... 237

III. DEVELOPMENTS IN TORTS BASED ON TRESPASS ANDINTENTIONAL WRONGS ............................ 239

A. The Basis of Trespass ................... 239

B. Capacity ................................ 240

180 Ottawa Law Review/Revue de droit d'Ottawa [Vol. 23:1

C. False Imprisonment .................... 241

D. Malicious Prosecution ................... 242

E. Abuse of Process ...................... 243

F. Intentional Infliction of Mental Suffering .......... 243

G. Trespass to Land ........................... 244

H. Defences ................................ 245

1. Consent .............................. 245

IV. DEVELOPMENTS IN OCCUPIERS' LIABILITY ..... ............ 247

A. The Common Law ......................... 247

B. Legislation ............................... 249

V. DEVELOPMENTS IN STRICT LIABILITY .... .............. ... 250

A. Rylands v. Fletcher ......................... 250

B. Fires ................................... 251

C. Vicarious Liability ......................... 251

VI. DEVELOPMENTS IN THE BUSINESS TORTS ............... .... 254

A. Deceit .................................. 254

B. Inducing Breach of Contract by Direct andIndirect Means ............................ 256

C. Conspiracy ......................... 258

VII. DEVELOPMENTS IN PRIVATE NUISANCE ............. 259

A. The Role of Nuisance Law ................. 259

B. The Defence of Statutory Authority .............. 260

VIII. DEVELOPMENTS IN DEFAMATION LAW ................. 261

A. Introduction ......................... 261

B. The Plaintiffs Case .................... 261

C. Defences ........................... 262

1. Absolute Privilege ................... 262

2. Qualified Privilege ................... 263

3. Fair Comment ......................... 263

1991] Recent Developments in Canadian L

D. Damages ...............

E. Slander of Goods ..........

IX. DEVELOPMENTS IN DAMAGE ASSESSMENT

A. The Collateral Source Rule ....

B. The Lump-Sum Approach .....

C. Tax Gross Up ............

D. Management Fee ..........

aw: Tort Law 181

264

265

265

265

267

268

268

............

............

Recent Developments in Canadian Law: Tort Law

I. INTRODUCTION

Since publication of the last tort law survey in this Review,' tortlaw has undergone an important process of judicial reassessment. Whilenot discounting the occasional step forward,2 the general attitude of thecourts over the past several years can best be summed up by the word"retreat". The important judicial decisions of the seventies and earlyeighties, such as McGhee v. National Coal Board,3 Anns v. MertonLondon Borough Council,4 and Junior Books Ltd v. Veitchi Co. Ltd,5

have been rendered almost irrelevant by an English House of Lords andPrivy Council intent on slamming the brakes on a tort law which wasevidently considered to be going too far, too fast. While Canadian courtshave not yet shown the same interest in distancing themselves from theselandmark decisions, they too have displayed some unease with a rapidlyexpanding tort law. This retreat and retrenchment is an important devel-opment in the history of tort, and will be a focus of this article.

Recent tort law developments have also answered some of thequestions which still remained open at the time of the writing of the lasttort survey. The contract/tort overlap issue finally has been resolved.The probable effect of the Canadian Charter of Rights and Freedoms6

on the development of tort doctrine is now a bit clearer. AttorneysGeneral have lost their immunity from tort suit. McGhee7 will offer noeasy solution to difficult proof of causation dilemmas. Nuisance law hasbeen reaffirmed as a strict liability solution for the shifting and redis-tributing of accident costs. Rylands v. Fletcher8 continues to be over-looked by the courts, insofar as it can be used to create a principle ofstrict liability for ultrahazardous activities. The courts still continue tostruggle with the issues of public tort liability and recovery for purelyeconomic losses. While developments at the Supreme Court of Canadawith regard to the issue of public tort liability suggest an expansionisttrend, in contrast to the distinctly restrictive approach laid down by highEnglish authorities, this hand has yet to be fully played out. These andother developments will be examined in this survey.

I See L.N. Klar, RECENT DEVELOPMENTS IN CANADIAN LAW: TORT LAW (1985)17 OTTAWA L. REV. 325 [hereinafter TORT LAW].

2 If by a step forward, one means an expanding tort law.3 [1972] 3 ALL E.R. 1008, [1973] 1 W.L.R. 1 (H.L.) [hereinafter McGhee cited

to ALL E.R.].4 (1977), [1978] A.C. 728, (sub nom. Anns v. London Borough of Merton)

[19771 2 ALL E.R. 492 (H.L.) [hereinafter Anns cited to A.C.].5 (1982), [1983] 1 A.C. 520, [1982] 3 ALL E.R. 201 (H.L.) [hereinafter Junior

Books].6 Part I of the Constitution Act, 1982, being Schedule B of the Canada Act

1982 (U.K.), 1982, c. 11.7 Supra, note 3.s (1868), L.R. 3 H.L. 330, [1861-73] ALL. E.R. REP. 1.

1991]

Ottawa Law ReviewlRevue de droit d'Ottawa

II. DEVELOPMENTS IN NEGLIGENCE LAW

A. Reformulating the Duty Formula: The Death of Anns

In the 1977 decision of Anns9 Lord Wilberforce culminated aprocess of development for negligence law, which was started by LordAtkin in Donoghue v. Stevenson,10 by proposing the prima facie duty ofcare doctrine. Recent developments, however, especially in England,have erased the contribution made by Anns, and have reopened the wholequestion of the basis of duty of care in a negligence action."

Let us briefly recall the history. Prior to Donoghue, the action ofnegligence did not depend upon a general principle of liability applicableto all cases of careless conduct causative of damage. Rather, it was basedon specific categories of relationships which involved a duty on the partof one actor to take reasonable care for the protection of another.Stymied by the privity of contract doctrine enunciated in Winterbottomv. Wright,'2 which seemed to preclude tort actions taken by strangers toa contract against one of the contracting parties,' 3 the courts, after aprocess of grafting exceptions to the privity of contract exclusion of tortlaw, 14 accepted the concept of a general relationship of proximity, whichwas the basis of a duty of care in negligence law. Lord Atkin declaredthat everyone has a duty to take reasonable care to avoid acts oromissions which can reasonably be foreseen as likely to injure one'sneighbor. A neighbor was a person so closely and directly affected byan act that the actor ought to have had him or her in contemplation asbeing so affected when the act was performed.

The post-Donoghue years were a period of growth and refinementfor Lord Atkin's neighbor principle. While perfectly suited for disputessuch as Donoghue itself, which involved acts of commission causingpersonal injuries or damage to property, it became readily obvious thatthe neighbor principle could not be viewed as definitive in every typeof case. Reasonable foreseeability of harm could not be the sole deter-

9 Supra, note 4.

10 [ 1932] A.C. 562, [1932] ALL E.R. REP. 1 (H.L.) [hereinafter Donoghue cited

to A.C.].1 There have been several useful articles. See T.K. Feng, Reassertion of the

Old Approach to Duty in Negligence (1987) 29 MAL. L. REV. 308. See also Feng,The Three-Part Test: Yet Another Test of Duty in Negligence (1989) 31 MAL. L.REV. 223, and the several articles cited therein [hereinafter The Three-Part Test].

12 (1842), 10 M. & W. 109, 153 E.R. 402 (Ex.).13 See J.C. Smith & P. Bums, The Good Neighbour on Trial: Good Neighbours

Make Bad Law (1983) 17 U.B.C. L. REV. 93, who argue that the judgment inWinterbottom v. Wright was misinterpreted by the courts and ought not to have hadthe effect attributed to it. According to the authors, it only precluded actions in tortcases of nonfeasance and not in cases of positive acts of negligence.

14 For example, George v. Skivington (1869), L.R. 5 Ex. 1, 21 L.T. 495 (Ex.),which allowed a negligence action when the product injured a person known by themanufacturer to be the person who was going to use the product; or Heaven v.Pender (1883), 11 Q.B.D. 503, 49 L.T. 357 (C.A.), where there was knowledge ofa defect.

[Vol. 23:1


minant of a duty's existence in all cases. Whether in disputes involvinglosses caused by pure omissions, by negligent speech, by public author-ities, judges, lawyers, or other officials, or where losses were of a purelyeconomic type, the courts faced the challenge of formulating a test forduty which, while not necessarily precluding recovery entirely, did notcast too wide a net.

The ensuing debate, which on the surface seems largely one ofsemantics, can be described as follows. The post-Donoghue approach,which reached its zenith in Anns, was to equate Lord Atkin's neighbortest of reasonable foreseeability with the relationship of proximity nec-essary to establish a prima facie duty of care. In the non-routine negli-gence disputes, 15 this prima facie duty could be reduced, or evennegated, by policy considerations. This prima facie duty approach wasarticulated both by Lord Reid in Home Office v. Dorset Yacht Co. Ltd,16

and Lord Wilberforce in Anns.17

Although, in truth, it was not radically different from what was saidin Donoghue itself, the prima facie duty approach seemed to send asignal to lower courts that the duty of care should not be restricted tothe garden variety negligence actions, and that courts should be morereceptive to the application of the duty in areas where the policy thrustis more pronounced. It was a reaffirmation of Lord Atkin's effort toweave the separate categories of duty relationships into a unified prin-ciple, based upon a relationship of proximity, and a rejection of the morenarrow categorization of the earlier common law. While fully cognizantthat there are policy considerations which will reduce or negate the dutyof care in some types of disputes, the prima facie duty approach keptseparate the issue of proximity from the questions of policy. This seemedto place the onus on defendants and courts to come up with policy

15 By this I mean cases not involving acts of commission leading to personalinjury or property damage.

16 [1970] A.C. 1004 at 1027, [1970] 2 ALLE.R. 294 at 297 [hereinafter DorsetYacht].

17 Supra, note 4 at 751-52. Lord Wilberforce stated:Through the trilogy of cases in this House - Donoghue v. Stevenson,[1932] A.C. 562, Hedley Byrne & Co. Ltd v. Heller & Partners Ltd,[19641 A.C. 465, and Dorset Yacht Co. Ltd v. Home Office, [1970] A.C.1004, the position has now been reached that in order to establish thata duty of care arises in a particular situation, it is not necessary to bringthe facts of that situation within those of previous situations in whicha duty of care has been held to exist. Rather the question has to beapproached in two stages. First one has to ask whether, as between thealleged wrongdoer and the person who has suffered damage there is asufficient relationship of proximity or neighbourhood such that, in thereasonable contemplation of the former, carelessness on his part maybe likely to cause damage to the latter - in which case a prima facieduty of care arises. Secondly, if the first question is answered affirma-tively, it is necessary to consider whether there are any considerationswhich ought to negative, or to reduce or limit the scope of the duty orthe class of person to whom it is owed or the damages to which a breachof it may give rise....

1991]

Ottawa Law Review/Revue de droit d' Ottawa

reasons to negate a duty of care in the face of a relationship of admittedproximity.18 It was this latter feature which, perhaps more than anythingelse, contributed to the expansion of liability after Anns. Judges, notgenerally comfortable with having to resort overtly to policy consider-ations in order to decide issues of tort liability, were more likely toconcede the duty, once proximity was established, than to deny it, if todeny it meant having to use policy to do so.19

The last five years have seen a dramatic reversal of the Annsapproach by the House of Lords and Privy Council. Clearly unhappywith the extension of duty which occurred after Anns, the Lords have,in numerous judgments, abandoned the idea of a general principle ofduty, based upon a relationship of foreseeability, qualified by overtconsideration of policy, in favour of more concrete duty categories whichinternalize issues of policy within the context of the notion of proximityitself 20 In other words, rather than the duty of care being a creature ofa general notion of proximity based upon Lord Atkin's test of foresee-ability, and only then qualified by policy considerations, as suggestedby Lord Wilberforce, the new approach to duty was to see it in termsof more narrow and discrete relationships of proximity, based not onlyupon foreseeability but also inherently including policy considerationstailored to meet the dispute in issue. The existence of this duty could

18 Although, as correctly pointed out by Feng in The Three-Part Test, supra,note 11 at 235, this is not a real onus or burden of proof, since the issue is one oflaw which neither side has to prove.

19 Ibid. at 236. According to Feng's argument, judges were reluctant to engagein the policy issue determination demanded by the second stage of LordWilberforce's test.

20 The Lords have felt so strongly about this matter that they have deemed itnecessary to repeat their opposition to Lord Wilberforce's approach in numerouscases. Primarily, it is Lord Keith who has led the way. See, e.g., Governors of thePeabody Donation Fund v. Sir Lindsay Parkinson & Co. Ltd (1984), [1985] A.C.210, [1984] 3 ALL E.R. 529 (H.L.) [hereinafter Peabody cited to ALL E.R.]; Curranv. Northern Ireland Co-ownership Housing Association Ltd, [ 1987] A.C. 718, [1987]2 ALL E.R. 13 (H.L.) [hereinafter Curran cited to ALL E.R.]; Rowling v. TakaroProperties Ltd, [1988] 1 ALL E.R. 163, [1988] 2 W.L.R. 418 (P.C.) [hereinafterTakaro Properties cited to ALL E.R.]; Yuen Kun Yeu v. A.G. of Hong Kong (1987),[1988] A.C. 175, [1987] 2 ALLE.R. 705 (P.C.) [hereinafter Yuen cited to ALLE.R.];Hill v. Chief Constable of West Yorkshire (1988), [1989] A.C. 53, [1988] 2 ALLE.R. 238 (H.L.) [hereinafter Hill cited to ALL E.R.]; Davis v. Radcliffe, [1990] 1W.L.R. 821, [1990] 2 ALL E.R. 536 (P.C.), all of which involved the liability ofpublic authorities. See also D. & F. Estates Ltd v. Church Commissioners forEngland (1988), [1989] A.C. 177, [1988] 2 ALL E.R. 992 (H.L.) [hereinafter D. &F. Estates cited to ALL E.R.]; Candlewood Navigation Corporation Ltd v. MitsuiO.S.K. Lines Ltd (1985), [1986] A.C. 1, [1985] 2 ALL E.R. 935 (P.C.) [hereinafterCandlewood Navigation cited to ALL E.R.]; Caparo Industries plc v. Dickman,[1990] 1 ALL E.R. 558 (H.L.) [hereinafter Caparo Industries cited to All E.R.]; andMurphy v. Brentwood District Council, [1990] 2 ALL E.R. 908 (H.L.) [hereinafterMurphy], which primarily involved liability for pure economic losses. It must bepointed out that Anns has been attacked, not only for its prima facie duty of caredoctrine, but for its treatment of recovery of pure economic losses resulting fromdefective structures. In this latter respect, it has been explicitly overruled in Murphy.Thus, it has not died only one death, but two.

[Vol. 23:1


then be further qualified by other policy considerations,21 and by suchnotions as justice, fairness and reason. 22

What is significant about these new developments in the Englishcourts? It must be admitted that the recent judgments have said nothingnew about the ingredients of the tort law duty. No one ever thought orsuggested that reasonable foreseeability of harm by itself created a dutyof care in all cases. The statement that the existence of a duty is basedon foreseeability of harm, policy considerations, justice, fairness, andreason is not revolutionary. Nevertheless, the recent judgments do havegreat importance for the future development of tort law, at least inEngland, and probably in the Commonwealth, for several reasons.Firstly, the repetition of the same theme in numerous judgments of thehighest authority clearly signal the Lords' desire to see a slowdown, ifnot a full stop, in tort law's expansion into areas of purely economicloss recovery and public tort liability.2 3 In this respect, it is importantnot to ignore the actual results of these recent cases. In all of these recentEnglish cases, tort actions brought against public authorities, or againstothers, for the recovery of purely economic losses, failed. 24 Judgmentsof high authority, such as Dutton v. Bognor Regis United Building Co.Ltd,25 Anns and all decisions based on them, were specifically overruled.This surely is a dramatic display of the Lords' unhappiness with tortlaw's expansion into traditionally "off limits" areas. Secondly, any effortto create a principle of the duty relationship capable of general applica-tion has been put on hold. The "incremental" approach2 6 has won theday. This means that while policy considerations will still be a factor indefining duty, they will become internalized within proximity relation-

21 Although it is unclear what these other policy considerations might be, sincepolicy has already been considered in deciding whether there was a relationship ofproximity. This point was conceded by Lord Keith in Yuen, ibid., at 712, when hestated that "[t]he second stage of Lord Wilberforce's test [i.e. the policy stage] isone which will rarely have to be applied."

22 The "just and reasonable" factor was added to the pot by Lord Keith inPeabody, supra, note 20 at 534. See also Lord Bridge's judgment in CaparoIndustries, supra, note 20 at 574, where he asserts that the ingredients of the dutyrelationship are foreseeability, proximity and considerations of fairness, justice andreason.

23 And probably the duty of affirmative action as well.24 I will look more closely at the areas in contention, i.e., the tort liability of

public authorities, recovery of pure economic losses and the duty of affirmativeaction later in this survey.

2 [1972] 1 ALL E.R. 462, (sub nom. Dutton v. Bognor Regis Urban DistrictCouncil) [1972] 1 Q.B. 373 (C.A.) [hereinafter Dutton].

26 For this, credit must be given to Brennan J. in Sutherland Shire Council v.Heyman (1985), 60 A.L.R. 1 at 43-44, 59 A.L.J.R. 564 at 588 (H.C.):

It is preferable, in my view, that the law should develop novel categoriesof negligence incrementally and by analogy with established categories,rather than by a massive extension of a prima facie duty of carerestrained only by indefinable "considerations which ought to negative,or to reduce or limit the scope of the duty or the class of person towhom it is owed".

1991]

Ottawa Law ReviewlRevue de droit d' Ottawa

ships, making it easier for courts to deny the existence of duty, notbecause of policy, but because of lack of proximity. Lord Wilberforce'ssimple two-stage formulation is replaced by the onion of proximity, inwhich foreseeability, policy, justice, reasonableness and fairness arefragile and transparent layers, difficult to separate one from the other.

Canadian judges generally have remained receptive to LordWilberforce's two-stage duty approach. The Supreme Court of Canada,in two recent judgments, has expressly given it approval. In Just v.B.C.,27 Cory J. described it as a sound approach to determining theexistence of a duty of care in Canadian law.28 Mr Justice Cory reaffirmedthis view in Rothfield v. Manolakos,29 where the two-stage duty approachwas again described as sound, which can and should be effectivelyapplied in negligence actions against governmental officials. This posi-tive attitude has been reflected in the results of these judgments, whichrather than limiting liability against public authorities have extended it.30

Although the Canadian courts have not yet entered into the dutydebate with the full vigour of their English counterparts, it is inevitablethat they soon will. The English decisions and terminology have alreadybegun to influence some Canadian decisions. In Longchamps v. FarmCredit Corp.,31 McDonald J. expressed his preference for a duty formu-lation which "invites the courts, in deciding whether a duty of care exists,to look behind convenient but imprecise labels and examine the justiceand reasonableness involved in finding that such a duty does or does notexist".32 The "just and reasonable" test was considered by the BritishColumbia Court of Appeal in London Drugs Ltd v. Kuehne & NagelInternational Ltd.33 Guidance is needed in this area lest the vagueterminology presently being suggested as the key to duty 34 overwhelmsthe case law, making a muddle of judicial precedents developed carefully

27 (1989), 64 D.L.R. (4th) 689, [1990] 1 W.W.R. 385 (S.C.C.) [hereinafterJust cited to D.L.R.].

28 Ibid. at 701.29 (1989), 63 D.L.R. (4th) 449 at 468, [1990] 1 W.W.R. 408 at 429 (S.C.C.),

application for reh'g denied [1990] 1 W.W.R. lxxi, 46 M.P.L.R. 217 (S.C.C.)[hereinafter Rothfield cited to W.W.R.].

30 See discussion infra, note 33. See also L. Klar, The Supreme Court ofCanada: Extending the Tort Liability of Public Authorities (1990) 28 ALTA L. REV.648 [hereinafter Klar].

31 (1990), 108 A.R. 115, [1990] 6 W.W.R. 536 (Q.B.) [hereinafter Longchampscited to W.W.R.].

32 Ibid. at 544.33 [1990] 4 W.W.R. 289, 45 B.C.L.R. (2d) 1 (C.A.) [hereinafter London Drugs

cited to W.W.R.]. Lambert J.A. considered the test, noting that he did not think itwas desirable to refer explicitly to such terminology when considering issues ofnegligence liability. Hinkson J.A., on the other hand, seemed to use the test in hisjudgment, as did Wallace J.A.

34 Consider the semantical confusion. In one way or another, a duty of careis now said to depend upon foreseeability, neighbourhood, proximity, policy, justice,reasonableness and fairness.

[Vol. 23:1


over the past years. 35 The following conclusions, which seek to simplifythe issue, are offered.

The generally agreed upon starting point for determining that a dutyof care exists still remains Lord Atkin's relationship of reasonableforeseeability. A plaintiff must have been within the range of dangercreated by the defendant's act for there to be any further considerationof the issue of duty. In almost all cases, this test will easily be satisfied,although occasionally, it may not be.3 6 It must be conceded, however,that foreseeability, as a test of duty defined in this narrow way, issuperfluous, amply being taken account of as a factor in determining theissue of breach.

In cases of acts of commission causative of property damage orpersonal injury involving private parties as litigants, proof that the victimwas within the range of risk will establish the relationship of proximitynecessary to support the existence of a duty to take reasonable care. Inother types of disputes, consideration will be given to other concerns.

In cases involving the liability of public authorities, acts of purenonfeasance, or recovery for purely economic losses, 37 a variety ofpolicy considerations will affect the court's decision regarding the impo-sition of a duty. Whether these considerations are seen as matters ofpolicy, justice, reason, or fairness is of little importance. These termsall seek to explain the common law's reluctance to extend tort liability,and resort to the same considerations to justify the reduction or rejectionof a common law duty of care.38

The rejection of Lord Wilberforce's two-stage test by the Englishcourts, and its replacement by a test of proximity which internalizesissues of policy, as well as the actual results of recent cases, havesignalled a change in attitude towards the developing areas of negligencelaw. Externalizing policy considerations and viewing them in terms ofnegating or reducing a prima facie duty invited the extension of tortliability. Internalizing policy considerations, however, and viewing themas factors inherent in the relationship of proximity necessary to supporta prima facie duty, has had the opposite effect. A universal test for duty,

31 See, e.g., Dixon v. Deacon Morgan McEwen Easson (1990), 70 D.L.R. (4th)609 (B.C.S.C.) [hereinafter Deacon Morgan]. The issue, it is suggested, involvedthe law relating to negligent statements. Rather than using the precedents establishedin this area such as Hedley Byrne & Co. v. Heller & Partners Ltd, infra, note 47,the Court talked about "proximity" and "policy". One would hope that the newlanguage of the House of Lords does not become a panacea for all difficult disputes.

36 The best illustration of the failure of foreseeability is probably the Americancase of Palsgraf v. Long Island RR. Co. (1928), 162 N.E. 99, 248 N.Y. 339 (Ct.App.) or the Scottish case, Bourhill v. Young (1942), [1943] A.C. 92, [1942] 2 ALLE.R. 396 (H.L.). Even here, it can be argued that the judgment was based not onforeseeability, but on policy.

37 One might consider liability for negligent speech to be another one of thesepolicy infused areas. However, it is suggested that liability for speech only posesa special problem when pure economic loss is at issue.

38 The policy reasons vary and will be examined below within the context ofthe different problem areas.

1991]


which is subject only to special considerations, i.e. Lord Wilberforce'stest, asserted that all types of disputes involving carelessness and damageto proximate victims should be treated similarly, at least initially. Cre-ating categories of duty relationships which are tailored to meet thespecial concerns of individual types of disputes, i.e. the incrementalapproach, facilitates the denial of duty in policy infused areas. WhetherCanadian courts continue to follow the Lord Wilberforce two-stage dutyapproach, or begin to move closer to the incremental duty approach, isa question which will be answered over the next few years.39

B. The Liability of Public Authorities

An area of tort which has undergone important developments inthis survey period involves the liability of public authorities. While theHouse of Lords and Privy Council have significantly lessened the vul-nerability of public authorities to tort liability, the Supreme Court hasmoved Canadian law in the opposite direction.

It is useful to distinguish among the different types of tort caseswhich involve public authorities as defendants. A large number of casesbrought against public authorities, and particularly municipal and localauthorities, stem from specific statutory duties which require authorities toperform public functions and provide civil liability for their failure to doso. A second category of cases involves negligent statements or advicegiven by public employees. The third, and most contentious area, involvesthe liability of public authorities for carelessness in policy formulationor in the implementation of policy in areas not regulated by expressstatutory liabilities. Although these areas- give rise to common policyconcerns, the courts have generally responded to them in different ways.

1. Express Statutory Liability

That courts seem capable of assessing the competence of publicauthorities, whether it be in the policy formulation or operational phasesof governmental activity, when express statutory duties are imposed onthe authority is evident from those tort cases dealing with injuries arisingfrom a local authority's failure to maintain and repair highways or otherpublic works. Although it is clear that the manner in which a publicauthority executes its statutory duty to maintain and repair highways,for example, requires its exercise of discretion with relation to issues ofbudgetary allocation, thrift, and the use of resources, tort law review ofthese disputes surprisingly takes place without apparent difficulty.

Several cases decided in the survey period illustrate this point.In Nicholls v. Hennion,40 the Ontario Ministry of Transportation and

39 Despite Mr Justice Cory's approval of the two-stage duty approach, heconceded in Just, supra, note 27 at 701, that it may be that this approach "shouldnot always be slavishly followed".

40 (1989), 49 C.C.L.T. 105, 18 M.V.R. (2d) 314 (Ont. H.C.).

[Vol. 23:1


Communication was sued, under the Public Transportation and HighwayImprovement Act,41 for its failure to keep a highway in good repair. Thehighway was washed out, minutes before a car accident, due to thebreakage of beaver dams which were located at several places above thehighway. Relying on previous authority,42 the Court held that once wantof repair of a highway was shown a prima facie case was made out, andthe onus of proving reasonable care fell on the defendant. The Courtheld that the defendant did not discharge this onus with respect to itsprogram for locating and dealing with potentially dangerous beaverdams. Hence, liability was imposed. Although recognition was given tothe practical problems involved with respect to dealing with the hazardunder consideration, no mention was made of the issues generally raisedwhen policy or planning questions are subjected to tort law review.43 Inanother case, Berezowski v. Edmonton,44 the municipality was foundliable for having failed to replace a traffic sign which had been knockeddown several days before an accident. The Court of Appeal, per Harrad-ence J.A., specifically noted that unlike Barratt v. North Vancouver,45

where Martland J. declined to review the defendant municipality's dis-cretion with respect to road inspection, the statutory duty imposed uponthe defendant municipality in this case made such a review imperative.The fact that this review would require consideration of themunicipality's exercise of discretion is not considered to be an obstacleto effective decision making in these cases. 46

It is suggested that even with express liability provisions, the courtsmust address the concerns which arise in other types of public tort cases.While courts cannot avoid the issue of a municipal authority's liabilityfor failing to maintain roads if a statutory liability provision exists, thisdoes not mean that determining liability need be done on an ordinarynegligence law reasonable care standard. When the defendant's failurerelates to legitimate areas of discretion rather than negligent implemen-

41 R.S.O. 1980, c. 421, ss 33(1)-(2).42 Gardam v. R., [1948] O.R. 641, [1948] 4 D.L.R. 175 (C.A.).43 Note that the Ministry of Natural Resources was also sued for its failure to

properly manage public lands and wildlife, pursuant to its statutory powers underthe Public Lands Act, R.S.O. 1980, c. 413, ss 1(b) and 2 and the Game and FishAct, R.S.O. 1980, c. 182, ss 3-4, 67. Although the issue of tort law review of policywas discussed by the Court in relation to this claim, it is difficult to see the basisof this allegation in any event.

44 [1986] 6 W.W.R. 660, 45 ALTA L.R. (2d) 247 (C.A.).45 [1980] 2 S.C.R. 418, 114 D.L.R. (3d) 577 [hereinafter Barratt cited to

S.C.R.].46 See also Rajotte v. Winnipeg (City) (1988), 48 D.L.R. (4th) 655, 51 MAN.

R. (2d) 23 (Q.B.); Ancuirs v. London (City) (1987), 63 O.R. (2d) 599, 48 D.L.R.(4th) 252 (H.C.); Occhino v. Winnipeg (City) (1988),,51 D.L.R. (4th) 546, 53 MAN.R. (2d) 257. In Thornhill v. Martineau (1987), 39 C.C.L.T. 293, 2 M.V.R. (2d) 141(B.C.S.C.) [hereinafter Thornhill cited to C.C.L.T.], where there was no statutoryduty to install or maintain traffic control devices but a statutory power to do so, theCourt, at 302, refused to review the manner in which the defendant decided toexercise its power since this was a matter of discretion "involving the allocation ofscarce resources with a view to balancing such factors as efficiency and thrift".

1991]


tation of plans, the standards by which the authority's conduct shouldbe judged should, as discussed below, reflect the essentially politicalnature of the activity.

2. Negligent Statements

Ever since liability for negligent speech resulting in purely eco-nomic losses was first recognized in Hedley Byrne & Co. Ltd v. Heller& Partners Ltd,47 a common ground of complaint against public author-ities has been the negligent speech or advice of public employees.Although in some instances the application of Hedley Byrne principlesto public authorities has been fully justified on the facts without the needto consider special circumstances peculiar to public authority defen-dants, in other cases the invocation of Hedley Byrne has masked impor-tant issues. Cases decided in this survey period continue to illustratethese points.

In Dubnick v. Winnipegosis,48 for example, a city council was suedfor advising the plaintiff that he could not dig his own well, but wasrequired to purchase the city's water. The council had made this decisionin order to promote public health, and for financial reasons. Unfortu-nately however, the council had failed to enact the by-law which wasrequired to validate this policy, and the plaintiff, who suffered finan-cially by being required to purchase the city's water, sued. Although itis suggested the essence of the plaintiff's complaint was the city'sincompetence in promulgating its policy decision for which there oughtnot, according to authority, have been tort liability, 49 the Court cast theissue as one of negligent speech or advice and, applying Hedley Byrne,found in the plaintiff's favour. In another case, Bell v. City of Sarnia,50

the plaintiffs sued the city when the municipal council decided tooverrule the zoning department's advice, which had been given to theplaintiffs, that the plaintiffs' use of its property was a permitted use.The plaintiffs alleged negligent misrepresentation, and based uponHedley Byrne, the action was maintained. It is arguable, however, thatthe essence of the plaintiffs' complaint in this case was the discretionaryor political decision taken by the city council not to allow the plaintiff'sbusiness, despite earlier contrary advice which the plaintiffs hadreceived. The fact that the manifestation of the public authority's activityis speech or advice, upon which others rely, should not alter the policy

47 (1963) [1964] A.C. 465, [1963] 2 ALL E.R. 575 (H.L.) [hereinafter HedleyByrne cited to A.C.].

48 (1984), [1985] 2 W.W.R. 437, 32 MAN. R. (2d) 130 (Q.B.), aff d [1985] 5W.W.R. 758, 35 MAN. R. (2d) 229 (C.A.).

49 See Welbridge Holdings Ltd v. Metropolitan Corporation of Greater Win-nipeg (1970), [1971] S.C.R. 957, 22 D.L.R. (3d) 470.

50 (1987), 59 O.R. (2d) 123, 37 D.L.R. (4th) 438 (H.C.) [hereinafter Bell citedto D.L.R.].

[Vol. 23:1


or political nature of an authority's activity, allowing the courts to invokedifferent legal principles in determining issues of tort liability. 5

3. The Policy/Operational Dichotomy

Following along from its decision in City of Kamloops v. Nielsen,52

the Supreme Court has shed additional light on the policy/operationaldichotomy which separates those governmental activities which aresubject to ordinary negligence law review from those which are not. Asestablished in Kamloops, a public authority can be held liable for itsnegligence in the operational or administrative phases of governmentalactivity and for lack of good faith in the policy or discretionary spheres.While carefulness is the standard for the ordinary negligence claim,conscientiousness is the standard of care for the exercise of governmen-tal discretion. In the absence of corruption, bad faith, or an extreme lackof care, a public authority is said to be free from tort liability with respectto the manner in which it exercises its policy decisions.

In Just53 and Laurentide Motels Ltd v. Beauport (Ville), 54 theSupreme Court of Canada, while maintaining the policy/operationaldichotomy with its different standards of care, significantly enlarged therange of governmental activity which can be described as operationaland hence subject to a standard of reasonable care. The facts of Justwere briefly as follows. The appellant and his daughter were stopped ina line of traffic alongside a rocky slope on a major highway. A boulderfrom the slope above became dislodged and came crashing down uponthe appellant's car, killing the appellant's daughter and seriously injuringthe appellant. The appellant sued the provincial Crown, alleging negli-gence in its system of monitoring and dealing with avalanche threats.The lower courts decided that the decisions taken by the defendant inthis case fell within the area of policy, and were not subject to negligencelaw review. Cory J., delivering the majority judgment for the SupremeCourt, however, decided that once the public authority decided to embarkupon a program of inspecting rocky slopes to monitor and deal withpotential avalanche dangers, all decisions relating to the manner in whichslope inspections were carried out, their frequency, and how and whencertain aspects of the slopes should have been inspected, were allquestions relating to the plan of inspection, and were operational. Thesedecisions were subject to negligence law review, and since the lower

51 See Executive Holdings Ltd v. Swift Current (1984), [1985] 1 W.W.R. 341,36 SASK. R. 15 (Q.B.) [hereinafter Executive Holdings], where a duty was foundowing, due to a public announcement of a downtown project which was subsequentlynever built. See also Dorsch v. City of Weyburn (1985), 23 D.L.R. (4th) 379, 43SASK. R. 46 (C.A.) [hereinafter Dorsch] where the plaintiffs sued based on advicethey were given with respect to possible acquisition of their land.

52 [1984] 2 S.C.R. 2, 10 D.L.R. (4th) 641 [hereinafter Kamloops]. The judg-ment was discussed in TORT LAW, supra, note 1 at 356ff.

53 Supra, note 27.54 [1989] 1 S.C.R. 705, 23 Q.A.C. 1 [hereinafter Laurentide Motels cited to

S.C.R.].

1991]


courts had failed to examine the defendant's conduct from this perspec-tive, a new trial was ordered. In Laurentide Motels, the defendantmunicipality's alleged negligence related to the failure of its firefightersto extinguish a fire rapidly. Part of the problem lay in the fact that thefire hydrants were unusable because they were either frozen or broken.This was traced to the inadequacy of the municipality's program ofmaintaining and inspecting hydrants. The Supreme Court held that oncethe municipality had decided to operate a fire-fighting service, theactivity became operational and subject to private law review.55

As a result of these decisions, it can be concluded that only highlevel threshold decisions, i.e. broad-brush decisions deciding in generalterms whether to do something or not, seem now to fall within the policysphere of governmental activity. It was conceded by Cory J. in Just56

that in the operational phase there would be policy decisions, mattersrelating to the financial and political constraints under which publicauthorities operate, and that these must be taken into account by thecourt when determining the standard of care issue, i.e. the reasonablenessof the plan. Nevertheless, the decision that this was reviewable by theCourt from the standpoint of a private law duty of care is important, andmarks a departure from what courts had held previously. 57 It is respect-fully suggested that this approach will lead to difficulties. How, forexample, is the lower court going to retry the issue of negligence inJust? It has been directed to do so, while also being told that it canlegitimately consider the financial and political constraints, and compet-ing demands under which the defendant operated when it embarked uponits plan of slope inspection. This necessarily will require that the courtreplace the ministry's discretion with its own, and must engage the lowercourt in the type of policy planning which the courts have traditionallysought to avoid. Perhaps this will become clear to the lower courts whenthe task of judging is at hand, and, in the face of a very difficult task,the courts will readily adopt the plans devised by the Ministry as being

55 This case emanated from Quebec. The Court decided that since a municipalcorporation was involved, public statute and common law principles were to beapplied. Thus, the English common law approach to the tort liability of publicauthorities was applied to this case, forcing the Court to consider Anns andKamloops. Once it was decided that a private law duty was owed, the case then fellto be considered under Art. 1053 of the Civil Code of Quibec.

56 Supra, note 27 at 707.57 For example, in Barratt, supra, note 45, the issue was whether the defendant

municipality was negligent in the manner in which it inspected and repairedpotholes. It had a system of inspection. Mr. Justice Martland held, at 428, that the"inspection system was a matter of policy or planning" and not subject to privatelaw. It is suggested that there is very little difference between this case and Just onthe facts. Note also Mr Justice Sopinka's forceful dissent in Just. Sopinka J. argued,supra, note 26 at 692, that the majority's approach "would considerably expand theliability for negligence of public authorities by subjecting to judicial review theirpolicy decisions which were hitherto not reviewable". See Klar, supra, note 30. Itis also important to note that both lower courts in Just, including the trial judgmentof Madame Justice McLachlin, considered the issue to be one of policy and notreviewable by the ordinary standard of care.

[Vol. 23:1


reasonable ones, in the absence of proof of bad faith, corruption, orextreme lack of diligence. In this case, post-Just decision making willbe similar to that generally occurring before Just, although now thepotential for unwarranted judicial interventions is certainly muchgreater, and litigation costs and time spent will probably increase. Amore sensible, although inefficient approach, at least for the short term,for public authorities to follow might be to draft policies with moreattention being paid to the details of implementation, leaving less dis-cretion to those who are in the field and who are required to implementthese plans.

The Supreme Court of Canada also dealt with the liability of apublic authority for negligence in Rothfield.58 The Court held that amunicipality, which had implemented a system to inspect and approvebuilding plans and construction, was partly liable to an owner-builderwhen, due to a defect, a retaining wall which had been constructed forthe owner by contractors collapsed. Several aspects of this judgment areof particular note. The Court reviewed the public authority's conduct inrelation to its decisions regarding the manner by which plans would belooked at, and building permits issued, from the perspective of opera-tions and not policy. Matters which were essentially discretionary innature were subjected to an ordinary negligence standard of care. Aswell, the municipality's assumption of its statutory powers to regulateconstruction was seen to impose upon it not only a duty to protect thirdparties and others from personal injury or property damage, but as wella duty to protect owner-builders themselves from purely economiclosses. Finally, the majority of the Supreme Court found the municipalitypartly responsible, even though the owner-builder failed to observe theconstruction by-law requirement that the city be notified by the owner-builder so that it could inspect the wall's foundations prior to them beingcovered over. The facts of the case indicated that had the owner-builderobserved the requirement, the defects would have been discovered andthe losses thereby avoided. 59

These Supreme Court of Canada decisions which continue to takea fairly liberal position with regard to the liabilities of public authoritiescan be sharply contrasted with the restrictive approach adopted by theHouse of Lords and the Privy Council. In a string of public authoritycases, 60 the Lords have rejected actions brought against public authoritydefendants. The Lords have stressed that while it may be a useful startingpoint, the policy/operational dichotomy is not a sufficient answer to theissue of public tort liability. Other relevant considerations must be taken

58 Supra, note 29.59 There was a divided court on this issue. Dickson C.J.C., La Forest and

Gonthier JJ. held that the owners and the city should share the blame. Cory andLamer JJ. held that the owners' negligence absolved the city of its responsibility tothem, although not to their neighbours whose property had been damaged by thewall. Wilson and L'Heureux-Dub6 JJ. held that the owners bore no responsibilityfor what had happened and were entitled to rely upon the city and the contractors.

60 See supra, note 20.

1991]

Ottawa Law Review/Revue de droit d'Ottawa

into account when considering the liability of public authorities. LordKeith has led the way in this regard, authoring several of the judgments.In Takaro Properties Ltd,61 Lord Keith noted that even in the operationalarea, considerations will arise which negate a public authority's duty ofcare. Where alternative remedies are available to a complainant, whereconduct is inherently difficult to judge, or where the threat of liabilityimpedes governmental activity, a duty may not be imposed. In Pea-body,62 the principle that courts must consider what is "just and reason-able" before imposing a duty of care on public authorities was introducedby Lord Keith. As well, the purpose of the statutory powers must beexamined by the court before imposing a duty of care based upon them.This was further elaborated upon by Lord Bridge in Curran,63 where itwas stated that the Anns ratio involved three elements: the statutorypower must be specifically directed to safeguarding the public or somegroup of which the plaintiff was a member, the due exercise of the powercould have avoided the danger, and the non-exercise or negligent exer-cise of the power must have created a hidden defect which could nothave subsequently been discovered and remedied before damageresulted.64 In Murphy,65 the judgment of Anns was specifically overruledinsofar as it imposed tort liability on a statutory body for purely eco-nomic losses resulting from a defective structure.66

Canadian courts have not yet engaged in the same type of detailedanalysis of public tort law issues. For now, the policy/operational dichot-omy remains the main basis upon which these liability issues are resolved.In view of the policy end of the scale having been severely reduced bythe Supreme Court, the present approach is that while all governmentalactivity is subject to tort law review, the standard of care demanded fromthe governmental actor will be dictated by the extent to which theconduct investigated is one of policy formulation or operations.

C. The Recovery of Pure Economic Loss

The case law concerning the recovery of pure economic loss in tortcontinues to lurch forward as the courts search for workable dutyformulations which will allow for some purely economic loss recovery,without opening the ambit of recovery too widely. Rather than adoptingthe advice of commentators, 67 and accepting a structure which wouldclassify different types of economic negligence claims and devise prin-

61 Supra, note 20.62 Supra, note 20 at 534.63 Supra, note 20.64 Ibid. at 20.65 Supra, note 20.66 Although the judgment focused on the question of recovery for purely

economic losses, Lord Keith expressly left open the question of whether a publicauthority owes a duty to ensure that its by-laws are complied with, even with respectto personal injuries or property damage cases.

67 See especially B. Feldthusen, ECONOMIC NEGLIGENCE, 2d ed. (Toronto:Carswell, 1989) [hereinafter Feldthusen].

[Vol. 23:1


ciples of liability tailored to meet their respective needs,68 the courtshave generally lumped all economic loss disputes together andapproached each case on an ad hoc basis.69 Economic loss disputes dodiffer and a recognition of this difference would help in straighteningout what has been, and will continue to be, a very difficult area of tortlaw.

1. The Negligent Statement Cases

As is evidenced by the number of reported cases, liability fornegligent statements represents the most significant exception to thegeneral exclusionary rule restricting economic loss recovery.70 Plaintiffswho are able to frame their claims in terms of losses caused by negligentstatement seem to have greater prospects of success than other economicloss claimants. This is due to the fact that, following from HedleyByrne,7 1 the courts have created a series of liability rules and precedentsfor the negligent statement cases with which they feel comfortable, andwhich can be applied to new disputes as they arise. Without the need toconsider the difficult policy issues which are raised by other disputesinvolving economic loss recovery, the courts have been able to applythe negligent statement rules to these cases, frequently to the advantageof the plaintiffs.

As with other types of pure economic loss claims, the courts'principal concern in the area of negligent statements seems to be thedesire to limit the ambit of recovery so as not to impose unreasonable

68 Feldthusen's categories are: (1) negligent misrepresentation, (2) negligent

performance of a service, (3) tort liability of the non-privity manufacturer of adefective product, and (4) relational economic loss consequent on physical damagesuffered by a third party. In his latest edition, Feldthusen added "the liability ofstatutory public authorities", although as he himself concedes at 282, "the connec-tion between public authority liability principles and the economic loss is contin-gent". In other words, it is not the type of damage caused by public authoritieswhich causes difficulties but the nature of the defendant and the type of role it has.

69 Certain types of claims have been segregated, but not due to any recognitionthat categorizing economic loss disputes would be a helpful exercise. Negligentstatement cases are treated under a special rule, but courts here seem as concernedwith the aspect of negligent speech as with economic loss. As well, such things asthe action per quod are treated separately, but this arises mainly due to historicalfactors.

70 It is somewhat arguable whether liability for negligent statements is simplyan aspect of the larger problem of pure economic loss recovery or whether liabilityfor words, which result in economic loss, property damage or personal injury, createsproblems in and of itself. Despite ambiguity in the case law, it is my opinion thatliability for physical damage caused by a negligent statement ought to be viewedas an ordinary negligence law case covered by Donoghue, supra, note 10. It is onlywhen pure economic loss is at issue that the more restrictive duty stipulated for inHedley Byrne ought to be considered. Cases, however, do not always make thisdistinction. See, e.g., Densmore v. Whitehorse (City), [1986] 5 W.W.R. 708, 5B.C.L.R. (2d) 284 (Y.T.S.C.) where a property damage case was analyzed withinthe context of Hedley Byrne.

71 Supra, note 47.

1991]


burdens on defendants or the administration of the judicial system. Thus,reasonable foreseeability has been eschewed in favour of a more restric-tive formulation. The approach generally followed has been to limit aduty of care to claimants whom defendants should have reasonablyforeseen would rely on the advice offered, and who were reasonable intheir reliance. 72 A second test, favoured by some courts and commenta-tors,73 is the voluntary assumption of responsibility approach. A speakerwill be held to a duty of care when the courts can imply from thecircumstances that the speaker voluntarily assumed the responsibility totake reasonable care when offering the advice. 74

There have been several guideposts used by courts in determiningthe duty issue in the negligent statement cases. Whether a sufficientlyclose relationship of reliance exists between parties to justify the impo-sition of a legal duty of care has depended upon a variety of factors.The skill of the advisor,75 the relationship between the parties and their

72 In the survey period, this "reasonable and foreseeable reliance" approachwas adopted in the following cases: Deacon Morgan, supra, note 35; Engel v. Janzen(1989), 49 C.C.L.T. 140, 43 B.L.R. 216 (B.C.S.C.), affd (1990), 65 D.L.R. (4th)760, [1990] 2 W.W.R. 665 (C.A.); Doherty v. Allen (1988), 55 D.L.R. (4th) 746,94 N.B.R. (2d) 74 (C.A.) [hereinafter Doherty]; Royal Bank v. Aleman, [1988] 3W.W.R. 461, 57 ALTA L.R. (2d) 341 (Q.B.); Bell, supra, note 50; Blair v. CanadaTrust Co. (1986), 32 D.L.R. (4th) 515, 9 B.C.L.R. (2d) 43 (S.C.) [hereinafter Blair];Cumby v. Snow (1986), 60 NFLD. & P.E.I.R. 299, 31 D.L.R. (4th) 192 (Nfld. C.A.);Fletcher v. Manitoba Public Insurance Co. (1990), 74 D.L.R. (4th) 636, 5 C.C.L.T.(2d) 1 (S.C.C.) [hereinafter M.P.I.C. cited to D.L.R.], among others.

73 See, e.g., Feldthusen, supra, note 67.74 The foreseeable and reasonable reliance approach is the more popular of

the two. The voluntary assumption of responsibility test has, in fact, come underattack. See, e.g., Lord Griffith's judgment in Smith v. Eric S. Bush, [1989] 2 W.L.R.790 at 814, [1989] 2 ALL E.R. 514 (H.L.), where His Lordship stated that the testis neither "helpful [n]or realistic". For another test, see B.J. Roth, Case Comment:Liability for Loose Lips: Sirois and Therrien v. New Brunswick Teachers' Federa-tion (1984), 56 N.B.R. (2d) 50 (N.B.Q.B.) (1986-87) 51 SASK. L. REv. 317, wherethe voluntary assumption of responsibility test is stated as follows: in making thestatement did the defendant know, as a reasonable person, that someone wouldreasonably believe that the statement was accurate and would reasonably trust inthe circumstances that the defendant took due care in making it? See also ShirlynFishing Co. v. Pumps & Power Ltd (1990), 3 C.C.L.T. (2d) 304 (B.C.C.A.), wherethe test used was whether the circumstances supported the conclusion that thespeaker intended to be bound by the statement.

7- The duty is generally imposed on professionals whose business it is toadvise and to have expertise in the subject matter. It is not necessary, however, thatthe defendant be in the business of giving out the type of advice requested. Thispoint has been reconfirmed in a case decided during this survey period: see Blair,supra, note 72.

[Vol. 23:1


respective interests, 76 the skill and knowledge of the advisee,77 the natureof the occasion, 78 whether the advice was given unsolicited or as a resultof a specific request, 79 whether the purpose for which the informationwas used was reasonably foreseeable, . whether the statement was oneof fact or opinion,8' have all been seized upon as factors in determiningthe existence of a special relationship of reliance. These factors servethe courts' objectives in the negligent statement cases. They limit theduty to proximate recipients of the information, and they appeal to thesense of justice, namely, that when skilled individuals circulate infor-mation which they reasonably ought to know can injure the economicinterests of others, care must be taken.

76 Where the parties have adverse interests, for example, it may be unreason-able and unforseeable that advice offered by one will be taken seriously by theother. In Kingu v. Walmar Ventures Ltd (1986), 10 B.C.L.R. (2d) 15, 38 C.C.L.T.51 (C.A.) [hereinafter Kingu], for example, Madame Justice McLachlin held that areasonable purchaser would not have relied on statements made by the vendors ofa hotel concerning the hotel's potential profitability. The plaintiff ought to havemade further independent inquiries. See also Dorsch, supra, note 51, and Andronykv. Williams (1985), 21 D.L.R. (4th) 557, [1986] 1 W.W.R. 225 (Man. C.A.), leaveto appeal den'd (1986), 69 N.R. 77 (note), 42 MAN. R. (2d) 242 (note) [hereinafterAndronyk cited to D.L.R.]. In Spiewak v. 251268 Ontario Ltd (1987), 61 O.R. (2d)655, 43 D.L.R. (4th) 554 (H.C.) [hereinafter Spiewak], on the other hand, the Courtmaintained the action brought by a purchaser who was misled by a real estate agent,although it reduced the plaintiff's damages because of his own contributory negli-gence.

77 See, e.g., Kingu, ibid.78 Would, for example, reasonable individuals rely on candidates' promises

made during an election campaign? See Ruffolo v. Mulroney (28 June 1988), (Ont.Prov. Ct) [unreported], where the Court concluded that even the most gullible ofvoters would be foolish to do so.

79 As noted in the last survey, there is no need for a request. See 392980Ontario Ltd v. City of Welland (1984), 45 O.R. (2d) 165, 6 D.L.R. (4th) 151 (H.C.)[hereinafter 392980 Ontario Ltd]. However, without a request, it is less likely thatthe courts will find the relationship of foreseeable and reasonable reliance. See, e.g.,Foster Advertising Ltd v. Keenberg (1987), 35 D.L.R. (4th) 521, [1987] 3 W.W.R.127 (Man. C.A.), leave to appeal den'd (1987), 80 N.R. 314 (note), [1987] 4W.W.R.lxvi (note) [hereinafter Foster Advertising]. In this case, unsolicited statements madeduring a press conference by the chair of the Manitoba Horse Racing Commissionconcerning the financial state of a racetrack and its future prospects did not giverise to a duty of care to a person who relied on these assurances and extended creditto the racetrack operation. Mr Justice Twaddle noted that the information was givenby a person without particular financial skill or competence, without a specificinquiry having been made, and without actual knowledge that it would be reliedupon for the purpose for which it was used.

1o See, e.g., Foster Advertising, ibid., or Clarkson Co. Ltd v. Penny &Keenleyside Appraisals Ltd, [1985] 5 W.W.R. 538, 64 B.C.L.R. 343 (B.C.S.C.).

81 It has been held that opinions are not covered by Hedley Byrne: seeAndronyk, supra, note 76 at 567. I would suggest, however, that the distinctionbetween statements of fact and statements of opinion is a difficult one to draw andshould be approached with flexibility. The test should be whether or not thereasonable individual would have relied on the statement. It is arguable that themore speculative, subjective or qualified the information, the less likely it is that itwould be relied upon. However, a categorical distinction between fact and opinionis an unhelpful addition to the duty formulation.

1991]


Cases decided during the survey period highlighted other aspectsof the negligent statement action, which, although rarely in issue, mustnot be overlooked. The statement relied upon must be inaccurate for acase to be made out. The accuracy of the statement must be assessed asof the time the statement was made, taking into account what thereasonable individual would know. In Williams v. School District No.63 (Saanich),82 for example, the defendant lured the plaintiff away fromhis job so that he would come and work for it. The defendant knew thata grievance might be filed against this appointment by the union butbasing itself on past experience, assured the plaintiff that there wasnothing to worry about. This prediction turned out to be wrong, and aftera successful grievance, the defendant was forced to dismiss the plaintiff.The Court dismissed the plaintiff's tort action for negligent statement,based partly on the fact that the statement which was made was an honestopinion at the time.8 3 It has also been held that a statement may giverise to an implied misrepresentation which, if acted upon, can lead to asuccessful action.8 4 Finally, it must be recalled that an advisor is not tobe taken as having guaranteed the accuracy of a statement, only thatreasonable care was exercised with respect to formulating it. This wasin issue in Bell,8 5 where the Court decided that advice concerning aninterpretation of zoning law had been negligently arrived at.

Despite the apparent contradiction with the notion that a specialrelationship is based upon foreseeable and reasonable reliance, courtscontinue to find that even plaintiffs who unreasonably rely upon advicecan successfully sue for negligent statement, although their damages willbe reduced on account of their contributory negligence.8 6 Although Iwould concede that a plaintiff has a duty to mitigate a loss caused bythe defendant's breach of duty, to permit a plaintiff who unreasonablyrelies upon advice to succeed in negligent statement is, in my opinion,unwise. It offends the essential nature of the duty, and in so doing createsconfusion. One can find many cases which have correctly dismissed theaction because of the fact that a reasonable person would not have reliedupon the statement which was made. These are difficult to reconcile withthose cases which have permitted negligent plaintiffs a reduced recovery.

82 (1987), 14 B.C.L.R. (2d) 141, 17 C.C.E.L. 257 (C.A.).83 The case also points out why opinions are less likely than facts to be the

basis of a successful claim. The Court held that the reasonable person would nothave relied so heavily on a forecast of what might occur in a litigious dispute. Seealso Executive Holdings, supra, note 51, where public statements concerning aproposed downtown development which was never undertaken could not form thebasis for a successful negligent statement claim.

84 See Doherty, supra, note 72, discussed in Tort Law, supra, note 1.85 Supra, note 50.86 See, e.g., Spiewak, supra, note 76.

[Vol. 23:1


Courts must recall that the decision to allow victims of pure economiclosses to succeed in tort is an exceptional one which should beapproached with caution.87

An important question in the application of the Hedley Byrneprinciple is the nature of the reliance requirement. It is the plaintiff'sreasonable reliance on the defendant's statement, and the foreseeabilityby the defendant of this reliance, which distinguishes the plaintiff'slosses from the losses of others, and justifies a compensation decisionin favour of that plaintiff. As I have argued elsewhere,8 8 reliance underHedley Byrne requires that the plaintiff either acted or refrained froman act because of the advice which was received. Mere economic inter-dependence, whereby a person suffers economically due to the negli-gence of the defendant, even if foreseeable, does not provide an adequatetest for the recovery of economic losses. This view received support inthe recent British Columbia Court of Appeal decision, Kamahap Enter-prises Ltd v. Chu's Central Market Ltd.89 The case involved a suitbrought by a purchaser of property against solicitors who were retainedby the property's vendors. The plaintiff claimed that because of negli-gent advice given by the defendants to their clients, the plaintiff facedeconomic losses which could have been avoided. 90 Taylor J.A. stressedthe absence of any reliance by the purchaser on statements made by thevendor's solicitors, and in its absence, or in the absence of some otherjustification for imposing a duty,9' denied that a duty of care was owed.Taylor J.A. stated:

Out of the period of uncertainty and re-thinking through which the lawof negligence has passed in recent years, there has, I think, emerged arealization that the infliction of foreseeable pure economic loss mustnecessarily result from very many acts and omissions which take placeroutinely in the course of everyday business activities under our eco-nomic system, and that any law imposing a general duty of care to avoidthe infliction of such loss would greatly hamper the conduct of com-mercial and private business, and would probably interfere fundamen-tally with the operation of that economic system.92

87 Let us not forget the essential issues here. We are dealing generally withbusiness transactions where there are no issues other than economic ones and whereplaintiffs might have provided for their own protection by insurance or othercontractual arrangements. There ought to be good reason to require careless defen-dants to absorb losses suffered by careless plaintiffs.

88 See L. N. Klar, A Comment on Whittingham v. Crease (1978-79) 6 C.C.L.T.311.

89 (1989), 64 D.L.R. (4th) 167, [1990] 1 W.W.R. 632 (B.C.C.A.) [hereinafterKamahap cited to D.L.R.].

90 The issue was whether the purchasers bought the property subject to a rightof first refusal in someone else. The right of first refusal was exercized. Thepurchaser was sued as a result. The purchaser claimed that had the solicitors notgiven the vendor negligent advice, the "subject to" clause would have been removedand the purchaser would not have been forced to face litigation.

91 Such as if the solicitors had been retained for the purpose of conferring abenefit on the purchaser.

92 Supra, note 89 at 171.

1991]


I would agree. 93 Without reasonable and foreseeable reliance, there isno Hedley Byrne relationship.

2. Undertakings

Following from the principles established in Hedley Byrne, thecourts have been prepared to grant plaintiffs recovery for purely eco-nomic losses caused as a result of defendants' failures to carefullyperform undertakings made for the benefit of the plaintiffs and uponwhich the latter relied. The policy question raised by these types of tortclaims is not, as in some other areas of economic loss recovery, one ofpotentially vast and indeterminate liability, but whether the courts shouldbe enforcing gratuitous promises. If an undertaking without consider-ation is enforceable by a damage remedy in tort, where does that leavethe principles of contract law?

On the whole, the courts have recognized that tort law should notbe used to assist those who ought to have protected their economicinterests themselves, through appropriate contractual or insurancearrangements. In Maxey v. Canada Permanent Trust Co.,

9 4 for example,the Manitoba Court of Appeal rejected a claim by a homeowner againsta mortgage company based on an alleged undertaking by the mortgageeto insure the home for the protection of both of their interests. The Courtheld that there was not a sufficient relationship of reliance based upona clear promise, adequate communication, and knowledge, to create alegal duty of care. Where, on the other hand, the facts indicate theseelements, courts have been prepared to hold defendants to their gratu-itous undertakings.95

An interesting problem which was dealt with by the Supreme Courtof Canada during this survey period relates to the tort liability of insurersfor their failure to adequately service their customers. The case ofFletcher v. Manitoba Public Insurance Corp.96 involved an action ofnegligence brought against the defendant by the plaintiffs, who hadpurchased automobile insurance from the corporation. The corporationhad failed to advise the plaintiffs about the availability of under-insuredmotorist protection, and as a result, the plaintiffs, who were seriouslyinjured in a car accident, were inadequately compensated due to theinsufficiency of the negligent motorist's insurance coverage.

93 See also Abacus Cities Ltd v. Bank of Montreal (1986), (sub nom. Re AbacusCities Ltd) [1987] 1 W.W.R. 755,48 ALTA L.R. (2d) 247 (Q.B.), af d (1987), [1988]1 W.W.R. 78, 55 ALTA L.R. (2d) 123 (C.A.) [hereinafter Abacus Cities], whereMcDonald J. rejected a tort claim brought by a debtor company against the creditorcompany's solicitors. There was no reliance relationship between the parties andno duty of care owed.

94 (1984), 9 D.L.R. (4th) 380, [1984] 2 W.W.R. 469 (Man. C.A.) [hereinafterMaxey].

95 See, e.g., Twardy Estate v. Humboldt Credit Union Ltd, [1985] 6 W.W.R.538, 41 SASK. R. 217 (Q.B.).

96 M.P.I.C., supra, note 72.

[Vol. 23:1


The first matter which arises in a case such as this is the difficultyin the characterization of the dispute itself. Was this a case of negligentstatement, similar to Hedley Byrne, or a case of negligence with respectto the defendant's failure to perform a gratuitous undertaking with duecare? Madame Justice Wilson, delivering the judgment for the SupremeCourt, treated the case as one of negligent statement relying on HedleyByrne and the other authorities in the negligent statement area. In truth,however, it is suggested that the negligence alleged in this case did notrelate to a misstatement at all, but to the defendant's failure to performa service or undertaking with care. The gravamen of the plaintiffs'complaint against the defendant was not that it had given the plaintiffsadvice which was both wrong and negligently formed, but that it failedto anticipate the plaintiffs' insurance needs, and provide a reasonableservice with respect to them. What, one may ask, is the difference? Itresides in the distinction between positive acts of negligence, i.e. thecirculation of negligent statements, and the failure to act for the protec-tion of others, i.e. omissions. While, as indicated above in cases such asMaxey, the law is prepared in exceptional cases of reliance to impose aduty on one party to perform a gratuitous undertaking for the benefit ofanother, it is suggested that this duty, if imposed, is best seen in thatlight, and not simply as a matter of negligent advice. 97

With respect to the scope of the insurer's duty of care itself,Madame Justice Wilson affirmed that there is a duty residing on privateinsurance agents to anticipate and service the needs of their clients. Thisduty was stated to be a stringent one to provide their customers withindividualized information and advice. The duty imposed on publicinsurers, however, was stated to be less onerous. While not required toprovide "individualized insurance advice", the public insurer, throughits employees, or through clearly communicated information of somesort, was required to inform their customers of the available range ofcoverage. This, Wilson held, the defendant had failed to do in this case,and it was accordingly held responsible.98

An analogous class of cases is where plaintiffs have relied uponthe defendants' careful performance of services which were essentiallyundertaken within the context of a relationship which the defendants hadwith other parties. The gist of the plaintiffs' allegations in these casesis that these undertakings were performed in order to benefit the plain-tiffs, and the plaintiffs relied upon their careful performance. Again the

97 I concede that the distinction is a difficult one. A negligent statement canconsist of inaccurate advice or incomplete advice, and thus be composed of state-ments or omissions. However, the issue in this case was not whether the defendant'sadvice was wrong, but whether the defendant had a duty to advise at all. There arereasons why the duties should not be the same in both contexts. In terms of negligentadvice, one can limit one's responsibility by declining to give the advice, qualifyingit, disclaiming liability or simply taking reasonable care when giving it. In termsof a positive duty to advise, it is a duty which is much more difficult for thedefendant to define, to anticipate and hence to control.

98 For a critique of this judgment, see L. Stuesser, A Confusing Case ofContradictions (1991) 5 C.C.L.T. (2d) 64.

1991]


courts have rightfully proceeded with caution here. B.D.C. Ltd v.Hofstrand Farms Ltd99 illustrates the problem. A land developer sued acourier, which had been hired by the Crown, for negligently failing todeliver important documents on time. Estey J., in dismissing theplaintiff's claim, stressed both the fact that the courier had no knowledgeof the plaintiff and its need to have the documents delivered on time,and that the plaintiff's loss did not result from its reliance upon thedefendant's performance. The risk of the plaintiff's loss arose from thefact that the plaintiff had involved himself in a land transaction wheretime was of the essence. The plaintiff admittedly depended upon the factthat the courier would perform its contract with the Crown; it howeverdid nothing in reliance on that fact.100

The case of the disappointed beneficiary of a will presents thecourts with a slightly different problem. Although the solicitor's respon-sibilities are principally owed to a client, where the client has engagedthe solicitor in a transaction intended to benefit a third party, the courtsfeel more secure in imposing a tort duty of care. Thus one can, on thisbasis, justify tort cases which have found solicitors liable to disappointedbeneficiaries. The solicitor is in a proximate relationship with the ben-eficiary, and knew that the purpose of the will was to impose a benefiton that person. 10 1 Courts should not, however, extend this too far. Merelybecause plaintiffs suffered economically as a result of the carelessnessof solicitors or other professionals in the execution of their contractualduties owed to others does not provide the basis of a tort law duty. 10 2

3. Relational Losses

The fear that defendants would be faced with indeterminate andcrushing liability were all reasonably foreseeable economic losses result-ing from their negligence to be recoverable, is nowhere more real thanin cases involving relational losses. An economic loss which arises fromdamage to another's property or from a personal injury suffered by

99 (1986), 26 D.L.R. (4th) 1, [1986] 3 W.W.R. 216 (S.C.C.) [hereinafterHofstrand Farms cited to D.L.R.].

100 See J. Blom, Slow Courier in the Supreme Court: A Comment on B.D.C.Ltd v. Hofstrand Farms Ltd (1986-87) 12 CAN. Bus. L.J. 43. Blom argues that theplaintiff, knowing of the risk of loss if the documents were not delivered on time,should have arranged its own affairs appropriately. The plaintiff's risk of loss oughtnot to have imposed greater contractual burdens on the courier. Tort should notrescue the plaintiff from the adverse financial consequences of its contractualarrangements.

101 See cases such as Ross v. Caunters, [1980] 1 CH. 297, [1979] 3 ALL E.R.580 (Ch.) and Whittingham v. Crease & Co. (1978), 88 D.L.R. (3d) 353, [1978] 5W.W.R. 45 (B.C.S.C.). As I have argued, however, the best solution in the disap-pointed beneficiary cases is not to award damages in favour of the plaintiff, but toalter wills legislation to permit courts to rectify mistakes in a will so that thetestator's intentions are put into effect. Where the testator's intentions are unknown,the disappointed beneficiary ought to fail in tort law since damages cannot beproven. See Klar, supra, note 88.

102 See Kamahap, supra, note 89 and Abacus Cities, supra, note 93.

[Vol. 23:1


another is generally not recoverable, even if the loss was reasonablyforeseeable. Where, however, the courts have been able to find a closerelationship of proximity between the parties so as to allay fears ofindeterminate liability, liability has been imposed.

Canadian National Railway Co. v. Norsk Pacific Steamship Co.Ltd10 3 is one such case. The defendants, while towing a barge down theFraser River, struck and damaged a railway bridge owned by the Crown.As a result, three railway companies which used the bridge incurredadditional costs of operation. In addition to a claim by the owner of thebridge for property damage, could users of the bridge recover their lossesas well?

The judges who decided this case recognized the problems ofindeterminate and burdensome liability should all reasonably foreseeablerelational economic loss claims be permitted. Addy J., at trial, debatedwhether the so-called "bright line" test, which refused to award anyeconomic losses not caused by personal injury or property damage, ora more flexible test which would allow some economic loss recovery,should be adopted. Following the lead of the Australian High Court inCaltex Oil (Australia) Pty. Ltd v. The Dredge "Willemstad" ,104 Addy J.held that as long as (1) the defendant has knowledge that the claimantas a specific individual would be likely to suffer loss, (2) the precisenature of the loss is foreseeable, and (3) there is a sufficient degree ofproximity between the negligent act and the damage caused to suggesta moral obligation to compensate, the plaintiff's economic losses shouldbe recoverable. Based on this, the plaintiffs' claims were recognized.On appeal, after an extensive review of the authorities, MacGuigan J.A.concluded that while there is no absolute exclusionary rule in Canadianjurisprudence, there must be a special relationship based upon sufficientproximity, and not merely reasonable foreseeability, for economic lossesto be awarded. The parties must not only be neighbors, they must beclose neighbors. As did Addy J., MacGuigan J.A. decided that the factorsin this case supported the recognition of this close relationship.

It must be stated that Canadian courts have not made much progressin dealing with relational economic loss claims since the time of the lasttort law survey. As a general rule, the courts' exclusive concern in thisarea is indeterminate liability and overly burdensome claims. Thus,where the facts indicate an especially close relationship between theparties, liability is more readily imposed. A variety of terms have beenused to explain the special proximity which is required.105

Other concerns, however, have not been addressed. Even if arestrictive test which limits the potential claimants from any one incident

103 (1990), 104 N.R. 321, 65 D.L.R. (4th) 321 (F.C.A.D.) [hereinafter NorskPacific Steamship cited to D.L.R.], affg (1989), 49 C.C.L.T. 1, 26 F.T.R. 81 (T.D.).

104 (1976), 11 A.L.R. 227, 136 C.L.R. 529 (H.C.).105 For example in Norsk Pacific Steamship, supra, note 103 at 359, Mac-

Guigan J.A. stated that "the requisite proximity can consist of various forms ofcloseness - physical, circumstantial, causal, assumed....". With respect, what dothese terms mean and how are they to be determined and applied?

1991]


can be formulated, the door is open to numerous other analogous cases.It has also been the underlying assumption that once the issue ofindeterminate claims is resolved, business losses caused by negligentconduct ought to be dealt with by using negligence law. This assumptionhas been challenged, however, the argument being that business losses,personal injury and property damage claims, being quantitatively andqualitatively different, should not be treated in the same way. 10 6 Con-tractual or insurance arrangements may more efficiently deal with suchlosses rather than tort. English jurisprudence has reflected this morerestrictive approach to economic loss claims, and the general exclusion-ary rule has been reaffirmed. 107

4. Faulty Products

The right of non-privity users of chattels or buildings to sue man-ufacturers and builders in tort for the former's economic losses incurredas a result of the latter's defective workmanship has also been a matterfrequently before the courts in the survey period. This raises not aproblem of indeterminate or overly burdensome liability,10 8 but theextent to which tort law should warrant the quality of products or theperformance of services. Traditionally, one looks to the law of contracts,supplemented perhaps by consumer sales legislation, to deal with thedisappointed expectations of consumers. Can negligence law play auseful role here?

As in other areas of tort, the trend, especially in England, has beento retreat from the advances made earlier. The decision in JuniorBooks10 9, which allowed a non-privity plaintiff to sue a negligent sub-contractor for economic losses incurred as a result of a defective floor,has been all but obliterated by recent English judgments. In D. & F.Estates ° plaintiffs, who were lessees and occupiers of a flat built 15years previously, were unable to sue the builders for the costs of remedialwork to repair loose wall plaster. Rather than applying Junior Books,Lord Bridge narrowed it to its unique facts and denied that it laid downany principle of general application to the law of tort. Instead, it wasLord Brandon's dissenting judgment in Junior Books, which was com-mended for having laid down with "cogency and clarity principles offundamental importance which are clearly applicable to determine thescope of the duty of care owed by one party to another in the absence...of either any contractual relationship or any such uniquely proximate

106 See especially Feldthusen, supra, note 67.107 See, e.g., Candlewood Navigation, supra, note 20, and Leigh & Sillavan

Ltd v. Aliakmon Shipping Co. Ltd, [1986] A.C. 785, [1986] 2 ALL E.R. 145 (H.L.).108 The number of claimants and the amount of damage arising from a defec-

tive product will ordinarily be limited. However, if recovery is permitted in onecase, the number of other claims arising from other cases of defective products willpose a problem.

109 Supra, note 5. This was discussed in Tort Law, supra, note 1.110 Supra, note 20.

[Vol. 23:1


relationship as that on which the decision of the majority in Junior Bookswas founded.""' In Murphy"12 and Department of the Environment v.Thomas Bates,113 the Lords rejected claims for purely economic lossesarising from defective structures brought against a public authority inthe first case, and a builder in the second. The Lords rejected both LordDenning's reasoning in Dutton'14 and Lord Wilberforce's reasons inAnns" 5 which characterized physical damage to structures caused bydefects in construction as material physical damage, as opposed to pureeconomic losses. The cost of repairing defects is purely economic, andwhere the defective structure does not actually cause physical damageto persons or property, the loss remains a purely economic one. Eventhe "complex structure theory", mooted in D. & F. Estates, which wouldsupport the argument that if one defective part of a complex structuredamages another part of that same structure, the damage can be consid-ered as material physical damage, was rejected by the Lords. 116 Mostsignificantly, the Lords rejected any recovery for purely economic lossesbased on a test of reasonable foreseeability alone, emphasizing the needfor additional factors to create a sufficient relationship of proximity.This special relationship was held not to exist in either of these cases." 7

The Canadian approach to the problem of the recovery of purelyeconomic losses flowing from a public authority's failure to perform itsstatutory duty to regulate building construction has been decidedlydifferent. In general, the approach followed in Dutton and Anns and notMurphy has been adopted. That is, where the court has decided that thepublic authority had a private law duty of care to regulate constructionfor the plaintiff's benefit and that this duty has been breached, the factthat the plaintiff's losses were purely economic has not affected theoutcome of the case. As long as the type of damage which was sufferedby the plaintiff was the type which the careful performance of theauthority's duty was designed to prevent, the damage is recoverable.This was the approach adopted in Kamloops,"18 and more recently inRothfield. 1 9

M' Ibid. at 1003.112 Supra, note 20.113 [1990] 3 W.L.R. 457, [1990] 2 ALL E.R. 943 (H.L.).114 Supra, note 25.115 Supra, note 4.116 Although it was conceded that if the defective part of the structure was

truly separate from the rest of the structure and not vital to its integrity, the argumenthad merit. Thus, if a defective boiler exploded and damaged a part of the building,the damage caused could be considered as physical damage.

117 See also Simaan General Contracting Co. v. Pilkington Glass Ltd (No. 2),[19881 Q.B. 758, [1988] 1 ALL E.R. 791 (C.A.), where the Court carefully consideredJunior Books and did not apply it to similar facts.

118 Supra, note 52.119 Supra, note 29. In this case, the defective wall collapsed, damaging a

neighbour's property. The owners-builders of the wall, and the neighbour both sued.The fact that the farmer's damages were purely economic was not even an issueraised in the judgments.

1991]


In the private sector, recovery of purely economic losses incurredby non-privity users of goods and services remains unsettled in Canadianlaw. Although Rivtow Marine Ltd v. Washington Iron Works and WalkemMachinery & Equipment Ltd120 is still the leading authority, it has beengiven various readings. Some courts have given it a narrow interpreta-tion, restricting recovery to situations where there is a duty to warn ofa defect,121 or where a reliance relationship exists. 22 Other courts haveinterpreted it more broadly and following Junior Books, have allowednon-privity consumers to sue architects and engineers for economiclosses flowing from faulty workmanship. 23 Again, as in the other areasof economic loss recovery discussed above, Canadian courts have invari-ably failed to go beyond issues of foreseeability and indeterminatelosses, and to address the more significant policy concerns which thesetypes of cases raise. Why should tort grant non-privity consumers recov-ery for purely economic losses arising from defective workmanshiprather than restricting them to their contractual remedies? It is clear thattort cannot provide the certainty and predictability which contract offersto those involved in commercial relationships and that tort obligationsought not to be imposed on parties in this setting. Where questions ofpersonal security or threats of injury are involved, tort plays a usefulrole. However, it seems particularly inept when used to order commer-cial relationships or to protect consumer expectations. At the very least,these issues must be addressed.

120 (1973), [1974] S.C.R. 1189, 40 D.L.R. (3d) 530 [hereinafter Rivtow citedto S.C.R.].

121 See, e.g., Marigold Holdings Ltd v. Norem Construction Ltd, [1988] 5W.W.R. 710, 60 ALTA L.R. (2d) 289 (Q.B.), where pure economic losses were heldnot recoverable except where there is a duty to warn.

122 See Logan Lake (District) v. Rivtow Industries Ltd, [1990] 71 D.L.R. (4th)333, 5 W.W.R. 525 (B.C.C.A.), where there was found to be no tort liability by amanufacturer of defective cement to a consumer where there had been no reliance.The restrictive approach is also evident in Edgeworth Const. v. N.D. Lea & Assoc.,[1991] 4 W.W.R. 251, 53 B.C.L.R. (2d) 180 (B.C.C.A.), where the Court struck outa negligence action brought by a plaintiff contractor against an engineer for thelatter's negligence in the preparation of tender documents which had been reliedupon by the plaintiff. The Court held that there was an insufficient relationship ofproximity between the parties to justify the imposition of a duty of care.

123 See, e.g., University of Regina v. Pettick (1986), 51 SASK. R. 270, 38C.C.L.T. 230 (Q.B.), var'd (1991), 6 C.C.L.T. (2d) 1 (Sask. C.A.) [hereinafterPettick], and SEDCO v. William Kelly Holdings Ltd, [1990] 4 W.W.R. 134, 40C.L.R. 116 (Sask. C.A.). In Pettick, the Court of Appeal held that the fabricatorand supplier of space frame systems, as well as the structural engineers, were liableto the plaintiff in tort for the defective structures. The architect was relieved ofliability. The rather confusing use of the jurisprudence in the area of economic lossrecovery is well illustrated in Pettick. Speaking for the majority, Sherstobitoff J.A.used a very wide interpretation of Hedley Byrne to support the duty relationship.The principle of Hedley Byrne was held to apply not only to cases of informationor advice, but to all instances of professional services of any type that involve theexercise of special skill. The dissenting judgement of MacLeod J.A. ignored HedleyByrne entirely and instead relied on a narrow interpretation of Rivtow to denyliability.

[Vol. 23:1


D. The Duty To Assist Others

Developments occurring in the survey period reinforce the viewthat while the common law does not impose a general duty on individualsto assist others who are in peril or to take preventative steps to savestrangers from harm, there are several categories of cases where dutiesto assist are recognized.

One such category was illustrated in the case of Crocker v. SundanceNorthwest Resorts Ltd. 124 As discussed in the last survey, the defendant,who operated a ski resort, was held liable to the plaintiff at trial for allowinghim to compete in a "tube race" despite the fact that he was intoxicated.The plaintiff was held to have been contributorily negligent. Subsequentto the survey's publication, however, the Ontario Court of Appealreversed the trial judgment. The principal basis of the majority's judgmentwas the voluntary assumption of risk by the plaintiff. He entered thecompetition in a deliberately intoxicated state fully aware of its dangers,having signed a waiver. Finlayson J.A., for the majority, held that thedefendant, who was the race's promoter, had taken reasonable steps tomake the plaintiff aware of the risks, and was not required to do moreto prevent him from racing. Dubin J.A., in dissent, emphasized thedefendant's wrongdoing in the tragic accident. The defendant had know-ingly promoted a dangerous event, had encouraged the use of alcoholby the contestants, and could have easily prevented the obviously drunkenplaintiff from participating. In restoring the trial judgment, the SupremeCourt of Canada, per Wilson J., reaffirmed the principle established bythe Court in Jordan House Ltd v. Menow and Honsberger.125 The partiesin Crocker were not disinterested strangers, where no duty to assist wouldbe imposed. Rather, the defendant, for its own commercial benefit,placed the plaintiff in a situation of danger knowing that the plaintiffcould not adequately deal with it. The fact that the plaintiff was drunk andirresponsible did not relieve the defendant of its duty of care, but was the"very reason why Sundance [the defendant] was legally obliged to take allreasonable care to prevent Crocker from competing." 126 The same reasoningwas applied to the defence of voluntary assumption of risk. The narrowingof this defence, with a strict requirement of an agreement to waive one'slegal remedies, makes this very difficult to establish, especially wherethe duty relates to the plaintiff's incapacity to protect himself from danger.

A point stressed at several places in Wilson J.'s judgment was thecommercial nature of the defendant's activity. 127 I would suggest that

124 (1988), 51 D.L.R. (4th) 321, 44 C.C.L.T. 225 (S.C.C.) [hereinafter Crockercited to D.L.R.], rev'g (1985), 20 D.L.R. (4th) 552, 33 C.C.L.T. 73 (Ont. C.A.),rev'g (1983), 150 D.L.R. (3d) 478, 25 C.C.L.T. 201 (H.C.).

125 [1974] S.C.R. 239, 38 D.L.R. (3d) 105 [hereinafter Jordan House cited toD.L.R.].

126 Supra, note 124 at 331.127 For example, Wilson J. noted at 329 that the competition was set up by

the defendant "in order to promote its resort and improve its financial future" thatthe competition was run "for profit", and, at 334, that the event was put on "to drawpeople to its resort and enhance its profits".

1991]


where the defendant stands to gain an economic benefit from its rela-tionship with the plaintiff, the courts are quite prepared to impose a dutyon the defendant to take affirmative steps to protect the plaintiff fromdanger. This was part of the rationale of Jordan House, and is oneimportant reason to distinguish cases of social host liability from theliability of tavern keepers and other commercial establishments. 28

A second category of cases dealing with a duty to assist othersinvolves those who are in relationships of control or supervision. Indi-viduals who are permitted to control the activities of others are alsorequired to assist those persons and to prevent them from injuring eitherthemselves or others. Several illustrations of this occurred during thesurvey period. In Funk v. Clapp,129 prison authorities were sued by thewidow of a prisoner who committed suicide while in custody. Althoughthe action was eventually dismissed, the duty imposed upon the author-ities was not questioned. In MacAlpine v. H.(T.),130 not only the fosterparent of two boys, but the Superintendent of Family and Child Servicewho placed the boys together in the care of the foster parent, were heldliable in negligence to the plaintiffs whose property was damaged bythe boys.131 In Stewart v. Extendicare,132 a nursing home was liable toa patient for an attack made upon her by another patient. These casesare an exception to the general rule that since you do not owe a duty toassist those in peril, you do not owe a duty to prevent one individualfrom causing harm to another. In them, the relationship of control gaverise to the exceptional duty. 133

128 See, e.g., Hague v. Billings (1989), 68 O.R. (2d) 321, 48 C.C.L.T. 192(H.C.) [hereinafter Hague cited to O.R.] where the Court required both a tavernwhich sold alcohol to the patron, and a tavern which served the patron only onebeer, to take steps to prevent the drunk patron from driving. The trial judge stated,at 336-37, that the fact that taverns are "in business to make a profit" imposes uponthem "as a price of doing business, a duty to attempt to keep the highways free ofdrunk drivers". There have been no successful cases, however, against social hosts.

129 (1984), 12 D.L.R. (4th) 62, 55 B.C.L.R. 336 (S.C.), rev'd and new trialordered (1986), 68 D.L.R. (4th) 229, 35 B.C.L.R. (2d) 222 (C.A.) [hereinafter Funkcited to D.L.R.]; action dism'd (1988), 54 D.L.R. (4th) 512 (C.A.).

130 (1988), 48 C.C.L.T. 80 (B.C.S.C.), rev'd (1991), 82 D.L.R. (4th) 609,[1991] 5 W.W.R. 699 (C.A.).

131 But see Mada Lena v. Kuun (1987), 35 D.L.R. (4th) 222, (sub nom. M.(M.)v. K.(K.)) 11 B.C.L.R. (2d) 90 (S.C.), rev'd (1989), 61 D.L.R. (4th) 392, 38 B.C.L.R.(2d) 273 (C.A.) [hereinafter M.(M.)], and G.(A.) v. B.C. (Superintendent of Familyand Child Service) (1989), 61 D.L.R. (4th) 136, [1990] 1 W.W.R. 61 (B.C.C.A.),where actions brought against superintendents of Family and Child Service weredismissed due to lack of negligent conduct on the part of the officials.

132 (1986), 48 SASK. R. 86, 38 C.C.L.T. 67 (Q.B.).133 See also Re Hendrick v. De Marsh (1984), 6 D.L.R. (4th) 713, 28 C.C.L.T.

207 (Ont. H.C.), aff d (1986), 54 O.R. (2d) 185, 26 D.L.R. (4th) 130 (C.A.). Thetrial judgment was discussed in the last survey. The Court of Appeal affirmed thetrial judgment's finding that the action was statute-barred and did not go into thesubstantive merits of the case. As well, in Williams v. Saint John (City) (1983), 53N.B.R. (2d) 202, 27 C.C.L.T. 247 (Q.B.), aff d (1985) 66 N.B.R. (2d) 10, (sub nom.Williams v. New Brunswick) 34 C.C.L.T. 299 (C.A.), prison authorities were heldliable for deaths caused to inmates as a result of a fire started by a prisoner.

[Vol. 23:1


Teachers are also obliged to safeguard their students. The standardordinarily applied is that of the careful or prudent parent,1 34 although inone recent case, the standard of the reasonable person, and not that ofthe careful and prudent parent, was applied to volunteer coaches. 35

Those who undertake, either by their words or their conduct, toperform acts for the benefit of others also may be legally obliged tocarefully fulfill their promises. As we have discussed, reliance is thehallmark of these relationships.1 36

Statutes, of course, may impose duties of affirmative action onpublic authorities. Whether public duties can be translated into privatelaw duties of care is a problem which we have already addressed. Theuse of statutory duties to impose common law duties of care uponindividuals was, as discussed in the last survey, restricted by theSupreme Court of Canada in R. v. Saskatchewan Wheat Pool.137 Thisdoes not mean that statutes cannot be used to reinforce common lawduties of care which are inherent in certain relationships. Actions againstthe police for their failure to protect citizens provide the best illustrationof this problem. In Doe v. Metro Toronto (Municipality) Commissionersof Police, 38 for example, the courts rejected a motion to strike out astatement of claim for negligence brought against the police by anindividual who alleged that the police failed to adequately protect heragainst a serial rapist. The duty of care owed by police is essentiallyrooted in the common law, bolstered by specific statutory duties.1 39

E. Professional Negligence

Malpractice litigation against professionals continues to constitutean important part of tort law. While principles of general applicationexist, the law is being tailored to meet the special needs and character-istics of various professions. Doctors continue to be the main targets oflaw suits, no doubt due to the fact that medical treatment is so common

134 See Dunbar v. School Dist. No. 71 (18 April, 1989), (B.C.C.A.) [unre-ported].

135 See Hamstra v. B.C. Rugby Union (1989), 1 C.C.L.T. (2d) 78 (B.C.S.C.).The defendant, although a school teacher and rugby coach, was at the time of theaccident, acting not under the auspices of the school board, but those of the B.C.Rugby Union. In view of this, the trial judge applied the ordinary standard of care.For an interesting recent English Court of Appeal case, see Van Oppen v. BedfordCharity Trustees (1989), [1990] 1 W.L.R. 235, [1989] 3 ALL E.R. 389, where theCourt held there was no general duty on schools to take out personal accidentpolicies in favour of their rugby-playing pupils, or to advise parents that suchinsurance should be obtained.

136 See Maxey, supra, note 94; Hofstrand Farms, supra, note 99, and thediscussion relating to these cases.

137 (1983), 143 D.L.R. (3d) 9, 23 C.C.L.T. 121 (S.C.C.). See discussion inTort Law, supra, note 1 at 350.

138 58 D.L.R. (4th) 396, (sub nom. Jane Doe v. Board of Police Commissionersof Metro Toronto) 48 C.C.L.T. 105, affd (1990), 72 D.L.R. (4th) 580, 40 O.A.C.161 (C.A.).

139 Principally in this case the Police Act, R.S.O. 1980, c. 381.

1991]


and the unintended results of medical mishap often so disastrous. Law-yers, engineers, accountants, auditors, bankers, insurers and others havecome in for their fair share of litigation as well.

1. The Contract/Tort Overlap

One issue which has been resolved in the survey period is whethertort law can be used concurrently with contract, or, whether the existenceof a contractual relationship between the parties precludes an action intort. In Central Trust Co. v. Rafuse, 140 the defendant solicitors were suedby their client both for breach of contract and negligence. The actionwas dismissed at trial,141 on the ground that the defendants had not beennegligent. The Court of Appeal found that the defendants had beennegligent but that the action, whether framed in contract or tort, wasstatute-barred. 42 On appeal to the Supreme Court of Canada, the plain-tiff conceded that if the solicitors' liability was based only on breach ofcontract, that the action was statute-barred. The plaintiff argued, how-ever, that the concurrent liability approach ought to be followed and thatthe tort action should succeed.

Le Dain J. accepted the concurrent liability thesis. He held that ifa common law duty of care in tort, based upon a relationship of prox-imity, exists, it is unimportant whether the relationship arises in acontractual or non-contractual setting. Thus, for example, a professionalwho gives out advice upon which others rely would ordinarily owe aduty in tort to take reasonable care. The fact that the parties are alsocontractually linked will not eliminate this tort duty. The tort duty,however, must not depend upon or be defined by the specific contractualobligations. Liability in tort will not be permitted in order to overrideor circumvent a term of the contract, for example, a contractual exclusionor limitation of liability clause. Applying these principles to the facts ofthe case, Le Dain J. held that the plaintiff could base its action eitheron tort or contract, whichever was to its advantage. 43

The concurrent liability approach, as proposed by Le Dain J., is themost sensible solution to the long-standing debate. There is no reasonto prejudice a plaintiff by denying that person a tort claim, merelybecause of a co-existing contractual relationship, unless the contractitself limits the plaintiff's tort remedies. If both the tort relationship andthe contractual relationship impose upon the parties the same rights andobligations, there is no reason to make either exclusive. Of course, onemust then ask why in such a case there ought to be any advantages tothe plaintiff in choosing one regime over the other. Following from the

140 (1986), 31 D.L.R. (4th) 481, (sub nom. Central & Eastern Trust Co. v.Rafuse) 37 C.C.L.T. 117 (S.C.C.) [hereinafter Central Trust cited to D.L.R.].

141 (1982), 53 N.S.R. (2d) 69, 139 D.L.R. (3d) 385 (S.C.).142 (1983), 147 D.L.R. (3d) 260, 25 C.C.L.T. 226 (N.S.C.A.).143 The Court went on to find that the solicitors had been negligent and that

the action was not statute-barred.

[Vol. 23:1


logic of the concurrent liability approach itself, matters such as theappropriate limitation period, the applicability of contributory negli-gence, or the manner of assessing damages ought to be the same, wherethe legal obligations and rights are the same, without reference to thelegal source of these rights. This is clearly the direction in which thelaw is moving.

As stated by Le Dain J., concurrent liability is predicated upon (1)the existence of a proximate relationship supportive of a tort duty ofcare, and (2) the absence of an applicable contractual limitation orexclusion clause. Tort law does not ordinarily impose a duty on oneperson to take affirmative action for the benefit of others nor does itgrant recovery for purely economic losses in the absence of a specialrelationship. Thus, the concurrent liability thesis is irrelevant in themajority of breach of contract cases. 144 The question whether there is anapplicable contractual limitation or exclusionary clause which overridesthe tort obligation can be a difficult one, and is an issue which is to beapproached primarily as a matter of contract and not tort law. An areawhich has been particularly difficult in recent cases has been the appli-cability of exemption clauses to cover the tort liabilities of employees.In London Drugs,14 5 the British Columbia Court of Appeal limited thetort liability of two employees who had negligently damaged theplaintiff's property which was being stored with a storage company forwhich the employees worked. There was a clause limiting the liabilityof the storage company to $40 on any one package. The damage to theproperty, a transformer, was almost $34,000. Did the limitation clauseapply to the employees? McEachem C.J.B.C. allowed the limitationclause to be applied, not however as a matter of contract, but of tort.The Chief Justice held that the limitation clause was a factor whichdefined the type and extent of the tort duty which was owed by theemployees to the owner of the transformer. In other words, a contractbetween the storage company and the plaintiff, the benefit of whichMcEachern C.J.B.C. refused to extend to the employees because of thedoctrine of 'privity of contract', became determinative in defining thetort rights and duties between the plaintiff and the defendants. Thiscertainly must be considered as novel, and one must say with respect, amethod of doing indirectly something which McEachern C.J.B.C. saidcould not be done directly. This seems to have been the opinion ofLambert J.A., who conceded that the defendants were trying "one wayor another, by tort principles or contract principles .... to take the benefitof a contract to which they were not parties". 146 And, rather thanfollowing "an adventurous and perilous tort analysis", Lambert J.A.decided to stick to a straightforward contract analysis and, by the

144 See, e.g., Moss v. Richardson Greenshields of Can. Ltd, [1989] 3 W.W.R.50, 56 MAN. R. (2d) 230 (C.A.) where there was no concurrent liability between astockbroker and his client since the Court found that the breach of a term of an'Options Trading Agreement' did not give rise to a tort duty.

145 Supra, note 33.146 Ibid. at 326.

1991]


principles of contract law, to allow the defendants to benefit from thecontractual limitation. According to Lambert J.A., there was a tort dutyowed by the employees to the plaintiff to take reasonable care of thegoods and the tort duty was not defined as to its extent by the limitationclause. However, by implying a contractual term which extended thelimitation of liability clause to the employees, Lambert was prepared tolimit the defendants' liability to the $40 contracted for.147 Hinkson J.A.opted for the tort route and held that, in view of the contractual limitationclause, it could not be said that the plaintiff was relying upon thedefendants' employees, or that there was a sufficiently "close and directrelationship of proximity between the parties as to give rise to a duty ofcare." 148 Wallace J.A. approached the issue as did McEachern C.J.B.C.,refusing to extend the limitation of liability protection to the employeesas a matter of contract law, but allowing "the contractual matrix" to beconsidered when defining and limiting the tort duty. 149 Southin J.A.'sapproach was the most unorthodox and, with respect, the most question-able. Her Ladyship agreed with McEachern C.J.B.C. and Wallace J.A.that the employees could not, as a matter of contract law, take the benefitof the limitation clause. Nor did she find a doctrine of vicarious immu-nity which would extend the immunity of the employer to its employees.However, rather than examining the tort liability of the employees as amatter of negligence law, Southin J.A. found that the basis of the suitagainst them was trespass.1 50 Since liability in trespass did not dependupon a duty of care capable of being reduced by the limitation of liability

147 An important part of Lambert J.A.'s reasoning was that if the limitationclause did not apply, an absurd result would follow. According to Lambert J.A.,under British Columbia case and statute law, the employees, if found liable for thefull amount, could claim contribution of 50% of the damages from their employer.Thus, the employer's liability, although initially limited by a $40 clause, would endup being far in excess of that contracted for. I do not agree that an employee isentitled to claim contribution from an employer who is vicarously and not personallyliable. The opposite is true. That is, the employer is entitled to be fully indemnifiedby the employee if the employer is called upon to satisfy the judgment. See JohnG. Fleming, THE LAW OF TORTS, 7th ed. (Agincourt: Carswell, 1987) at 239, citingLister v. Romford Ice Co., [1957] ALL E.R. 125, [1957] A.C. 555 (H.L.). LambertJ.A. held that the B.C. law is based upon Flamant v. Knelson (1971), 21 D.L.R.(3d) 357, [1971] 4 W.W.R. 454 (B.C.S.C.) [hereinafter Flamant cited to D.L.R.].This case dealt with whether an owner of a car and a driver's employer could benefitfrom a section of the Contributory Negligence Act, R.S.B.C. 1960, c. 74, whichnominally applied only to the driver of the car. It was held that they could. Withrespect, I do not believe that the issues are the same as those in London Drugs. Thereasons in Flamant do not support the view that an employee can seek contributionfrom his or her vicariously liable employer. Also note that Wallace J.A. in LondonDrugs specifically stated that he did not agree that a negligent employee can suehis or her vicarously liable employer.

148 Supra, note 33 at 323. Hinkson J.A. allowed the appeal, thus limiting theemployees' liability to $40. However, although not completely clear, I assume thatthe import of Hinkson J.A.'s judgment was to totally exculpate the employees, noteven acknowledging a $40 liability. Thus, as opposed to McEachern C.J.B.C.,Hinkson J.A. was not prepared to recognize a "$40.00 duty of care".

149 Ibid. at 354.150 Ibid. at 374.

[Vol. 23:1


clause, Southin J.A. dissented from the judgment of the Court, and heldthe employees liable. Although Southin J.A. referred to quotes fromHalsbury's and other sources with respect to trespass, it is, in my view,not clear why she held that a trespass had in fact occurred in this case.A trespass is a direct interference with the possession of chattels. Aperson who damages goods in his or her possession cannot commit atrespass, since the possession of another has not been interfered with. Adetinue or conversion can be committed against a plaintiff with a rightto immediate possession - not a trespass. In that case, however, the factsmust constitute a detinue or conversion, and the negligent dropping ofsomeone's goods would not normally so qualify. In short, I do not agreewith Southin J.A. that a trespass was committed by the defendants onthese facts.

As is evident from the five sets of reasons, London Drugs was adifficult case. It was difficult because, although all the judges felt thatit would be terribly unjust and inefficient to require two workers tocompensate an insurance company for a large amount of damages causedto someone's goods through mere carelessness, established legal doc-trine seemed to compel such a result. 15' Thus, established doctrine hadto be strained and twisted to avoid the unjust result. The problem residesin the fact that while the law requires an employee to assume fullresponsibility for the torts committed by him or her during the courseof the employment, it does not afford to the employee the benefit of theemployer's liability insurance or contractual limitations. It is suggestedthat the remedy to this unfairness is to be found in the law of contract,not tort. To deny that employees owe tort obligations to reasonablyforeseeable victims of their carelessness, because of their status, wouldbe to turn tort law back to the 19th Century. As well, to recognize theemployee's tort duty, but to define its scope by reference to a contractwhich the courts deny applies to the employee is to muddy tort doctrinein order to preserve, at least nominally, a 'privity of contract' doctrine.As well, to ignore liability insurance or contract as a way to limit theemployee's potential tort liabilities is equally wrong. The solution is torecognize tort liability, where the requirements of duty, breach and causeare satisfied, notwithstanding the status of the tortfeasor, while acknowl-edging that in the normal course of business, insurance contracts or othercontractual protections are drafted not only for the benefit of theemployer, but for the benefit of its employees as well.

151 See, e.g., two other recently decided cases where the courts requiredemployees to compensate plaintiffs without the benefit of their employers' contrac-tual limitation clauses. See Muller Martini Canada v. Kuehne & Nagel InternationalLtd (1990), 71 O.R. (2d) 794 (H.C.), and Katz v. Thompson Horse Van Lines Ltd,[1988] 4 W.W.R. 356, 24 B.C.L.R. (2d) 334 (S.C.). Note that in Blom's commenton London Drugs at (1991), 70 CAN. BAR REV. 156 at 157, it is suggested that thetwo employees in this case were covered by their employer's insurance. Therefore,in actuality the dispute in this instance was probably between London Drug's insurerand Kuehne & Nagel's insurer.

1991]


2. Standard of Care

The standard of care demanded of professionals is still that of the"reasonably competent", "ordinarily competent", or "ordinarily prudent"professional in like circumstances.1 52 Cases decided in the survey period havehelped shed additional light on how these notions are to be interpreted.

One of the interesting problems is how to reconcile the propositionthat the standard demanded of professionals is to be measured by whatother competent professionals do with the proposition that evidence ofgenerally approved practice cannot be treated as conclusive proof ofreasonable care in a negligence action. 153 It is becoming clear that unlessthe evidence does not support the existence of a general practice, or,unless the issue to be resolved is not one which requires professionalexpertise but can be resolved by the application of common sense, triersof fact cannot find a professional negligent for having adopted a profes-sional practice adhered to by other ordinarily prudent practitioners. Theissue is generally raised in medical negligence cases. 154 In Maynard v.West Midlands Regional Health Authority,5 5 the House of Lords heldthat it is an error of law for a judge to find a professional negligentwhere a body of competent, professional opinion supported the allegedlynegligent conduct. This is so even where a competing, equally competentopinion considered that the practitioner's conduct was wrong. This viewhas support in Canadian cases. It was followed by the court in Haughianv. Paine156 and in Quintal v. Datta.157 In the latter case, the Court stated:

Except in those unusual medical negligence cases where the standardof care is a matter of common knowledge, the jury must determine thestandard of the professional learning, skill and care required of a defendantphysician only from the opinions of physicians (including a defendantphysician) who have testified as expert witnesses as to such standard.The jury are not at liberty to formulate their own standard of care andmust be instructed that the standard of care is to be determined byweighing and considering the expert evidence proffered on this issue. 5 '

152 This was recently reaffirmed, insofar as solicitors are concerned, by MrJustice Le Dain in Central Trust, supra, note 140 at 523.

153 See Anderson v. Chasney, [1949] 4 D.L.R. 71, [1949] 2 W.W.R. 337 (Man.C.A.), aff d [1950] 4 D.L.R 223 (S.C.C.), is generally cited as the authority for thelatter point. For a discussion of this problem, see K.M. Norrie, Common Practiceand the Standard of Care in Medical Negligence (1984-85) 29-30 JURIDICAL REV.(N.S.) 145; R.M. Mahoney, Lawyers - Negligence - Standard of Care (1985) 63CAN. BAR REV. 221 [hereinafter Mahoney]; M. Rice, Is Custom a Defence for aLawyer in a Professional Negligence Suit? (1987) 8 ADV. Q. 452.

154 It has also arisen in other contexts, for example, in legal malpractice cases.See recently Edward Wong Finance Co. Ltd v. Johnson, Stokes & Master, [1984]A.C. 296, [1984] 2 W.L.R. 1 (P.C.).

155 (1983), [1984] 1 W.L.R. 634, [1985] 1 ALL E.R. 635 (H.L.).156 (1986), 46 SASK. R. 186, 36 C.C.L.T. 242 (Q.B.) [hereinafter Haughian

cited to C.C.L.T.], rev'd on other grounds (1986), 37 D.L.R. (4th) 624, 40 C.C.L.T.13 (C.A.).

157 [1988] 6 W.W.R. 481, 68 SASK. R. 104 (C.A.) [hereinafter Quintal citedto W.W.R.].

158 Ibid. at 498.

[Vol. 23:1I


The British Columbia Court of Appeal has also adopted the Houseof Lords' approach. In Belknap v. Meakes,159 Seaton J.A. held that itwas not open to the trial judge to find the defendant doctor negligentfor having adhered to one professional school of thought, as opposed toanother. 60 Although one case decided in the survey period - Brain v.Mador'6' - was not as clear on this position, it is arguable that thedecision there to find the defendant doctor negligent was based on thelack of evidence that there were two camps of respectable opinion, oneof which supported the doctor's impugned conduct. 62

The view that the standard of care required of professionals, insofaras professional practice is concerned, should be determined by thegeneral practice of other respected professionals is, in my opinion, thecorrect one. It would not only be unrealistic to expect triers of fact, bethey judges or juries, to be able to competently second-guess experts onquestions of technical expertise, but it would be wrong to allow them todo so. The obligation of professionals, whether agreed to by contract orimposed upon them by tort law, is to apply ordinary care and skill tothe matters before them. Although in areas not requiring professionalexpertise, or beyond the ability of the lay person to understand, courtsshould be able to set standards which depart from general practice, thisis a situation which is likely to arise only very rarely. 163

Other aspects of the professional standard of care issue have beenin focus in cases decided recently. The locality rule, which states thatthe location of a professional's practice may be relevant to the standardof performance expected, has been reaffirmed. Without suggesting thatless is expected of rural professionals than their urban counterparts,which would be wrong, Walker J. in Haughian'64 noted that "the localityis merely one circumstance and is not an absolute limit on the care andskill required". 65 It is clearly appropriate when judging a professional'sconduct to keep in mind the facilities, equipment, access to other spe-cialists and so on which were available to the professional. Anotherfactor which courts can consider is whether the defendant was a generalpractitioner or a specialist. That this is so in relation to professions withrecognized specialties, such as medicine, is beyond doubt. It is also true,

159 (1989), 64 D.L.R. (4th) 452, (sub nom. Belknap v. Greater VictoriaHospital Society) 1 C.C.L.T. (2d) 192 (B.C.C.A.).

160 See also Morrison v. Patel (1988), 44 C.C.L.T. 264 (Ont. H.C.), where thefact that a large segment of professional opinion supported the defendant's treatmentsatisfied the professional duty imposed on the defendant.

161 (1985), 9 O.A.C. 87, 32 C.C.L.T. 157 (C.A.) [hereinafter Brain cited toO.A.C.].

162 See J. Irvine, Annot.: Belknap v. Meakes (1985), 32 C.C.L.T. 158.163 I concede that there will be gray areas: what is a matter of professional

judgment and what is not? Hopefully, the problem is unlikely to arise frequently.One might assume that any practice judged unreasonable by the lay person will notbe one which is considered to have been reasonable by a group of respectedprofessionals.

164 Supra, note 156.165 Ibid. at 250.

1991]


however, in relation to professions without the de jure recognition ofspecialization, such as law. Lawyers who hold themselves out as spe-cialists in areas of legal practice are required to live up to the higherstandards of care which clients expect and pay for.166 Whether generalpractitioners who engage in work usually done by specialists are to bejudged by a lower standard of care is a more arguable issue. In CentralTrust, 67 the trial judge excused a solicitor with a general practice foran error which would not have been made by a solicitor who specializedin commercial lending transactions. The trial judge stated that the stan-dard to be applied was not that of the reasonably competent specialistbut that of the ordinary reasonably competent general practitioner. 63

Both the Court of Appeal and the Supreme Court of Canada reversedthe trial judge's decision and held that the defendant had been negligent,although neither judgment took exception to the trial judge's distinctionbetween general practitioners and specialists. Mr Justice Le Dainreferred, without disapproval, to the trial judge's distinction, but heldthat even as a general practitioner, the defendant's conduct failed to meetthe standard of care required. 69 It is likely that courts will only veryreluctantly excuse a generalist lawyer for having made an error whichwould not have been made by the reasonably competent specialist.Where a general practitioner accepts work which is difficult and beyondhis or her area of expertise, there ought minimally be a duty to advisethe client of this fact and to suggest a referral or seek assistance froma more expert solicitor.

A related issue is the standard of care demanded of inexperiencedor beginner practitioners. Although it has been stated that the standardof care required of the professional is that of a competent practitioner"of the same experience and standing", 70 it has also been generallyagreed that lack of experience is not an answer to a claim of negligencebrought against a professional. In Wills v. Saunders,'7' for example, theAlberta Court of Queen's Bench refused to lower the standard of caredue to the inexperience of the defendant doctor. In Wilsher v. Essex AreaHealth Authority,172 it was suggested by Lord Justice Mustill that whilethe standard of care cannot be tailored to suit the beginner practitioner,a standard can be related to the position occupied by a defendant. Thus,if beginners occupy a certain post in a hospital, the standard required ofa specific practitioner in that post is based upon the competence of those

166 See Elcano Acceptance Ltd v. Richmond, Richmond Stambler & Mills(1985), 31 C.C.L.T. 201, 9 C.P.C. (2d) 260 (Ont. H.C.) [hereinafter Elcano Accep-tance], rev'd (1986), 55 O.R. (2d) 56, 16 O.A.C. 69 (C.A.).

167 Supra, note 141.168 Ibid. at 390.169 Supra, note 130 at 526-28.170 See Crits and Crits v. Sylvester, [1956] O.R. 132 at 143, 1 D.L.R. (2d)

502 at 508 (C.A.). See also Mahoney, supra, note 153 at 224.171 [1989] 2 W.W.R. 715, 47 C.C.L.T. 235 (Alta Q.B.).172 (1986), [1987] 2 W.L.R. 425, [1986] 3 ALL E.R. 801 (C.A.), rev'd on other

grounds [1988] A.C. 1074, [1988] 1 ALL E.R. 871 (H.L.) [hereinafter Wilsher citedto ALL E.R.].

[Vol. 23:1


who ordinarily fill that post. The issue of how far courts ought toconsider the defendant's characteristics, whether they relate to knowl-edge, experience, disability, age and so on in determining the issue offault, is difficult because it puts into conflict two of negligence law'sgoals - the desire to remain faithful to fault as a basis of compensationwith the desire to shift and redistribute accident costs. One must notoverstate the problem, however. Although beginners, or individuals withdebilitating characteristics, may not be morally blameworthy for beingunable to achieve a standard of competence beyond their capacity, faultis present when individuals take risks which are unreasonable in lightof the actors' limitations.

3. Medical Malpractice

Failure to inform cases continue to appear frequently in medicalmalpractice litigation, although, as in the past, these cases remain verydifficult for plaintiffs to win. It appears, from a survey of the recentcases, that although the scope of the doctor's duty to inform has beenwidened from the initial judgments of the Supreme Court of Canada inReibl v. Hughes'73 and Hopp v. Lepp,174 serious obstacles to a claimant'schances of success still remain.

A broad duty of disclosure was suggested in the case of Rayner v.Knickle & Kingston. 75 Not only must a doctor disclose the material,special or unusual risks of the treatment proposed- for a patient, but apatient must be informed of how the procedure is to be carried out, thebenefits of having the procedure, any alternatives to the procedure andthe risks associated with these alternatives. I would suggest that courtsare unlikely to require such a fulsome disclosure in all cases. Where thetreatment proposed and the alternatives are relatively simple for the layperson to understand, where the alternatives are reasonable, and wherethe risk/benefit analysis is particularly relevant in view of the treatmentproposed, the full disclosure standard of Rayner is more likely to berequired.

Plaintiffs must prove that there was a failure to disclose, and thatthis failure caused them damage. This will be shown by establishing thathad the required information been communicated they, as reasonablepatients, would have declined treatment. Courts have varied in theirinterpretation of what the latter requirement implies. As discussed byP.H. Osborne, 176 judgments have ranged from applying a very objectivetest of causation which considers few subjective factors to a test whichwill permit consideration of numerous of the patient's personal charac-teristics. Notwithstanding which test is adopted, however, the court's

17 [1980] 2 S.C.R. 880, 33 N.R. 361 [hereinafter Reibl].174 [1980] 2 S.C.R. 192, 22 A.R. 361.175 (1988), 72 NFLD. & P.E.I.R. 271, 47 C.C.L.T. 141 (P.E.I.S.C.) [hereinafter

Rayner], rev'd (1989), 78 NFLD. & P.E.I.R. 347, 24 A.P.R. 347 (C.A.).176 P.H. Osborne, Causation and the Emerging Canadian Doctrine of Informed

Consent to Medical Treatment (1985) 33 C.C.L.T. 131.

1991]


judgment in this area is highly speculative and seemingly quite result-oriented. A review of the cases in which plaintiffs have succeeded inestablishing causation suggests that the following considerations areimportant to the courts. It is clear that the answer to the question whethera reasonable patient would have accepted the treatment is integrallyrelated to the court's view of the reasonableness of the doctor's decisionto treat. Where the court considers that the treatment proposed wasunreasonable, it will obviously also find that the reasonable patientwould have declined it. 177 Courts also are more likely to find in favourof plaintiffs where the proposed treatment, although not unreasonable inthe sense that the doctor was negligent in having proposed it, was noturgent or necessary, 178 or was not, at least in the court's view, thatimportant as, for example, cosmetic surgery. 179 Following this logic,treatment for scientific experimentation demands a high duty of disclo-sure and presents an easier case for causation.180 In the absence of thesespecial cases, courts will ordinarily not find that reasonable patientswould have rejected reasonable treatment. 181

177 See, e.g., Reynard v. Carr (1983), 50 B.C.L.R. 166, 30 C.C.L.T. 42 (S.C.),aff'd (1986), 10 B.C.L.R. (2d) 121, 38 C.C.L.T. 217 (C.A.); Graham v. Persyko(1984), 55 O.R. (2d) 10 at 12, 30 C.C.L.T. 85 (Ont. H.C.), affid (1986), 55 O.R.(2d) 10, 27 D.L.R. (4th) 699 (C.A.), leave to appeal den'd (1986), 57 O.R. (2d)512, 34 D.L.R. (4th) 160; Brain, supra, note 161; Coughlin v. Kuntz (1987), 17B.C.L.R. (2d) 365, 42 C.C.L.T. (2d) 42 (C.A.); Schanczl v. Singh (1987), 56 ALTAL.R. (2d) 303, [1988] 2 W.W.R. 465 (Alta Q.B.); Rayner, supra, note 175.

178 See, e.g., Montaron v. Wagner (1988), 84 A.R. 231, 43 C.C.L.T. 233(Q.B.).

179 A good example of this might be Sinclaire v. Boulton (1985), 33 C.C.L.T.125 at 130 (B.C.S.C.). The surgery was for breast augmentation, and in allowingthe plaintiff's claim, MacKinnon J. noted:

In as much as this particular surgery was not necessary, in the sensethat it was not eliminating, halting or correcting some disease or con-dition, emphasis must be placed on the particular position of the plain-tiff. Where a person is in a life-threatening condition requiring surgicalintervention, a reasonably prudent person is likely to accept risks topreserve life. Where a person is undergoing considerable pain or dis-comfort a reasonably prudent person is likely to consent to the risk ofsurgery to eliminate pain. Breast surgery of the type undertaken herewas for cosmetic purposes. There was no medical recommendation itbe done. It was the plaintiff who decided to have the surgery.180 See, e.g., Weiss v. Solomon, [1989] R.J.Q. 731, 48 C.C.L.T. 280 (C.S.).181 This is borne out in the numerous cases decided during this survey period

where courts found a failure to disclose but rejected the action anyway becausecausation was not proven. See, e.g., the recent decision of Meyer Estate v. Rogers(1991), 2 O.R. (3d) 356, 6 C.C.L.T. (2d) 102 (Gen. Div.), where the Court havingconcluded that all material risks must be disclosed due to there being no exceptionfor the so-called "therapeutic privilege" rule in Canadian law, dismissed the actionbecause of a lack of causation.

[Vol. 23:1I


Other medical malpractice cases of note which occurred during thesurvey period ought to be highlighted. In Robson v. Ashworth,182 thecourts dismissed an action brought against a doctor despite findings attrial of the doctor's negligence. The doctor had prescribed a potentiallylethal drug to his patient, despite the fact that the doctor ought to havebeen alerted that the patient might have been a suicide risk. The trialjudge held that this was negligent, and that this negligence contributedto the suicide of his patient. The action was dismissed, however, due tothe court's view that a suicide which is the deliberate and intentionaldecision of a sane person must, for policy reasons, remain the personalresponsibility of the suicide victim. The Court of Appeal, in a briefjudgment, upheld this decision. 183 The courts have also reaffirmed theright of competent persons, including minors, to decide for themselveswhich medical treatment they will or will not submit to. As has beenwell established, any unconsented-to medical treatment is a battery,subject to an exception for emergency medical treatment which thepatient, who becomes incapable, had not refused prior to the occurrenceof the emergency. In Malette v. Shulman,184 Robins J.A. upheld the rightof a Jehovah's Witness to refuse a blood transfusion, even where therefusal was communicated by means of a card carried by the patient. InC.(J.S.) v. Wren,185 Kerans J.A. upheld the right of a minor who couldunderstand and appreciate proposed medical treatment, to consent to it,even over the objections of the minor's parents.1 86

4. Legal Malpractice

As discussed above, the Supreme Court of Canada, in CentralTrust,187 resolved the contentious debate concerning the appropriatecause of action to be brought against lawyers by adopting the concurrentliability thesis. In the same judgment, the Court shed some light on otheraspects of the legal malpractice claim. The alleged negligence of thedefendant solicitors in this case concerned their failure to appreciate thata section of the Nova Scotia Companies Act 88 invalidated a mortgagewhich they had arranged for their client. While conceding that "asolicitor is not required to know all the law applicable to the performance

182 (1985), 33 C.C.L.T 229 (Ont. H.C.), affjd (1987), 40 C.C.L.T. 164 (C.A.).183 I have criticized the trial decision elsewhere. See L.N. Klar, Negligence -

Reactions Against Alleged Excessive Imposition of Liability - A Turning Point?(1987) 66 CAN. BAR REV. 159 [hereinafter Negligence].

184 (1990) 67 D.L.R. (4th) 321, 2 C.C.L.T. 1 (C.A.), aff'g (1987), 47 D.L.R.(4th) 18, 43 C.C.L.T. 62 (Ont. H.C.).

185 (1987), 35 D.L.R. (4th) 419, [1987] 2 W.W.R. 669 (Alta C.A.) [hereinafterC.(J.S.)].

186 The case concerned an abortion which the pregnant minor's parents wereattempting to prevent her from having. See also Gillick v. West Norfolk and WisbechArea Health Authority (1985), [1986] A.C. 112, [1985] 3 ALL E.R. 402, where theHouse of Lords also upheld the right of a doctor to treat a minor without parentalconsent.

187 Supra, note 140.188 R.S.N.S. 1967, c. 42, s. 96(5).

1991]


of a particular legal service", Le Dain J. went on to hold that "he musthave a sufficient knowledge of the fundamental issues or principles oflaw applicable to the particular work he has undertaken to enable himto perceive the need to ascertain the law on relevant points. 1' 89 In otherwords, it appears that where a solicitor fails to know the law it is verylikely there will be liability in negligence for either the solicitor's lackof knowledge or research. 190 The Supreme Court also reaffirmed its standthat, barring any legislative provisions to the contrary, the limitationperiod in tort begins to run from the date that the damages becamereasonably discoverable, and not on the date that the damagesoccurred.1 91 Mr Justice Le Dain noted that this applies both to propertydamage and pure economic loss claims; whether it applies to personalinjury claims as well is still unclear. 92

The question of the solicitor's liability to third parties who are notclients but suffer economic losses as a result of the solicitor's negligencein the performance of services for a client is an important and unsettledaspect of legal malpractice claims. The disappointed beneficiary caseshave widened the solicitor's liability but, as we have seen, the extent towhich the courts will allow tort law to protect the economic interests ofnon-privity claimants is still very uncertain. Courts which take a broadview of the elements of the special relationship of proximity whichunderlies the issue of duty have allowed recovery. 93 Other judgmentshave held, however, that in the absence of a relationship of activereliance, or where the solicitor's services were not intended to benefitthird parties, the solicitor will not be held responsible. 194 It is my opinionthat the law's principal concern in this area should be the protection ofthe relationship between solicitors and their clients. Tort duties to thirdparties should not be recognized where these duties will conflict withthe solicitors' contractual obligations. As well, in the ordinary course ofcommercial and business relations those who wish to avail themselvesof the services of professionals ought to be required to contract for these

189 Supra, note 140 at 524.190 See also Elcano Acceptance, supra, note 166.191 This was the position taken by the Court in Kamloops, supra, note 52,

discussed in the last survey.192 See Foley v. Greene (1990), 4 C.C.L.T. (2d) 309 (Nfld S.C.) where the

Court applied the reasonable discoverability rule to a case of personal injuries, andwent even further by holding that a new cause of action arises every time newinjuries suffered in the original accident manifest themselves.

193 See, e.g., Klingspon v. Ramsay, [1985] 5 W.W.R. 411, 65 B.C.L.R. 132(S.C.), where a solicitor who was acting for a company was liable to an investorwho was reassured by the solicitor that her investment was sound; Bowles v.Johnston, [1988] 4 W.W.R. 242, 53 MAN. R. (2d) 81 (Q.B.), where a vendor'ssolicitor owed a duty to purchasers to warn them of dangers involved in landtransactions.

194 See especially Abacus Cities, supra, note 93; and Kamahap, supra, note 89.

[Vol. 23:1


services, and not be permitted to piggy-back onto the contractual ser-vices provided to others. 195

F. Products Liability

The duty imposed upon manufacturers to warn consumers of thedangers associated with certain products, and even of the need on theconsumers' part not to misuse or abuse products, has remained animportant aspect of products liability law. In Buchan v. Ortho Pharma-ceutical Ltd,196 the decision of the trial Court to find the manufacturerof a birth-control pill liable to the plaintiff for a stroke brought upon byuse of the pill was affirmed by the Ontario Court of Appeal. 197 Thejudgment, by Robins J.A., fully elaborated upon this aspect of the law.

The nature of the manufacturer's duty to warn was described asfollows. The warning must be adequate, clearly and understandablycommunicated as to the nature and extent of the risk, its terms shouldbe commensurate with the gravity of the risk, and the warning shouldnot be neutralized or negated by collateral efforts on the manufacturer'spart. It is a continuous one, even extending to warning of dangersdiscovered after the sale and delivery of the product. The warning neednot always be communicated directly to the consumer of the product. If,for example, the product will be used under the supervision of experts,or will be examined prior to its use by a "learned intermediary", awarning to the expert or intermediary may suffice. 198

The "learned intermediary" rule was one of the principal issues ofthe Buchan case, concerning, as it did, a prescription, rather than an"over the counter" drug. In the case of prescription drugs, the "learnedintermediary" rule would suggest that as long as the drug's manufacturerhad properly communicated the required information concerning theproduct to the prescribing doctor, its duty would be satisfied. In the caseof oral contraceptives, however, some American courts have held that awarning to the doctor is not sufficient. This is because of the nature ofbirth-control pills, including, among other factors, that the consumeractively participates in the decision to use oral contraceptives and theuser can be easily warned of the drug's risks by the manufacturer. Thetrial judge in Buchan had held that the "learned intermediary" rule did

195 The same issues arise with respect to other professionals providing finan-cial services and advice. See, e.g., McPherson v. Shachter (1989), 1 C.C.L.T. (2d)65 (B.C.S.C.), where an auditor of a public company was found to owe no duty ofcare to potential investors; Dixon v. Deacon Morgan McEwan Easson (1989), 64D.L.R. (4th) 441, [1990] 2 W.W.R. 500 (B.C.S.C.), where there was found to beinsufficient proximity between auditor and investor; and in England, see CaparoIndustries, supra, note 20, where an investor was held to owe no duty to a potentialinvestor.

196 (1986), 25 D.L.R. (4th) 658,35 C.C.L.T. 1 (Ont. C.A.) [hereinafter Buchancited to D.L.R.].

197 The trial judgment at (1984), 46 O.R. (2d) 113, 28 C.C.L.T. 233 (H.C.),was discussed in the last tort survey, supra, note 1 at 392.

198 See Buchan, supra, note 196 at 673.

1991]


not apply to oral contraceptives. Mr Justice Robins, on the other hand,accepted, for the purposes of his judgment, that it did. He thus examinedthe case by inquiring into whether the defendant had adequately com-municated the information concerning the drug to the prescribing doc-tors. After carefully examining the information given, and comparing itto information given to doctors concerning the product in the UnitedStates, Robins J.A. concluded that the defendant had not met its duty ofdisclosure.1 99 Having decided this, however, Mr Justice Robins, in anobiter dictum, agreed with the trial judgment that the "learned interme-diary" rule did not apply to oral contraceptives. Robins J.A. emphasizedcertain features of oral contraceptives which led him to this conclusion.Such contraceptives are taken voluntarily not for therapeutic, diagnostic,or curative reasons, but usually for socio-economic ones.200 Warningscan usefully and easily be given to women by manufacturers to betterenable them to decide whether to adopt this method of birth control.

Other aspects of Robins J.A.'s judgment are noteworthy. First, heheld that in the case of the "learned intermediary" rule, once the plaintiffhas proved that the manufacturer failed to properly inform the interme-diary of the drug's risks, it can be inferred that this negligence contrib-uted to the doctor's decision to prescribe the drug. If the defendantcontends that the doctor's decision to prescribe would not have beendifferent even if the manufacturer's duty to inform had been observed,the burden of proving this rests on the defendant.20 1 A second matterconcerned the nature of the causation requirement where a plaintiffalleges that had she been informed of the risks, she would not have takenthe drug. Robins J.A. held that unlike the objective or modified objectivetest of causation used in Reibl, the test in products liability cases is asubjective one. The plaintiff need prove only that she would not havetaken the drug if informed of its risks. This is a question of fact whichmust be decided based on the evidence. 20 2

Although the Buchan case was the most interesting "failure towarn" case decided in the survey period, it is interesting to note thatmost of the other reported products liability cases also involved allega-tions of the manufacturer's failure to warn.2 0 3 It is interesting to specu-late as to why this is so. The reason might simply be a reflection of thefact that virtually all products involve some danger or risk of harm intheir use or misuse. Plaintiffs injured by products, and being unable toestablish negligence in design or manufacture, have found in the

199 Ibid. at 679.200 Ibid. at 688.201 Ibid. at 682.202 Ibid. at 687.203 See, e.g., Meilleur v. U.N.I.-Crete Canada Ltd (1985), 32 C.C.L.T. 126,

15 C.L.R. 191 (Ont. H.C.); Smithson v. Saskem Chem., [1986] 1 W.W.R. 145, 34C.C.L.T. 195 (Sask. Q.B.); Nicholson v. John Deere (1986), 58 O.R. (2d) 53, 34D.L.R. (4th) 542 (H.C.); Siemens v. Pfizer, [1988] 3 W.W.R. 577, 51 MAN. R. (2d)252 (C.A.); and Moore v. Cooper Can. Ltd (1990), 2 C.C.L.T. (2d) 57 (Ont. H.C.)as am. at 95.

[Vol. 23:1


manufacturer's expanding duty to warn an easier avenue for tort com-pensation. Courts must not allow this duty to become a strict liabilitysolution for those injured by reasonably designed or manufactured prod-ucts.

G. Proof of Causation: The Death of McGhee

An essential component of the negligence action is proof of causa-tion. In a fault-based compensation system, the ability to connect thewrongful conduct of the defendant to the injury suffered by the plaintiffis an absolute requirement.204 It is causation, both factual and legal,which supplies this connection. 205

Establishing a sufficient causal connection between the defendant'smisconduct and the plaintiff's injury to warrant liability is generally nota difficult matter for the courts.206 This is evidenced by the fact that veryfew reported tort cases turn on issues of cause-in-fact. Courts have beenwilling to rely on their experience, intuition and common sense to decidequestions of causal link, and have eschewed notions that this is aquestion of either "scientific precision" 207 or metaphysical analysis. Thetest generally used is the "but for" test. As long as the plaintiff canconvince the trier that the injury suffered would probably not haveoccurred had it not been for the defendant's negligent conduct, the casefor causation is established.

Most of the cases which have dealt with the issue of causationduring this survey period have involved the applicability of the testestablished in McGhee.208 As discussed in the last survey, in McGheethe House of Lords decided that where the defendant's negligence hasmaterially increased the risk of the type of injury suffered by theplaintiff, the negligence will be deemed to have been a material contri-

204 Which is not to say that a wrongful act causative of damage is not the onlybasis for the obligation to compensate. One might argue, for example, that theequitable redistribution of wealth, the capacity to bear or redistribute a loss, themoral or religious obligation to share or perform charity, will justify requiringindividuals to help others. These, however, are not the bases of tort compensation.

205 As stated by Sopinka J. in Snell v. Farrell (1990), 72 D.L.R. (4th) 289 at298-99, 110 N.R. 200 at 215 (S.C.C.) [hereinafter Snell], "causation is an expressionof the relationship that must be found to exist between the tortious act of thewrongdoer and the injury to the victim in order to justify compensation of the latterout of the pocket of the former."

206 This is so, despite the jurisprudential furor which surrounds the issue ofcausation. Many scholars have written about the theoretical difficulties which plaguethe causal inquiry. Quite different points of view prevail concerning the nature ofthe causation problem. Is it a question of objective or scientific fact, or a policyand value-laden enterprise? See S.N. Pincus, Progress on the Causal Chain Gang:Some Approaches to Causation in Tort Law and Steps Toward a Linguistic Analysis(1986) 24 OSGOODE HALL L.J. 961, and R.W. Wright, Causation in Tort Law (1985)73 CALIF. L. REV. 1737, for analysis and review of the issues and writings on thetopic.

207 See Sopinka J. in Snell, supra, note 205.208 Supra, note 3.

1991]


bution to that injury and proof of causation will have been established. 20 9

The defendant can only succeed in such an event by proof that the injuryprobably was not caused by his or her negligent conduct. Since negligentconduct, by definition, involves the creation of an unreasonable risk ofinjury, the presumption of causation which arises when an injury withinthe risk eventuates effectively negated the element of causation from thenegligence action. This was a radical proposition, and is one which hasnot survived the conservative trend in tort during this survey period.

The principle established in McGhee typically arises in those caseswhere the evidence indicates a number of possible causes of theplaintiff's injury but no probable ones. 210 Moreover, it is impossible toestablish any antecedent event as the one which probably caused theinjury due to the nature of the injury.211 These conditions frequentlyarise in medical negligence cases.2 12 The dilemma arises because,although the court may know that the defendant acted improperly in away which might have produced the plaintiff's injury, the evidencecannot establish any more than that.

209 Ibid. at 1010.210 A possible cause is one whose statistical probability as a cause of the injury

is less than 50%. A probable cause is one whose statistical probability as a causeof the injury is greater than 50%. Traditionally, the burden of proof in tort is uponthe preponderance of the evidence, or the balance of probabilities. Thus, where thestatistical probability that the defendant's conduct was a necessary antecedent ofthe plaintiff's injury is over 50%, cause has been proved, and the plaintiff is entitledto receive 100% of the damages suffered. Where the statistical probability is lessthan 50% cause has not been proved, and the plaintiff is entitled to receive nothing.In J.G. Fleming, Probabilistic Causation in Tort Law (1989) 68 CAN. BAR REV. 661at 662, the author notes that sample testing suggests that judges and juries understandthe balance of probabilities to require much more than 51% - more like 75%.

211 What "impossible" in this context means is another issue. Is it a questionof practical impossibility, i.e. the real cause can be discovered but it would cost alot more money than the accident is worth to determine it, or of scientific impos-sibility, i.e. no amount of time or expenditure of money can ever determine the realnecessary antecedent causes? In Letnik v. Toronto (Municipality of Metro), [1988]2 F.C. 399, 44 C.C.L.T. 69 (F.C.A.D.) [hereinafter Letnik cited to F.C.], a ship sanktwo weeks after a collision. The cause of the sinking was unknown. The plaintiffsargued McGhee and the defendants countered that there was no evidentiary gapsince all the plaintiffs had to do was to raise the ship to discover why it sank.MacGuigan J.A. agreed with the plaintiffs' contention that as a matter of economicpracticality it was virtually impossible to discover the cause of sinking. The costof raising the ship was "so completely disproportionate as to be impracticable",ibid. at 421. See also Nowsco Well Service v. Canadian Propane Gas & Oil (1981),7 SASK.R. 291 at 314, 16 C.C.L.T. 23 at 47 [hereinafter Nowsco Well], where BaydaJ.A. stated that "if causation is overwhelmingly difficult to prove or impossible toprove then it is a matter of public policy or justice that it is the creator of the riskwho should be put to the trouble of hurdling the difficulty or bearing the conse-quences."

212 Almost all of the recent cases where the principle established in McGheehas arisen are medical negligence cases. Occasionally, however, an environmentalpollution case, product liability case, or some other type of case, raises the McGheeprinciple.

[Vol. 23:1


Tort cases decided in the survey period indicate that the courts havehad considerable difficulty in determining what McGhee actuallydecided and thus when to apply it. In England, the House of Lords hasretreated from the McGhee principle. In Wilsher,213 Lord Bridge reversedlower court decisions which had applied McGhee in the following cir-cumstances. The infant plaintiff, who was born prematurely, developedan incurable eye condition. It was found by the trial judge and Court ofAppeal that one of the possible causes of the plaintiff's condition wasexcessive oxygen which had been negligently administered to him bythe defendants. 214 Based on this finding, McGhee was applied and theplaintiff's action maintained. Mustill L.J., in the Court of Appeal, stated:

If it is an established fact that conduct of a particular kind creates a riskthat injury will be caused to another or increases an existing risk thatinjury will ensue, and if the two parties stand in such a relationship thatthe one party owes a duty not to conduct himself in that way, and ifone party does conduct himself that way, and if the other party doessuffer injury of the kind to which the injury related, then the first partyis taken to have caused the injury by his breach of duty, even thoughthe existence and extent of the contribution made by the breach cannotbe ascertained. 215

In reversing the decision, Lord Bridge held that the judgment inMcGhee "laid down no new principle of law whatever" 21 6 and did notpermit a finding of causation merely on the basis that the defendant'snegligent conduct was one of a number of possible causes of theplaintiff's injury. According to Lord Bridge, the House of Lords' judg-ment in McGhee was based upon a process of inferential reasoning,which allowed their Lordships to conclude, as a matter of common sense,that the defendant's negligence probably contributed to the plaintiff'sillness. The evidence in Wilsher, on the other hand, was inconclusiveand did not permit such an inference. A new trial to rehear the evidencewas ordered.2 17

213 Supra, note 172.214 This finding was challenged by the House of Lords. Lord Bridge held that

the trial judge had misapprehended the evidence and he doubted the Court ofAppeal's ability to resolve the issue.

215 Wilsher, supra, note 172 at 829 (C.A.).216 Ibid. at 881 (H.L.).217 Two other English cases decided in the survey period before Wilsher are

of note. In Kay v. Ayrshire and Arran Health Board, [ 1987] 2 ALL E.R. 417 (H.L.),the Lords reversed a trial judgment in the plaintiff's favour. The Lords held thatsince the evidence did not support the conclusion that the defendant's negligencewas a possible cause of the plaintiff's injury, the action ought to have been dismissedwithout the need even to consider the principle of McGhee. In Hotson v. EastBerkshire Area Health Authority, [1987] A.C. 750, [1987] 2 ALL E.R. 909 (H.L.),the Lords reversed a decision to award the plaintiff 25% of his damages, which hadbeen based on evidence that there was a 25% chance that the plaintiff would haverecovered had it not been for the defendant's negligence. The Lords held that theevidence proved, on the balance of probabilities, in this case 75%, that the plaintiff'sinjury was not caused by the defendant's negligence, and thus the action ought tohave been dismissed.

1991]


The Supreme Court of Canada has also taken the opportunity toconsider the applicability of McGhee, with again less than completelyconclusive results. In Snell,2 18 the plaintiff underwent an eye operationto remove cataracts. After the surgery, it was discovered that the plaintiffwas blind in the eye which had been treated. One of the possible causesof the blindness was bleeding which had occurred during the surgery. Itwas found that the defendant doctor had been negligent in havingcontinued with the operation despite knowledge that some bleeding wasoccurring. The trial judge, having found that the bleeding was one ofthe possible causes of the plaintiff's disability, applied McGhee andshifted the onus of disproving causation to the defendant. The decisionto apply McGhee was affirmed by the Court of Appeal. Mr JusticeSopinka in the Supreme Court's decision noted that Canadian courtshave adopted either the reverse onus approach, 21 9 or the Wilsher infer-ential approach. 220 While not totally discounting the utility or legitimacyof these alternative approaches, 22 1 Mr Justice Sopinka's general conclu-sion was that ordinary causation principles, properly applied, wereadequate to the task of dealing with the facts of Snell, and by implication,most tort cases.222 Significantly, however, these principles were cast invery flexible terms. Sopinka J. noted, for example, that causation neednot be determined by scientific precision, but is a practical question offact which can best be answered by ordinary common sense rather thanabstract metaphysical theory. 223 Even questions such as the allocationof the burden of proof and standard of proof were described as flexible.Sopinka J. emphasized the principle that where the facts of a case lieparticularly within the knowledge of the defendant, very little affirma-

218 Snell v. Farrell (1990), 72 D.L.R. (4th) 289, 110 N.R. 200 (S.C.C.)[hereinafter Snell], affg (1988), 84 N.B.R. (2d) 401, 8 A.C.W.S. (3d) 388 (C.A.),affig (1986), 77 N.B.R. (2d) 222, 40 C.C.L.T. 298 (Q.B.).

219 Sopinka J. cited Powell v. Guttman (1978), 89 D.L.R. (3d) 180, [1978] 5W.W.R. 228 (Man. C.A.); Letnik, supra, note 211; Dalpe v. City of Edmunston(1979), 25 N.B.R. (2d) 102, 51 A.P.R. 102 (C.A.); and Nowsco Well, supra, note211.

220 Sopinka J. cited Rendall v. Ewert (1989), 60 D.L.R. (4th) 513, 38 B.C.L.R.(2d) 1 (C.A.); Kitchen v. McMullen (1989), 62 D.L.R. (4th) 481, 100 N.B.R. (2d)91 (C.A.), leave to appeal den'd (1990), 65 D.L.R. (4th) viii, 103 N.B.R. (2d) 270;Westco Storage v. Inter-City Gas Utilities Ltd, [1989] 4 W.W.R. 289, 59 MAN. R.(2d) 37 (C.A.); and Haag v. Marshall (1989), 61 D.L.R. (4th) 371, [1990] 1 W.W.R.361 (B.C.C.A.).

221 Sopinka J. stated, supra, note 205 at 299, that "[i]f I were convinced thatdefendants who have a substantial connection to the injury were escaping liabilitybecause plaintiffs cannot prove causation under currently applied principles, I wouldnot hesitate to adopt one of these alternatives."

222 An interesting aspect of Sopinka J.'s judgment was the linkage which hedrew between the "liberalization of rules for recovery in malpractice suits" and themedical malpractice insurance crisis. I have suggested previously that the liabilityinsurance crisis, no matter its real cause, would have an impact on tort liabilityrules, and would lead to the restriction of liability. Sopinka J.'s comments providesome evidence of this trend. See Negligence, supra, note 183.

223 Paraphrasing Lord Salmon in Alphacell Ltd v. Woodward, [1972] A.C. 825at 847, [1972] 2 ALL E.R. 475 at 490 (H.L.).

[Vol. 23:1


tive evidence on the plaintiff's part will justify the drawing of aninference of causation in the absence of evidence to the contrary. Thisprinciple was noted to be particularly relevant to medical malpracticecases which give rise to the majority of McGhee-principle decisions.Having said all of this, it is not surprising that Sopinka J. found that theevidence in Snell supported an inference that it was the defendantdoctor's negligence which caused the plaintiff's injury, and, withoutMcGhee, upheld the lower court decisions. 224

Where do Wilsher and Snell leave McGhee and the issue of causa-tion? It is suggested that from one perspective McGhee is dead. Thenaked principle, that merely proving the defendant's negligence was apossible cause of the plaintiff's injury will either create an inference ofnegligence or shift the onus of disproof to the defendant, has beenrejected by the highest authorities in both England and Canada. How-ever, from another perspective the intention behind McGhee, that is, toloosen principles of proof to meet difficult causation dilemmas, is verymuch alive. In both McGhee and Snell, the courts were prepared to acceptinferences of negligence based upon evidence which seemed, at least tothe triers of fact, to be quite inconclusive regarding the issue of causa-tion. Thus, by relying on inferential reasoning and common sense andrejecting rigidity, the courts can accomplish the purpose of McGhee.225

H. Multiple Causes

Questions of multiple cause continue to raise very difficult issuesfor the courts. How the courts should apportion the liability for an injuryamong the several parties potentially responsible for causing it is, as therecent cases illustrate, by no means clear.

Where wrongdoers are joint tortfeasors, each is fully responsiblefor the injuries caused by everyone else. One category of joint tort iswhere two or more persons act together in furtherance of a common plan

224 The "inferential reasoning" approach approved by Sopinka J. in Snell, andby the Lords in Wilsher, explains several other judgments decided in the surveyperiod which expressly applied the reverse onus proposition of McGhee. See, e.g.,Letnik, supra, note 211, where MacGuigan J.A. applied McGhee in a case althoughhe stated, ibid. at 420, that he found the "inference overwhelmingly probable at thepractical level" that the defendants' loss was caused by the plaintiffs' negligence.Using Sopinka J.'s analysis in Snell, this would satisfy the test of causation on thebasis of ordinary tort principles. See also Jacks v. Dunnett (1987), 43 C.C.L.T. 54(B.C.S.C.), and Rayner, supra, note 175, where I would make the same argument.

225 Another important recent Supreme Court of Canada judgment dealing withcausation is Lawson v. Laferriere (1991), 78 D.L.R. (4th) 609, 123 N.R. 325 (S.C.C.)[hereinafter Lawson cited to D.L.R.]. The Court decided that under Quebec civillaw, a plaintiff cannot be compensated for the "loss of a chance" of avoiding harmwhich was actually suffered. The plaintiff must prove that her injury was causedby the defendant's fault, it not being sufficient to establish only that had thedefendant not been negligent, there was a possibility that the injury could have beenavoided. Although decided according to Quebec law, it is likely, in my opinion,that similar conclusions will be applied to the common law: see especially Lawson,supra, at 658-59, per Gonthier J., for a statement of the majority's observations.

1991]


during the course of which a tortious act is committed. It is suggested,however, that merely participating in a common venture does not convertall the actors into joint tortfeasors, if the common venture is itself notunlawful and there is no reasonable likelihood of a tort being committedduring its commission.22 6 Conversely, where the joint activity is in itselfwrong, any act done by any of the parties in furtherance of it willimplicate all the actors in the wrongdoing. This approach was adoptedin Newcastle (Town) v. Mattatall.22 7 The New Brunswick Court ofAppeal affirmed a trial judgment which held that three boys who brokeinto the town rink for the purpose of committing a theft were eachresponsible for a fire set by one of them. This was a case of personsengaging in a common action for a wrongful, as opposed to a lawful,purpose.

One of the consequences of a joint tort is that, at common law, ajudgment entered against one joint tortfeasor prevents the plaintiff fromproceeding against the others, even if the judgment remains unsatisfied.Legislation has been enacted in some jurisdictions to change this rule.However, in Scarmar Constructions Ltd v. Contracting Co.,22 8 the Courtof Appeal decided that the British Columbia Law and Equity Act,22 9

while abolishing the "one judgment" rule, only did so if the tortfeasorswere sued in the same proceeding. Thus, where the plaintiff sued B inone proceeding, entered into a settlement agreement with her andobtained an enforcing judgment which B later failed to satisfy, he couldnot then obtain a judgment against the joint tortfeasor G who had beensued in a separate proceeding.

The real problems associated with multiple wrongdoers arise whencourts must interpret and apply the various provincial apportionmentstatutes. Cases decided during this survey period illustrate some of thethornier questions. In Siegl v. Sylvester,230 the B.C. legislation was heldto allow contribution between two tortfeasors, one of whom was liablein negligence and the other for an intentional tort. In Sorenson v.Abrametz,231 the Court correctly rejected a claim for contribution madeby a lawyer against a motorist. The lawyer's negligence had resulted inthe failure of his client's motor vehicle claim against the motorist. Whenthe client sued his lawyer for damages, the lawyer claimed as a thirdparty the allegedly negligent motorist. The Court held that the damagecaused by the lawyer to his client, i.e. the lost action, was not the same

226 See, e.g., Keough v. Royal Canadian Legion, [1978] 6 W.W.R. 335, 7C.C.L.T. 146 (Man. C.A.). See L.N. Klar, Annot.: Keough v. Royal Canadian Legion(1979) 7 C.C.L.T. 147.

227 (1987), 78 N.B.R. (2d) 236, 37 D.L.R. (4th) 528 (Q.B.), aff'd (1988), 87N.B.R. (2d) 238, 52 D.L.R. (4th) 356 (C.A.).

228 (1989), 61 D.L.R. (4th) 328, 38 B.C.L.R. (2d) 188 (C.A.) [hereinafterScanmar Constructions], rev'g (1987), 42 D.L.R. (4th) 565, 16 B.C.L.R. (2d) 215(S.C.).

229 R.S.B.C. 1979, c. 224, s. 48.230 (1987), 47 D.L.R. (4th) 97 (B.C.S.C.).231 (1987), [1988] 1 W.W.R. 609, 64 SASK. R. 224 (C.A.).

[Vol. 23:1


as the damage caused by the motorist, i.e. personal injury and propertydamage, and that a claim for contribution accordingly could not be made.

Whether all plaintiffs should have joint and several judgmentsagainst concurrent wrongdoers who are not joint tortfeasors remains amatter of contention. The practice in most provinces is to grant plaintiffs,whether they are innocent or contributorily negligent, a joint and severaljudgment against the wrongdoing defendants. This has recently beenaffirmed both in Alberta2 32 and Saskatchewan. 233 British Columbia usesa several-judgment approach in the case of contributorily negligentplaintiffs. What is even more interesting, however, are recent cases inBritish Columbia which have held that when considering the apportion-ment of blame, even the fault of persons who were not parties to theaction, either as third parties or defendants, can be considered. In Wellsv. McBrine,234 the defendant motorist negligently struck and very seri-ously injured the plaintiff pedestrian. Part of the fault for the incidentwas found to reside with unnamed troublemakers who had threatenedand harassed the defendant motorist, blocking his way as he attemptedto leave the scene of a party in his car. The jury found that the plaintiffherself was 20% at fault, the defendant motorist 40% at fault, and thetroublemakers, who were not parties to the action, 40% at fault. Sincecourts in British Columbia award several and not joint judgments infavour of contributorily negligent plaintiffs, the result was that theplaintiff could not collect 60% of her damages from the defendant, beingforced to absorb not only a 20% reduction for her own negligence, butan additional 40% for the negligence of the parties who had not beensued. The British Columbia Court of Appeal upheld this judgment,although in the subsequent case of Reekie v. Messervey235 it held thatthe fault of individuals who are not parties to an action can be consideredonly in the case of contributorily negligent and not innocent plaintiffs.236

This development in British Columbia is unfortunate. If the several-judgment method is to be used in the case of contributorily negligentplaintiffs, all the wrongdoers, including the defendants, ought to berequired to assume the risk that some defendants may not be able tosatisfy the judgments obtained against them, or that some persons, whowere not parties to the action, may have been partly to blame for theplaintiff's injuries. The negligent plaintiff should not be required toassume these risks alone.

232 See Campbell Estate v. Calgary Power Ltd (1988), [1989] 1 W.W.R. 36,46 C.C.L.T. 229 (Alta C.A.).

233 See Bisheimer v. Bryce (1990), [1990] 3 W.W.R. 213, 82 SASK. R. 111(Q.B.).

234 (1988), 54 D.L.R. (4th) 708, [1989] 2 W.W.R 695 (B.C.C.A.).235 (1989), 59 D.L.R. (4th) 481, 36 B.C.L.R. (2d) 316 (C.A.).236 This is because innocent plaintiffs are entitled to a joint and several

judgment and need not be concerned if other parties were at fault.

1991]


I. Remoteness

How far should a negligent defendant's liability and financialresponsibility for an accident extend? Should tortfeasors be liable if theirvictims commit suicide as a result of their initial injuries, if relatives ofinjured persons suffer nervous shock, if thin skulls are fractured, if thenegligence of doctors exacerbate the original injuries, if injured personssuffer more significantly due to second accidents, and so on? These typesof questions raise issues of remoteness or proximate cause in the actionfor negligence.

Judgments decided in the survey period continue to illustrate thepoint that while factors such as judicial precedent, the foreseeability,probability, and seriousness of the injuries suffered, the nature anddegree of the defendant's wrongdoing, the reasonableness of the victim'sresponses, the relative financial positions of the parties and societalvalues will help resolve remoteness issues such as those noted above,the question of remoteness or proximate cause is still one of the negli-gence action's most unpredictable elements. When judges suggest, astests of remoteness, instinct and intuition, 37 one sees the high level ofuncertainty in this area.

The nervous shock cases illustrate the difficulty of knowing whereto draw the line. The fundamentals for the recovery of nervous shockare generally agreed upon. Nervous shock is a type of injury for whichdamages can be recovered in a negligence action.238 The injury must bea true shock, and not merely grief, sorrow or distress. 239 The shock mustbe accompanied by a recognizable physical or psychological illness.240

The injury must have been reasonably foreseeable. What, however, does"reasonably foreseeable" imply in the context of nervous shock claims?As discussed in the last survey,241 the courts have traditionally restricted

237 See, e.g., Watkins L.J.'s judgment in Lamb v. London Borough of Camden,[1981] 2 W.L.R. 1038 at 1054-55, [1981] 2 ALL E.R. 408 at 421 (C.A.).

238 It is not a "substantive tort", as suggested by earlier cases, but merely ahead of damage. See, e.g., Turton v. Buttler (1987), 85 A.R. 193, 42 C.C.L.T. 74(Q.B.), and Anderson v. St. Pierre (1987), 46 D.L.R. (4th) 754, 50 MAN. R. (2d)288 (Q.B.), where this point is made.

239 See Altia v. British Gasplc, [1987] 3 W.L.R. 1101 at 1110, [1987] 3 ALLE.R. 455 at 462 (C.A.), where Bingham L.J. suggests that the injury claimed ispsychiatric damage which includes all relevant forms of mental illness, neurosisand personality change. In Beecham v. Hughes, [1988] 6 W.W.R. 33, 27 B.C.L.R.(2d) 1 (C.A.) [hereinafter Beecham cited to B.C.L.R.], the Court disallowed a claimfor a severe reactive depression. It is not distress or sorrow which is being com-pensated for, but the shock of experiencing or witnessing an accident.

240 See Heighington v. Ontario (1987), 60 O.R. (2d) 641, 41 C.C.L.T. 230(H.C.), and Beaulieu v. Sutherland (1986), 35 C.C.L.T. 237 (B.C.S.C.), two judg-ments decided in this survey period which affirm this point. See, however, McDer-mott v. Ramadonovic Estate (1988), 27 B.C.L.R. (2d) 45, 44 C.C.L.T. 249 (S.C.),where Southin J. awarded the plaintiff $20,000 for the emotional pain of havingseen her parents killed in an automobile accident, even though there was no"recognizable psychiatric illness".

241 Supra, note 1 at 375.

[Vol. 23:1


recovery to those claimants who were actually at the scene of anaccident, or who arrived there shortly thereafter and witnessed theaftermath. Recently, two cases, one English242 and the other Austra-lian,243 extended recovery to plaintiffs who although not present at theaccident site, saw injured family members at the hospital shortly there-after.

The question of how far liability for nervous shock should extendhas been carefully considered by the British Columbia Court of Appeal.Although not dealing with a case of true nervous shock, but rather a caseof a reactive depression following' an accident, the Court in Beecham244

reaffirmed the importance of restricting nervous shock claims. Accord-ing to Taggart J.A., "reasonable foreseeability" must be limited by"causal proximity". Lambert J.A. stated that the question of recoverymust be based on consideration of "foreseeability, proximity, causationand remoteness". "Causal proximity" must be considered along with"temporal proximity", "geographical proximity" and "emotional prox-imity". The use of these terms indicates the courts' ongoing struggle toarticulate criteria which will restrict nervous shock recovery to a limitednumber of claimants.2 45

One other remoteness case decided in the survey period ought tobe noted. In Wright Estate v. Davidson,246 McKenzie J. allowed thedependants of the deceased, who had committed suicide nine monthsafter her car accident, to recover damages for her death. While concedingthat he was bound by the earlier case of Swami v. Lo 2 4 7 , which distin-guished between suicides committed by sane and insane persons,2 48

McKenzie J. held that the facts of the instant case satisfied the require-ments of recoverability. More interestingly, McKenzie J. seemed toprefer the view that since human beings are by nature "very fragilecreatures", it is foreseeable that "anything might happen to a person whois injured in an accident. '249

242 McLoughlin v. O'Brian (1982), [1983] 1 A.C. 410, [1982] 2 ALL E.R. 298(H.L.). This case was discussed in the last tort survey.

243 Jaensch v. Coffey (1984), 58 A.L.J.R. 426, 54 A.L.R. 417 (H.C.).244 Supra, note 239.245 See also Rhodes Estate v. C.N.R. (1989), 36 B.C.L.R. (2d) 1, 49 C.C.L.T.

64 (S.C.), rev'd (1990), 50 B.C.L.R. (2d) 273 (C.A.). The Court of Appeal reverseda trial judgment which would have permitted a claim for nervous shock to goforward, even though the plaintiff was not at the scene of a train crash.

246 (1989), 37 B.C.L.R. (2d) 292, 49 C.C.L.T. 116 (S.C.) [hereinafter Wrightcited to C.C.L.T.].

247 (1989), 16 B.C.L.R. 21, 11 C.C.L.T. 210 (S.C.).248 The essence of the distinction is this: if the accident renders a person insane

and this leads to a suicide, the suicide is not too remote. If the suicide is the act ofa sane person, however, it is too remote.

249 McKenzie J. in Wright quoted approvingly at 131 from Hayes Estate v.Green (1983), 30 SASK. R. 166 (Q.B.).

1991]


J. Defences

1. Contributory Negligence

The plaintiff's negligence which has been a contributing cause tohis or her injuries is the principal defence to a negligence claim. Gen-erally speaking, there are few difficult issues of law or fact involved inthe defence's application.

In order to be contributory, the plaintiff's fault must satisfy therequirements of being both a factual and proximate cause of the injuriessustained. Usually, the plaintiff's negligence will have contributed tothe accident which resulted in the injuries. As the seat-belt casesdemonstrate, however, negligence which contributes not to an accident,but to injuries, is also contributory. This is clearly consistent withprovincial apportionment statutes which define contributory negligencewith respect to the damage or loss suffered by a person.2 1

0

A few aspects of the contributory negligence defence discussed inthe survey period ought to be noted. The trend has been towards awidening of the defence's application, contributory negligence no longerbeing restricted to the ordinary negligence action. Thus, it was appliedto a case where one golfer negligently struck the plaintiff, another golfer,with a ball.2 5' The plaintiff was contributorily negligent for having stoodin front of the defendant and for having failed to warn him.2 52 It wasalso applied to a case of a medical battery.2 53 Whether it can be appliedoutside of tort law raises different issues. In United Services Funds(Trustees) v. Richardson Greenshields of Canada Ltd,2 54 Southin J.reviewed the history of contributory negligence legislation and con-cluded that the various enactments were not intended to create a newdefence of contributory negligence but merely to ameliorate the harsheffects of the existing contributory negligence defences at common law.Thus, if the common law did not recognize the fault of the claimant asa defence to a specific type of action, the legislation did not alter this.In this respect, Southin J. concluded that the claimant's fault was not a

250 It was stated by Angers J.A. in Bulmer v. Horsman (1987), 82 N.B.R. (2d)107 at 114, 42 C.C.L.T. 220 at 223 (C.A.), that "apportionment is based on faultwhich causes or contributes to the accident." With respect, I would not agree withthis statement.

251 See Finnie v. Ropponen (1987), 40 C.C.L.T. 155 (B.C.S.C.).252 The Court viewed the case as a negligence action, although the action could

have been seen as a negligent trespass. In either case, contributory negligence wouldbe an available defence.

253 See Brushett v. Cowan (1987), 40 D.L.R. (4th) 488, 42 C.C.L.T. 64 (NfldS.C.T.D.), rev'd in part (1990), 83 NFLD & P.E.I.R. 66, 69 D.L.R. (4th) 743 (C.A.).The trial judge held that the defendant doctor's decision to perform a bone biopsywas not consented to by the plaintiff, and thus, a battery had been committed. Theplaintiff's post-operative conduct, however, was negligent and her damages werereduced. The Court of Appeal reversed the trial judgment on the question of thebattery, finding that there indeed had been consent.

254 (1988), 48 D.L.R. (4th) 98, 22 B.C.L.R. (2d) 322 (S.C.).

[Vol. 23:1


defence to a defendant's fraud, and that accordingly contributory negli-gence was inapplicable in an action for fraud or breach of fiduciary duty.The defence, however, generally has been applied in breach of contractcases. 255

Where a plaintiff's fault was not a proximate cause of the injuriessustained, it cannot be considered contributory, and should be ignored. 256

Sometimes this rather straightforward point becomes entangled in thecommon law rule of "last clear chance". Although the doctrine of lastclear chance played a useful role prior to the introduction of the appor-tionment legislation as a way of avoiding the "stalemate solution", whichprevented a negligent plaintiff from recovering any of his or her dam-ages, it is an unnecessary doctrine in a regime of apportionment. Thefocus must be on issues of remoteness. In Hunter v. Briere,257 forexample, the Court held that the defendant who negligently ran out ofgas and stopped her car on a bridge was not responsible for the injuriessuffered by a motorcyclist who collided with the stalled car. The Court,while not specifically addressing itself to the doctrine of remoteness,effectively found that the defendant's negligence was not a proximatecause of the accident.258

How courts should apportion liability between those persons whosefault contributed to an injury has been usefully elaborated upon inOttosen v. Kasper.2 59 Although some have argued that both causationand culpability are factors in apportioning liability, as I argued in thelast tort law survey260 only relative degrees of culpability are relevant.This view is supported in Ottosen. An 11-year-old plaintiff crossed infront of a bus and was struck by a passing car. The plaintiff, the busdriver and the passing motorist were all held at fault for causing theplaintiff's injuries and the trial judge apportioned the liability on thebasis that the plaintiff was 35% at fault, the bus driver 45%, and themotorist 20%. The defendants appealed this allocation. In affirming the

255 See, e.g., Fuerst v. St. Adolphe Co-Op Parc Inc., [1990] 3 W.W.R. 466,63 MAN. R. (2d) 66 (C.A.) [hereinafter Fuerst cited to W.W.R.]. The case involveda breach of a duty owed by an occupier to a contractual entrant. The accidentoccurred prior to the passage of Manitoba Occupiers' Liability Act, S.M. 1983, c.29, C.C.S.M., c. 08. It is clear under the legislation that contributory negligence isan applicable defence.

256 See, e.g., Lillos v. Tilden Rent-a-Car (1987), 80 A.R. 32, 50 M.V.R. 280(Q.B.).

257 [1989] 3 W.W.R. 528, 49 C.C.L.T. 93 (Man. Q.B.).251 Unfortunately, like all remoteness issues, the decision seems rather arbi-

trary. Other than finding that there was "a clear line of demarcation" between thenegligence of the two parties, the trial judge did not explain why the motorcyclist'snegligence was not reasonably foreseeable and within the risk created by thedefendant's conduct. Compare C.N.R. Co. v. di Domenicantonio (1988), 49 D.L.R.(4th) 342 (N.B.C.A.) [hereinafter C.N.R.] where the blame for a train/car collisionwas attributed to both parties. See also Frandle v. MacKenzie (1990), 51 B.C.L.R.(2d) 190, 5 C.C.L.T. (2d) 113 (C.A.), where the Court held that the doctrine of "lastclear chance" was overtaken by the B.C. Negligence Act.

259 (1986), 37 C.C.L.T. 270 (B.C.C.A.) [hereinafter Ottosen].260 Supra, note 1 at 381.

1991]


trial judgment, Lambert J.A. made it clear that when allocating faultwhat matters is how blameworthy the parties were, keeping in mind thestandard of care imposed upon them. Thus, a child's conduct will becompared to that of the reasonable child. In determining the allocationof fault, the question will not be the degree to which the child wasresponsible for the accident, but the degree to which the child's conductdeparted from the standard required of him or her. Similarly, an adultdefendant's degree of fault will be determined by the degree of his orher negligence. The attribution of blame for the accident between theparties will be made by comparing their degrees of negligence.

The plaintiff's failure to employ a seat belt continues to be fre-quently raised as an item of contributory negligence. Recent cases havemade some interesting points about this. In Reekie v. Messervey,261 itwas held that once a defendant has proved that the plaintiff failed towear a seat belt and that this contributed to the plaintiff's injuries, theonus of proving that the failure to use the belt was not unreasonable inthe circumstances rests upon the plaintiff. In the case, the Court acceptedas an excuse the argument that the plaintiff was an asthmatic whobelieved that wearing the belt would detrimentally affect her asthma. InPelletier v. Olson,262 a large reduction in award - 50% - was made forthe deceased's failure to wear a seat belt. Finally, courts continue tocorrectly distinguish between the legislative requirements regardingseat-belt use and the contributory negligence defence. The absence of astatutory requirement does not absolve a person from using a seat beltfrom the perspective of tort law. 263

2. Voluntary Assurmption of Risk

The strict basis of the volenti defence has been reaffirmed by theSupreme Court of Canada in Dube v. Labar264 and Crocker.265 Thedefence requires an agreement, either explicitly made or able to beimplied from the parties' conduct, that "the defendant assumed noresponsibility to take due care for the safety of the plaintiff, and theplaintiff did not expect him to". 266 The risk which must be accepted isboth the physical and the legal risk of injury.267

261 (1986), 4 B.C.L.R. (2d) 194, supplementary reasons at (1986), 10 B.C.L.R.(2d) 231, 3 A.C.W.S. (3d) 276 (S.C.).

262 (1987), 59 SASK. R. 212, 42 C.C.L.T. 129 (Q.B.) [hereinafter Pelletier].263 See, e.g., Wallace v. Berrigan (1988), 82 N.S.R. (2d) 395, 47 D.L.R. (4th)

752 (C.A.). See also Pelletier, ibid., where a parent was relieved of liability forhaving failed to ensure that her young child was property secured in the car. Thejudge specifically noted that the legislation at the time did not require drivers toensure that young children were properly secure, and in fact young children werespecifically exempted from the then existing legislation.

264 (1986), 27 D.L.R. (4th) 653, 36 C.C.L.T. 105 (S.C.C.) [hereinafter Dubecited to D.L.R.].

265 Supra, note 124.266 Dube, supra, note 264 at 659.267 Crocker, supra, note 124 at 332.

[Vol. 23:1


As noted in the last survey, express exemption or waiver of liabilityclauses have met with mixed success. Since the last survey, the waiverof liability clause which had been signed by the plaintiff in Crocker,and which the trial judge had rejected, was accepted by the Court ofAppeal, 268 but later rejected by the Supreme Court. Wilson J. acceptedthe trial judge's finding that the plaintiff had not read the clause, it hadnot been brought to his attention, and he did not know of its existence.In Karroll v. Silver Star Mountain Resorts Ltd,2 6 9 on the other hand,McLachlin C.J.S.C. upheld a contractual release and indemnity agreementwhich the plaintiff skier had signed prior to entering into a competition.

Outside of the express agreement cases, implied agreements arerarely found. Although the defence succeeded in Dube,270 the SupremeCourt's judgment emphasized how difficult it is for the voluntaryassumption of risk defence to succeed. The case had been decided onthe basis of a jury's answers to specific questions which had been putto it. Although the Supreme Court expressed concern about whether thejury fully appreciated the legal significance of the defence when itanswered its questions, the Court felt bound to respect its findings. Thatsaid, Estey J. noted how rare it would be for a plaintiff to genuinelyconsent to accept a legal risk, and consequently that the defence wouldnecessarily be inapplicable to the great majority of drunk driver/willingpassenger cases. This has in fact been the experience of the recentcases.271

3. Illegality

What has been surprising in the survey period has been the unusualsuccess enjoyed by defendants with respect to the defence of illegality,otherwise known as ex turpi causa non oritur actio. The defence hasbeen upheld in a number of recent cases.272 One can suggest somereasons for the revitalisation of the defence. First, it is clear that thevolenti defence has been interpreted in such a way as to make it inap-plicable to most cases. The defence of illegality is not so limited and infact the requirements of the defence are fairly broad and undefined. Sinceboth defences frequently arise in the same case, courts that wish to rejecta plaintiff's claim on the basis of severe misconduct can do so moreeasily by upholding the defence of illegality than volenti. A second

268 Ibid. (C.A.).269 (1988), 33 B.C.L.R. (2d) 160, 47 C.C.L.T. 269 (S.C.).270 Supra, note 264.271 See, e.g., Mongovius v. Marchand (1988), 44 C.C.L.T. 18 (B.C.S.C.)

[hereinafter Mongovius], and Baumeister v. Drake (1986), 5 B.C.L.R. (2d) 382, 38C.C.L.T. 1 (S.C.).

272 See, e.g., Norberg v. Wynrib, [1988] 6 W.W.R. 305, 44 C.C.L.T. 184(B.C.S.C.), aff'd (1990), 66 D.L.R. (4th) 553, [1990] 4 W.W.R. 192 (B.C.C.A.)[hereinafter Norberg cited to D.L.R.], leave to appeal granted (1990), 74 D.L.R.(4th) vii (S.C.C.); Mongovius, ibid.; Johnson v. Royal Can. Legion GrandviewBranch No. 179, [1988] 4 W.W.R. 267, 26 B.C.L.R. 124 (C.A.) [hereinafter John-son].

1991]


reason might be related to the general atmosphere in the law of tortduring the survey period. As we have discussed, there has been acurtailment of the expansionist trend of the negligence action. A moveaway from the use of tort as a loss distribution device, and a return toits more traditional fault-based goals, will produce an increased empha-sis on those aspects of the negligence action which stress the moral basisof fault-based compensation. Illegality is such a defence.

There have been different rationales expressed by courts to justifythe rejection of a claim for compensation made by a wrongdoer in certaincircumstances. It has been seen as a matter of the dignity of the judicialprocess, a bar against wrongdoers profiting from their acts, a use of thecivil sanction to reinforce criminal laws, a matter of statutory intention,or occasionally, the issue has been cast in terms of no duty, no negli-gence, or lack of causal connection. Depending upon which basis isaccepted, the limits of the defence's application will be defined. Thedifferent theories have produced different rules.

The type of wrongdoing required has, for example, been unclear.Some judges have upheld the defence where the plaintiff's conduct was"immoral", without it necessarily being unlawful. 273 Others haverequired illegal conduct, some going so far as to require not merelybreaches of provincial law, but Criminal Code offences. 274 Some courtshave allowed the defence only in cases of joint wrongdoing,275 whereasit was applied recently to a case of unilateral wrongdoing.276 The degreeof causal connection required between the criminal act and the injury isunclear. In Betts v. Sanderson Estate,277 Lambert J.A. expressed reser-vations about the applicability of the illegality defence in tort, but feltbound by an earlier British Columbia judgment, Mack v. Enns, 278 whichhad applied it. Nevertheless, for its application, the parties need to beengaged together in a common criminal enterprise, and the plaintiffinjured "by an act or omission of the defendant which was, at one andthe same time, both the act or omission which formed the basis for theclaim in negligence, and also an act or omission in furtherance of thecriminal purpose and constituting part of the criminal actus reus. ''279

At present there are too many diverse themes which run throughthe applicability of the defence of illegality. What is needed is a SupremeCourt of Canada judgment which clearly defines the defence. It is likely thatin such a judgment the Supreme Court will confine the defence's appli-cation, as it has done with the defence of voluntary assumption of risk.

273 See Norberg, ibid. where Oppal J. talked about the application of thedefence in cases of "disgraceful, illegal, or immoral" matters. On appeal, McEachernC.J.B.C. emphasized the illegality of the parties' conduct.

274 See, e.g., Seaton J.A. in Funk, supra, note 129 at 238.275 See, e.g., Teece v. Honeybourn (1974), 54 D.L.R. (3d) 549, [1974] 5

W.W.R. 592 (B.C.S.C.).276 See Johnson, supra, note 272.277 (1988), 31 B.C.L.R. (2d) 1, 46 C.C.L.T. 97 (C.A.) [hereinafter Betts cited

to C.C.L.T.].278 (1983), 44 B.C.L.R. 145, 25 C.C.L.T. 134 (C.A.).279 Supra, note 277 at 108.

[Vol. 23:1


III. DEVELOPMENTS IN TORTS BASED ON TRESPASS AND

INTENTIONAL WRONGS

A. The Basis of Trespass

Although the tort actions which trace their origins to the 13thCentury writs of trespass have, in Canadian law at least, maintained theirtraditional characteristics, it might be useful to briefly look once moreat these classic causes of action. Are features of trespass an anachronismin contemporary tort law?

A trespass against persons, their possession of chattels or occupa-tion of land, requires a direct interference with the protected interest,and intentional or negligent conduct on the part of the wrongdoer. Onceconduct constituting a trespass has occurred, a plaintiff's prima faciecase has been made out. A defendant has the burden of proving that thetrespass occurred without fault. A few judgments decided during thesurvey period indicate some uncertainty or unease with these featuresof the trespass action.

The idea of a "negligent trespass", for example, as a cause of actiondistinct from negligence, is a curious notion. In Shewish v. MacMillanBloedel Ltd,280 the defendant logging company miscalculated its bound-ary and logged timber on the plaintiff's land. The mistake in boundariesoccurred as a result of the defendant's negligence. Given that anyinterference with the occupation of another's land is a trespass, was thetrespass committed in this case an accidental, negligent or intentional one?

Hollinrake J.A. treated this as a case of a negligent, as opposed toa willful, trespass and assessed damages accordingly. In one sense, thetrespass was negligent and not deliberate. The defendant did not intendto deprive the plaintiff of its rights, but as a result of a mistake causedby its negligence, it did so. However, I would submit that the trespasscommitted in this case was actually an intentional trespass. In describinga defendant's conduct as accidental, negligent or intentional, in referenceto the trespass actions, one focuses not on the defendant's bona fides,but on whether the act which constitutes the tort was an act whichoccurred accidentally, negligently or intentionally. In Shewish, thedefendant intended the act which constituted the trespass to land. Itintended to log a piece of land - it did not do so accidentally ornegligently. The fact that it was mistaken as to the factual or legalconsequences of its intended conduct did not alter the nature of thetrespass which it committed. 28' This was explained recently by Croom-Johnson L.J. in Wilson v. Pringle282 in reference to an intentional battery:

It is the act and not the injury which must be intentional. An intentionto injure is not essential to an action for trespass to the person.

280 (1990), 48 B.C.L.R. (2d) 290, 3 C.C.L.T. (2d) 291 (C.A.) [hereinafterShewish cited to C.C.L.T.].

281 This is why it is said that mistake is no defence to the intentional torts.282 [1986] 3 W.L.R. 1 at 8, [1986] 2 ALL E.R. 440 at 445 (C.A.).

1991]


Negligent trespasses, in the correct sense of the word, are in factoccasionally found in Canadian case law. Carelessly acting so thatanother's property is damaged,283 or negligently striking someonedirectly,284 illustrate negligent trespass cases.

The second definitional difficulty in this area involves the conceptof "directness". All trespasses must occur as a result of the defendant'sdirect act. The relevance of this requirement frequently arises whencourts distinguish between a trespass to land and a nuisance. In Didowv. Alta. Power Ltd,285 for example, the intrusion of wires and cross-armsof power line poles into another's space would be more appropriatelyclassed as a nuisance. Although not explained by Haddad J.A., this canbe justified by resort to distinguishing between direct and indirectinterferences.

That Canadian courts continue to distinguish between direct andindirect interferences is certainly questionable. A more appropriate ratio-nalization would be to reject categories based on the physical sequenceof events leading to an injury, and to distinguish between wrongs basedon the wrongdoer's conduct or bona fides, and the interests to beprotected. This would mean that all negligent conduct, whether resultingin direct or indirect injury, would be treated similarly as would allintentional or accidental wrongdoing. Prior to this development, how-ever, courts should remain alert to the technical distinctions between thevarious causes of action.

B. Capacity

Lack of capacity, short of actual lack of volition, is rarely asuccessful defence with respect to the intentional torts. Two recent casesillustrate this. In Whaley v. Cartusiano,286 the defendant shot at andinjured the plaintiff. The attack followed an argument which the defen-dant had had with his wife, but the victim, a neighbor, was someonetotally unknown to the plaintiff. The defendant was found not guilty ofa criminal charge stemming from the incident by reason of insanity. Interms of whether the defendant was capable of forming the requisiteintent for an intentional tort, R.E. Holland J., following recent authori-ties, held that as long as the defendant knew what he did and intendedto do it, intention was made out. The same reasoning and result prevailedin Canada (Attorney General) v. Connolly.287 The issue of appreciatingthe quality of one's acts, their rightness or wrongness, does not enter

283 See, e.g., Bell Canada v. COPE (Sarnia) Ltd (1980), 11 C.C.L.T. 170(H.C.), aff'd (1980), 31 O.R. (2d) 571, 15 C.C.L.T. 190 (C.A.).

284 For example, there are numerous cases involving errant projectiles, golfballs etc.

285 [1988] 5 W.W.R 606, (sub nom. Didow & Knox v. Alta. Power Ltd) 88A.R. 250 (C.A.) [hereinafter Didow], rev'g (1986), 70 A.R. 199, 37 C.C.L.T. 90(Q.B.).

286 (1990), 72 O.R. (2d) 523, 68 D.L.R. (4th) 58 (C.A.).287 (1989), 64 D.L.R. (4th) 84, 41 B.C.L.R. (2d) 162 (S.C.).

[Vol. 23:1


into the determination of whether a defendant was capable of formingthe requisite intention for a civil case. This being so, one is driven tothe conclusion that lack of capacity, short of lack of volition, is not adefence. Only where a defendant is incapable of controlling the tortiousact or is unaware of it will lack of capacity succeed as a tort defence.

C. False Imprisonment

One interesting development occurred in relation to the tort of falseimprisonment during this survey period. The long-standing debate con-cerning whether knowledge of one's confinement is a necessary elementof the tort has been resolved by the House of Lords. In Murray v.Ministry of Defence,288 the Lords, per Lord Griffiths, decided thatknowledge of one's confinement is not an essential element of the tortof false imprisonment. 289 This settled a long-standing debate created bytwo earlier conflicting judgments - Herring v. Boyle290 and Meering v.Grahame-White Aviation Co. Ltd.29 1 The decision is consistent with thespirit of torts based on trespass, which protect dignitary interests and donot require special damage, and should be followed by Canadian courtswhen the question next arises.

The major issue in false imprisonment actions remains that of thedefence of lawful authority. Since the majority of claims for falseimprisonment or arrest are brought against police officers,292 and a largenumber of the remainder against store owners, 293 the defence is generallybased on Criminal Code provisions. Recent cases continue to supportthe position that while police officers can effect an arrest of a personwhom they believe, on reasonable and probable grounds, has or is aboutto commit an indictable offence, private persons, including security staffat stores, can only detain a person who has in fact committed anindictable offence. 294

288 [1988] 1 W.L.R. 692, [1988] 2 ALL E.R. 521 (H.L.).289 Although Lord Griffiths conceded that the plaintiff in this case probably

knew from the outset of her confinement.290 (1834), 1 C.M. & R. 378, 149 E.R. 1126 (Ex.). The Court held that

knowledge of confinement was necessary.291 (1919), 122 L.T. 44 (C.A.), where Atkin L.J. held that knowledge of

confinement was not necessary.292 According to D. Poirier, Economic Analysis of False Imprisonment in

Canada: A Statistical and Empirical Study (1985) 34 U.N.B.L.J. 104, 60% of thereported false imprisonment cases in Canada from 1950 to 1983 were institutedagainst the police.

293 About 30% of all cases, according to Poirier, ibid. at 108.294 See, e.g., Cronk v. F.W. Woolworth Co., [1986] 3 W.W.R. 139, 44 SASK.

R. 81 (Q.B.); Banyasz v. K-Mart Canada Ltd (1986), 57 O.R. (2d) 445, 33 D.L.R.(4th) 474 (H.C.). Note, however, that in Sears Can. Inc. v. Smart (1987), 64 NFLD& P.E.I.R. 187, 36 D.L.R. (4th) 756 (Nfld C.A.), the Court held that although theremust have been the commission of an indictable offence, the guilty party need nothave been the plaintiff. The defendant need only have had reasonable and probablegrounds to believe that it was the plaintiff.

1991]


D. Malicious Prosecution

Several aspects of the malicious prosecution action were looked atin this survey period. Most significantly, the Supreme Court of Canadahas stripped the immunity from suit away from Crown Prosecutors andAttorneys General. As suggested in the last survey, the immunity grantedto certain officials, even for their malicious behaviour, was an unfortun-ate aspect of Canadian tort law. In Nelles v. Ontario,295 the majority ofthe Supreme Court of Canada was of this view. Lamer J. (as he thenwas), after noting how difficult it would be for a plaintiff to succeed ina malicious prosecution claim against an Attorney General or CrownAttorney, concluded that public trust and confidence in the impartialityof prosecutors, and the principle of equality under the law, favoured theabolition of the absolute immunity. 296 Only Madame Justice L' Heureux-Dub6, in dissent, upheld the immunity claim. Basing herself both onauthority and the public good, Her Ladyship held that strong policyreasons existed for granting Attorneys General and Crown Attorneysimmunity from prosecution for actions taken in the proper exercise oftheir powers. 297

The Court made it clear that, despite the absence of an absoluteimmunity, it would be very difficult to succeed in a malicious prosecu-tion claim against an Attorney General or Crown Attorney. There arefour elements to the action. The proceedings must have been initiatedby the defendant, have terminated in the plaintiff's favour, there musthave been no reasonable and probable cause for initiating the proceed-ings, and the defendant must have been malicious. The latter two require-ments pose the greatest difficulties. Although Mr Justice Lamer seemedto suggest that the third element requires that the defendant honestly andreasonably believed that the accused was guilty, a less strict interpreta-tion would be that the defendant, without prejudging the case, only hadreasonable and probable grounds for initiating the proceedings. 298 Proofof malice, i.e. an improper purpose, is also a difficult requirement. Asdefined by Lamer J., the plaintiff must establish that the Attorney

295 (1989), 60 D.L.R. (4th) 609, 49 C.C.L.T. 217 (S.C.C.) [hereinafter Nellescited to C.C.L.T.].

296 Lamer J.'s judgment was concurred in by Dickson C.J.C., Wilson and LaForest JJ., although the latter excepted himself from that portion of Lamer J.'sjudgment dealing with the Charter. McIntyre J., in a separate judgment, also refusedto recognize the claim of absolute immunity for Attorneys General and CrownProsecutors, particularly as the issue arose in a preliminary motion to strike out theplaintiffs action, based on such an alleged absolute immunity.

297 The scope of the requirement that the act be within the proper exercise ofthe defendant's jurisdiction was not elaborated upon. L'Heureux-Dub6 J., supra,note 295 at 262, even went so far as to concede that, "it may well be that agovernmental authority who acts with malice acts outside of the scope of hisauthority." All of the Justices agreed that the Crown itself was protected from suitby s. 5(6) of the Proceedings Against the Crown Act, R.S.O. 1980, c. 393.

298 That is, there was a reasonable case which ought to have proceeded to trial.Fleming, supra, note 145 at 586 supports this view.

[Vol. 23:1I


General or Crown Attorney "perpetrated a fraud on the process ofcriminal justice and in doing so has perverted or abused his office andthe process of criminal justice".299 Stated in this way, it is easy tounderstand why public policy does not require an immunity for suchconduct, and to see that it is unlikely that claims for malicious prosecutionwill be successful.

One final point should be noted. The tort of malicious prosecutionrequires proof that the plaintiff suffered damage as a result of theprosecution itself. Thus, the action is confined to those types of prose-cutions which rob the plaintiff of her or his liberty or damage her or hisfinancial credit. Criminal prosecutions or the initiation of bankruptcyproceedings generally give rise to this tort. In one recent English Courtof Appeal case, Metall and RohstoffA.G. v. Donaldson Lufkin & JenretteInc.,300 the action was restricted to these proceedings, Slade L.J. dis-missing the contention that a general tort of maliciously instituting civilproceedings exists.

E. Abuse of Process

An interesting development has been the apparent renewal of inter-est in the tort of abuse of process. This arises where an individual usesthe judicial process for an improper purpose and where there is a definiteact or threat in furtherance of that purpose. The action does not requireproof that the proceedings terminated favourably, and is not dependentupon the defendant's lack of reasonable and probable grounds for havinginitiated the proceedings. The stumbling block to a successful claim,however, has been the requirement that there be an overt, extraneous actto further the wrongful purpose, the initiation of the process for animproper purpose not being enough. 30 1 Thus despite the action's recentrevival, the results of the cases should not prove to be too worrisome tothose contemplating using the judicial processes to resolve their disputes.

F. Intentional Infliction of Mental Suffering

Some judicial activity has occurred with respect to the cause ofaction for the intentional infliction of mental suffering, otherwise knownas the tort in Wilkinson v. Downton.302 A recent judgment holding that

299 Supra, note 295 at 239.300 (1989), [1990] 1 Q.B. 391, [1989] 3 ALL E.R. 14 (C.A.).301 See, e.g., R. Cholkan & Co. v. Brinker (1990), 71 O.R. (2d) 381, 1 C.C.L.T.

291 (H.C.); Teledata Communications Inc. v. Westburne Industrial Enterprises Ltd(1990), 71 O.R. (2d) 466, 65 D.L.R. (4th) 636 (H.C.); Poulos v. Matanoic (1989),47 C.C.L.T. 207 (Ont. H.C.); Pacific Aquafoods v. C.P. Koch (1988), 47 C.C.L.T.214 (B.C.S.C.); and Tsiopoulos v. Commercial Union Assurance Co. (1986), 57O.R. (2d) 117, 32 D.L.R. (4th) 614 (H.C.). The claim failed in all of these cases.Note, however, that Professor Irvine makes the point that some British Columbiacourts seem prepared to overlook the overt or extraneous conduct requirement ifthey can infer an illicit collateral purpose from the very process complained of. SeeJ. Irvine, The Resurrection of Tortious Abuse of Process (1989) 47 C.C.L.T. 217.

302 [1897] 2 Q.B. 57, [1895-7] ALL E.R. Rep. 267 [hereinafter Wilkinson].

1991]


the tort could be used in the context of a family dispute concerningcustody and access to children 303 was overruled by the Supreme Courtof Canada in Frame v. Smith.304 The Court decided that it would not bein the best interests of resolving these types of disputes to allow tort lawto intervene and to replace other statutory mechanisms for theenforcement of custody orders. The action was successful, however, inanother, more typical Wilkinson-type case. In Timmermans v. Buelow, 30 5

a landlord, wishing to evict a tenant, used intimidation and threats ofviolence in order to persuade the tenant to leave. Due to the tenant'semotional health, the landlord's tactics resulted in the tenant becomingquite ill. In upholding the tenant's tort action and awarding him$7,500.00 in damages, the Court relied on the principle established inWilkinson. Although this tort is rarely utilized, the judgment does pro-vide us with a reminder of its existence and utility. It provides the courtswith a sufficiently vague residual cause of action to allow them tosanction outrageous behaviour which might otherwise fall between thecracks of the better defined intentional torts.306

G. Trespass To Land

The right of occupiers of land to control access to their land andto exclude others from interfering with their occupation has, in severaldifferent ways, been strongly reaffirmed during the survey period.

The notion that those in occupation of land ought to be encouragedto be reasonable, accommodating or even fair-minded in deciding whoshould be entitled to intrude into their space has been soundly rejected.In Austin v. Rescon Construction (1984) Ltd,307 a suggestion which hadbeen made by a trial judge that landowners should be encouraged tomake reasonable arrangements with their neighbors for interferenceswith their property which do not damage their property or inconveniencethemselves, was described by Hinkson J.A. as "a novel proposition,unsupported by authority". 30 8 A landowner can refuse permission to anyperson, who does not have legal authority, to enter his or her propertyfor any purpose. Thus, although the trial judge awarded the plaintiff$7,500.00 in punitive damages - an amount designed to be high enoughto deter wrongdoers without being so high as to "make it profitable forlandowners to hold their building neighbors to ransom" - the Court ofAppeal raised the amount to $30,000. This amount took into account theprofit made by the defendant in his decision to intrude into the plaintiff's

303 See Cant v. Cant (1984), 49 O.R. (2d) 25, 43 R.F.L. (2d) 305 (Co. Ct).304 [1987] 2 S.C.R. 99, 42 C.C.L.T. 1 [hereinafter Frame cited to C.C.L.T.].305 (1986), 38 C.C.L.T. 136 (Ont. H.C.).306 Although as pointed out by Professor Irvine, the facts of this case might

well have supported an action for assault. See J. Irvine, Annot.: Timmermans v.Buelow (1987) 38 C.C.L.T. 137.

307 (1989), 57 D.L.R. (4th) 591, 48 C.C.L.T. 64 (B.C.C.A.) [hereinafter Austincited to C.C.L.T.], rev'g (1988), 45 D.L.R. (4th) 559, 45 C.C.L.T. 137 (S.C.).

308 Austin, ibid. at 67.

[Vol. 23:1I


land without permission. 30 9 In a subsequent British Columbia case,Horseshoe Bay Retirement Society v. S.LF. Development Corp.,310 theCourt awarded more than the profit which a developer had earned incutting down trees on the plaintiffs' properties, in order to enhance theview from the developer's lots. In addition to general damages, theplaintiffs were awarded $100,000 in exemplary damages. 311

Support for the rights of landowners was also expressed in Russov. Ontario Jockey Club.3 12 In this case, the owner of a racetrack soughtto bar the plaintiff, a successful track patron, from coming onto itsfacility. Boland J. held that the common law right of the landowner toexclude others from its land can be exercized without reason or referenceto the principles of natural justice. This right exists in reference to alllandowners, including those who invite the general public onto theirlands. The Supreme Court of Canada decision recognizing the right ofshopping-mall owners to arbitrarily exclude others from entering theircomplexes was affirmed. 313

Finally, an Alberta trial court judgment which had dismissed anaction in trespass brought by a landowner against a defendant company,whose power line poles interfered with the landowner's air space, wasreversed by the Court of Appeal. In Didow,314 Haddad J.A. recognizedthe landowner's right to be free from permanent structures which in anyway impinge upon the actual or potential use and enjoyment of land.315

H. Defences

1. Consent

One of the interesting developments concerning the defence ofconsent occurring in the survey period is found in a spate of cases dealingwith the moral implications of allowing the defence of consent to beused in some circumstances. Although the fact situations differ, a similarmoral dilemma runs through all of the cases which will be discussed.

309 The defendant was a builder who had inserted steel anchor rods into theground beneath the plaintiffs residential property. The defendant had made someefforts to obtain the plaintiff's permission for this, but these were unsuccessful.

310 (1990), 66 D.L.R. (4th) 42 (B.C.S.C.).311 See also Dykhuizen v. Saanich (District) (1989), 63 D.L.R. (4th) 210

(B.C.C.A.), where exemplary damages of $1000 were awarded against a defendantwho removed trees from a municipally owned boulevard which adjoined his prop-erty.

312 (1987), 62 O.R. (2d) 731, 43 C.C.L.T. 1 (H.C.).313 See Harrison v. Carswell (1975), [1976] 2 S.C.R. 200, [1975] 6 W.W.R.

673, which was also applied in 281856 B.C. Ltd v. Kamloops Revelstoke OkanaganBuilding Trades Union (1986), 37 C.C.L.T. 262, 86 C.L.L.C. 14,056 (B.C.C.A.).

314 Supra, note 285.315 In Professor Irvine's annotation to the trial judgment, the threat to land-

owners posed by the trial decision was noted. This worry has now been removed.See J. Irvine, Some Thoughts on Trespass to Air Space (1986) 37 C.C.L.T. 99.

1991]


To what extent should the decision of a capable person to engage inconduct be respected by the law of torts?

The first case deals with the minor who wishes to undergo anabortion, despite her parents' strong objections. As discussed above, inC.(J.S.), 3 16 the Alberta Court of Appeal held that a 16-year-old, who hadenough intelligence and understanding to make up her own mind withrespect to terminating her pregnancy could, without her parents'approval, consent to the procedure. Her parents could not stop her byapplying to the Court for an injunction restraining the doctor fromperforming the procedure.

Quite a different problem arose in the case of M.(M.). 3 17 Thedefendant had sexual relations with his 15-year-old foster daughter. Thiswas a criminal act for which he was charged, and to which he pled guilty.He was also sued by his foster daughter for battery. The defendant reliedon the plaintiff's consent, and was successful in this defence at trial. Onappeal, however, the Court refused to allow the defence of consent tobe put forward. The Court noted that the defendant's conduct wascriminal, a breach of trust and a breach of his duty as a foster parent.In these circumstances, it was deemed to be against public policy toallow the defence of consent to be raised.318 Since the criminality ofjoint conduct is not normally sufficient to exclude the defence of con-sent, 319 I would suggest that the basis of the Court's decision layelsewhere. It was the plaintiff's vulnerability which contributed to herlack of judgment and the Court's strong disapproval of the defendant'sconduct which made consent an inapplicable defence.

In Lyth v. Dagg,320 a homosexual relationship developed betweena 16-year-old and his music and drama teacher. The relationship lastedfor one year, during which the teacher/pupil relationship continued. TheCourt found that only the first sexual advance was not consented to,since the teacher at that time exercized a dominating influence over hispupil. Subsequent incidents were, however, consensual despite the con-tinuing teacher/pupil relationship. 321

Finally, there is the British Columbia Court of Appeal's decisionin Norberg,322 where the defence of consent was allowed in the following

316 Supra, note 185.317 Supra, note 131.31s Note that the Court did not suggest that the plaintiff did not consent or did

not have the understanding to consent. This compares with another recent case,Harder v. Brown (1989), 50 C.C.L.T. 85 (B.C.S.C.), where due to the young ageof the plaintiff when the sexual activity commenced, the Court held that the laterapparent acquiesence could not be taken as consent.

319 For example, if a plaintiff could never consent to a criminal activity, thedefence of consent in relation to drunk-driving, or other common adventures, couldnever succeed. As well, the defence of consent often succeeds in cases of mutualfights.

320 (1988), 46 C.C.L.T. 25 (B.C.S.C.).32! The decision was based on the trial judgement in M.(M.), supra, note 131,

and was prior to the Court of Appeal's reversal in that case.322 Supra, note 272.

[Vol. 23:1


circumstances. The defendant doctor, in order to obtain sexual favoursfrom his drug addicted patient, provided her with drugs in return for sex.This was clearly in breach of the defendant doctor's professional duties,and was also seen by the Court as a joint criminal enterprise to trafficunlawfully in a prohibited drug. The Court, however, distinguished thiscase from M.(M.) in reference to the defence of consent. McEachernC.J.B.C. noted that M.(M.) involved "an infant under the protection ofthe defendant". The Court also focused on the plaintiff's wrongdoingand, based on ex turpi, the action was dismissed. The defendant doctor'swrongdoing seemed less serious than the defendant's wrongdoing inM.(M.).

What conclusions, if any, can be drawn from these cases? Shouldthe defence of consent involve only the issue of whether the consentingparty had the capacity to consent, or should moral considerations enterinto the decision? I would suggest that the defence of consent should bebased only on the reality of the consent and not on whether, for publicpolicy or morality reasons, the courts wish to recognize it. It may verywell be that consent in the case of adults and minors, teachers and pupils,or doctors and patients, should be disregarded but only if, due to theunequal relationship, the genuineness or freeness of the consent can bedoubted. If an adult or a mature minor has freely and knowingly con-sented to conduct, that consent should be respected, at least insofar astort actions involving that conduct are concerned. If a court's disapprovalconcerning an activity is allowed to override the reality of the consentof capable persons, the right of persons to make their own choices isthereby diminished.

IV. DEVELOPMENTS IN OCCUPIERS' LIABILITY

A. The Common Law

The common law rules of occupiers' liability are gradually beingreplaced by statutory provisions.323 Even in those jurisdictions wherestatutory reform has not yet occurred, courts have, on their own initia-tive, begun to abandon the complex common law rules of occupiers'

323 Five provinces have enacted statutes: Occupiers' Liability Act, R.S.A.1980, c. 0-3; Occupiers Liability Act, R.S.B.C. 1979, c. 303; Occupiers' LiabilityAct, R.S.M. 1987, c. 08, C.C.S.M. 08; Occupiers' Liability Act, R.S.O. 1980, c.322; Occupiers' Liability Act, R.S.P.E.I. 1988, c. 0-2. Proposals for statutory reformhave been put forward both in Saskatchewan and Nova Scotia: see Law ReformCommission of Saskatchewan, Tentative Proposals For An Occupiers' Liability Act(Saskatoon: Law Reform Commission of Saskatchewan, June 1980) (Chair: R.C.Cuming), and Nova Scotia Law Reform Advisory Commission, Occupiers' LiabilityLaw (Study Paper) by M.T. Hertz (Halifax: Nova Scotia Law Reform AdvisoryCommission, Feb. 1976).

1991]


liability with ordinary negligence law principles. 324 Thus, despite thefact that the categories with their respective and peculiar duties of carestill prevail in some of the provinces, one is tempted to conclude thateven where statutory reforms have not occurred, the common law ofoccupiers' liability is increasingly looking more like negligence law.

The common law still distinguishes between trespassers, licensees,invitees and contractual entrants although as with the duties of careowed, the categories themselves have become increasingly less distinc-tive. In McErlean v. Sarel,325 the Ontario Court of Appeal agreed withthe lower court that a trail bike rider injured on vacant land owned bythe defendant municipality was a licensee and not a trespasser. Althoughtrail bikers were not explicitly permitted to be on the land, they also hadnot been specifically excluded by the use of signs, fences, supervisionor other means. The failure to object to their presence, which was readilyascertainable if not actually known, was taken as a tacit permission forthem to enter. In distinguishing between licensees and invitees, courtscontinue to examine the purpose of the visitor's presence. A visitorwhose presence, while tolerated, is not of benefit to the occupier is alicensee.3 26 Those who are using premises on business are generally seenas invitees.327 The courts also continue to recognize the category ofcontractual entrant, which may have practical implications in terms ofthe duty of care which is owed. 328

It is with respect to the nature of the duties owed that the commonlaw has become increasingly more flexible. The low common law dutywhich occupiers owed to trespassers, namely, not to willfully or reck-lessly injure them, has been replaced by the higher duty of common orordinary humanity. 329 This duty, which fails somewhere between theduty not to willfully injure and the duty to take reasonable care, is a

324 This has occurred in Australia as a result of a series of decisions. SeeHackshaw v. Shaw (1984), 56 A.L.R. 417, 155 C.L.R. 614 (H.C.); Papantonakis v.Australian Telecommunications (1985), 57 A.L.R. 1, 156 C.L.R. 7 (H.C.); andAustralian Safeway Stores Pty. Ltd v. Zaluzna (1986), 69 A.L.R. 615, 162 C.L.R.479 (H.C.). Canadian judges have also suggested that the standard negligence testought to be used in occupiers' liability cases. See Creaghan J. in Austin v. GendisInc. (1985), 68 N.B.R. (2d) 57, 175 A.P.R. 57 (Q.B.), and Reed J. in Stuart v.Canada (1988), 61 ALTA L.R. (2d) 81, 45 C.C.L.T. 290 (F.C.T.D.) [hereinafterStuart].

325 (1987), 61 O.R. (2d) 396, 42 C.C.L.T. 78 (C.A.) [hereinafter McErleancited to C.C.L.T.], leave to appeal den'd (1988), 63 O.R. (2d) x (note), 46 D.L.R.(4th) vi (note). The accident occurred prior to the introduction of Ontario's occupierliability legislation.

326 See, e.g., Beaton v. MacMaster (1986), 72 N.S.R. (2d) 336, 173 A.P.R.336 (T.D.), where a daughter visiting her mother was a licensee.

327 See, e.g., Stuart, supra, note 324, and Suche v. R. (1987), 37 D.L.R. (4th)474, (sub nom. Suche v. Canada (Ministry of Transport)) [1987] 3 F.C. 301 (T.D.),where users of the Calgary International Airport were classified as invitees.

328 See, e.g., Fuerst, supra, note 254.329 See, e.g., Laviolette v. C.N.R. (1986), 69 N.B.R. (2d) 58, 36 C.C.L.T. 203

(Q.B.), aff'd (1987), 79 N.B.R. (2d) 110, 40 C.C.L.T. 138 (C.A.); Smith v. HudzikEstate (1986), 38 MAN. R. (2d) 115 (C.A.).

[Vol. 23:1


more subjective duty of care, taking into account the occupier's knowl-edge, ability and resources. 330 It now seems that the duty owed tolicensees is the same as that owed to invitees, previous decisions regard-ing requirements of "concealed" dangers known to the occupier havingbeen abandoned. The duty is one to use reasonable care to preventdamage from unusual dangers, a term which is sufficiently vague toencompass most unreasonable conduct on the occupier's part.33 1

B. Legislation

Occupiers' liability cases, decided pursuant to the statutory enactments,have been fairly straightforward, being resolved in most instances bydeterminations of fact. There is a common duty owed to most visitors, 332

which requires that occupiers take reasonable care to see that the con-dition of the premises, the activities conducted thereon or the conductof third parties do not cause injury to visitors or damage to their property.

One issue of law which has arisen and should be noted, however,is the effect that the visitor's knowledge of the risk has on the occupier'sduty of care. Two different sections of the statutes are relevant to thisquestion. First, there are the sections which provide for the commonduty of care and note that the scope of the duty depends upon "all ofthe circumstances of the case". Second, there are specific sections whichexclude or restrict the duty with respect to those risks willingly acceptedby the visitor. The question has arisen as to whether these latter provis-ions are a codification of the common law defence of volenti, and if so,what role the visitor's knowledge and appreciation of those risks shouldplay in the statutory action. Most courts have decided that the statutehas codified volenti, and that accordingly, mere knowledge and appre-ciation of a risk on the visitor's part does not negate the duty of careowed to him by the occupier. There must be an acceptance of the legalrisk of injury.333 This view was recently accepted by the Supreme Court

330 The duty of common humanity has met with some opposition. In Eastwickv. New Brunswick (1987), 83 N.B.R. (2d) 77 at 84, 45 C.C.L.T. 191 at 196 (Q.B.),Miller J., while conceding that the common humanity rule is the law in Canada,noted that the vagueness of the factors to be considered "can only lead to confusionif not chaos."

331 There have been several cases discussing the unusual danger requirement.See, e.g., McErlean, supra, note 325 at 94-95, in which unusual danger is definedas one which the reasonable person would neither know nor appreciate; Vyas v.Colchester-East Hants District School Board (1989), 94 N.S.R. (2d) 350 at 353, 65D.L.R. (4th) 48 at 52 (C.A.), in which it was stated that "reasonable expectation onthe part of the class of invitee must, in all cases, be the major factor ....".

332 There are lower duties owed to certain types of entrants. For example, thereis a lower duty owed to trespassers in Alberta under the Occupiers' Liability Act,R.S.A. 1980, c. 0-3, s. 12. In Manitoba, a lower duty owed to trespassing snow-mobilers is found in the Occupiers' Liability Act, R.S.M. 1987, c. 08, s. 3(4), asam. S.M. 1988-89, c. 13, s. 32.

333 See, e.g., Waldick v. Malcolm (1987), 61 O.R. (2d) 624, 43 D.L.R. (4th)693 (H.C.), aff'd (1989), 70 O.R. (2d) 717, 63 D.L.R. (4th) 583 (C.A.) [hereinafterWaldick], aff'd, [1991] No. 2178.

1991]


of Canada in Waldick.334 Mr Justice Iacobucci held that the Ontariolegislation was "intended to embody and preserve the volenti defence."Thus, despite holdings from lower courts prior to the Supreme Court'sjudgement that the statutory provision regarding the visitor's acceptanceof risks was new legislation which "cuts free from the previous commonlaw and does not embrace or accept the defence of volenti non fitinjuria",335 it is now likely that the Court's interpretation of the Ontarioprovision will prevail elsewhere. 336 It is suggested, however, that despitethis the visitor's knowledge and appreciation of risks will remain impor-tant considerations in defining the occupier's duty of care.

V. DEVELOPMENTS IN STRICT LIABILITY

A. Rylands v. Fletcher

The use of the strict liability principle of Rylands v. Fletcher337 hasnot been advanced at all during this survey period. If anything, its utilityhas even been more narrowly confined. In Tock v. St. John's Metro AreaBoard,338 the Supreme Court of Canada refused to apply the principleto a case where damage was caused by water which escaped from thedefendant's obstructed storm sewer and flooded into the plaintiff'sbasement. The principle was said to be inapplicable to statutorily author-ized activities which are ordinary and proper uses of land undertakenfor the benefit of the community. Thus, any notion that the principle canbe developed into a loss distribution device for dangerous, but sociallyuseful and ordinary, activities was effectively negated by the SupremeCourt.

339

334 Ibid.33- Clements Co. Ct J. in Christie v. Toronto (City) (1983), 20 M.P.L.R. 145

at 157. The British Columbia courts, in particular, require only a knowledge andappreciation of the physical risks for the section to apply. See, e.g., Abbott v. SilverStar Sports Ltd (1986), 6 B.C.L.R. (2d) 83 (S.C.); Samis v. Vancouver (City), [1989]B.C.W.L.D. 1010 (C.A.); and Stynes v. Victoria (City) (1990), 66 D.L.R. (4th) 588,43 B.C.L.R. (2d) 118 (C.A.). Although the majority of the Court in Stynes foundthat the section did not apply, this was based on the trial judge's finding that theplaintiff did not know or appreciate the risk. McEachern C.J.B.C. dissented, findingthat the plaintiff did.

336 Some provisions use the words "willingly assumed the risks", others "riskswillingly accepted". It would be my interpretation of Iacobucci J.'s judgement thathis reasoning in Waldick would apply to either provision.

117 Supra, note 8.338 [1989] 2 S.C.R. 1181, 64 D.L.R. (4th) 620 [hereinafter Tock cited to

D.L.R.].339 See also Modem Livestock v. Elgersma (1989), 97 A.R. 161, 50 C.C.L.T.

5 (Q.B.) [hereinafter Modern Livestock], where the Court held that raising pigs wasnot a non-natural use of land, and North York (Municipality) v. Kert ChemicalIndustries Inc. (1985), 33 C.C.L.T. 184 (Ont. H.C.), where the Court doubtedwhether the principle in Rylands v. Fletcher could apply to the intentional dischargeof a substance as opposed to its accidental escape.

[Vol. 23:1


B. Fires

Strict liability for fires has also been affected by the non-naturaluse requirement of Rylands. Fires started for ordinary purposes, such ashusbandry, have been excluded from the strict liability regime. 340 It mustbe noted, however, that outside of Rylands there is a high degree ofresponsibility on occupiers for fires started on their property. Not onlyare occupiers responsible for their own negligent acts and those of theiremployees, but also for the negligence of independent contractors andguests. 341 Assisting the occupier somewhat, however, is the generallyheld view that the burden of proving that the fire was started by theoccupier or by someone whom the occupier is responsible for rests onthe plaintiff.342

C. Vicarious Liability

The two principal issues which must be resolved in order for anemployer to be held liable for the torts of its employees have both beendealt with in cases decided during the survey period. They are: who isan employee for the purpose of the doctrine?, and was the tortious actcommitted during the employee's course of employment? 343

It is impossible to sensibly deal with the above issues without firstcoming to grips with what the policies of vicarious liability are. Severaldifferent ones can be suggested. The doctrine can be used to shift theaccident costs of an activity to the person best able to absorb or redis-tribute these costs. The doctrine can be justified on the basis that theperson who is in the best position to control an activity's performanceought to be encouraged to do so by the threat of tort liability. Or, it canbe suggested that as a matter of fairness, the person who stands to gainthe most from an activity ought to bear its risks. The rationales aredifferent and would not support the same conditions for the applicationof the doctrine.344

340 See, e.g., Smith v. Widdicombe (1987), 45 MAN. R. (2d) 53, 39 C.C.L.T.98 (Q.B.), aff'd [1987] 6 W.W.R. 687, 49 MAN. R. (3d) 52 (C.A.).

341 See, e.g., Wager v. Molyneaux & Wilson (1988), 90 A.R. 287, 47 C.C.L.T.73 (Q.B.), and Franks v. Sanderson, [1988] 5 W.W.R. 113, 44 C.C.L.T. 208(B.C.C.A.) [hereinafter Franks].

342 See Franks, ibid., and Hallick v. Doroschuk (1986), 41 SASK. R. 151, 35C.C.L.T. 81 (Q.B.).

343 For a very useful article see R. Flannigan, Enterprise Control: The Servant- Independent Contractor Distinction (1987) 37 U.T.L.J. 25 [hereinafter Flannigan].

344 It must also be noted that an employer is, according to most authorities,entitled to be indemnified by its employee. This will shift the loss back on to theemployee's shoulders, thus negating the risk-regulation and fairness rationales ofvicarious liability. But see Lambert J.A.'s judgment in London Drugs, supra, note33, where it was stated that the liability between employer and employee shall beshared equally. See also McCrindle v. Westin Ltd (1985), 35 C.C.L.T. 183 (Ont.H.C.), where it was held that the employer's right to indemnity is lost if the employerwas also at fault. Although there ought to be a right to contribution in this case,O'Brien J. held that this is also lost where the employer was at fault.

1991]


The traditional test which has been applied to determine whetheran employer should be held vicariously liable for the torts of an employeeis the control test. Where a person is hired as an "employee", in thesense that this person is not only directed by the employer as to what to do,but how to do it, vicarious liability applies. Where, on the other hand, anindividual is hired to perform a certain job, but the method of the job's per-formance is totally within the latter's discretion, that person is an indepen-dent contractor, and vicarious liability does not apply. The control test can bejustified on the basis of the risk-regulation role of vicarious liability. 345

Cases decided during the survey period support this traditionalapproach. A hospital, for example, is not vicariously liable for the tortsof doctors who are not their employees. 346 A railway company whichcontracted out passenger service to an independent contractor was notvicariously liable for the negligence of that contractor. 347 A projectowner who hired a subcontractor to perform welding services was notvicariously liable for the negligence of the welder sent out by thesubcontractor to do the work.348

In Lapensie v. Ottawa Day Nursery,349 a non-profit corporation,which was government-funded in order to administer a system of daycare, was held vicariously liable for the negligence of one of its approvedday-care providers. Sutherland J. noted the difficulty with applying the"control" test to this and other cases, where highly skilled professionalsare hired to perform certain tasks, without being given detailed instruc-tion or supervision regarding the manner in which the work is to becarried out. In these cases, the "control" test has given way to the"organization" test, which asks not whether the servant was under theemployer's control, but whether the servant was part of the employer'sorganization. In Lapensie, Sutherland J. decided that the day-care pro-viders were subject to the ultimate or co-ordinational control of thecorporation, and were therefore employees and not independent contrac-tors. The organization and other similar tests350 can be justified not on

345 See Flannigan, supra, note 343.346 See Lachambre v. Nair, [1989] 2 W.W.R. 749, 74 SASK. R. 87 (Q.B.).347 See C.N.R., supra, note 258.348 See James Street Hardware & Furniture Co. v. Spizziri (1985), 51 O.R.

(2d) 641, 33 C.C.L.T. 209 (H.C.), rev'd (1987), 62 O.R. (2d) 385, 24 O.A.C. 42(C.A.). This case raised the problem of the "borrowed servant". When a generalemployer temporarily transfers an employee to another employer, the generalemployer is presumed to maintain control over the transferred employee unless hecan prove that control over that employee has also been transferred. Various factorssuch as the authority to fire, hire, suspend or reprimand, the manner of payment,and the right to choose are taken into consideration.

349 (1986), 35 C.C.L.T. 129 (Ont. H.C.) [hereinafter Lapensge], var'd onreconsideration on other grounds (1986), 38 C.C.L.T. 113 (H.C.).

350 See, e.g., Food Giant Markets v. Watson Leaseholds Ltd. (1987), 43C.C.L.T. 152 (Alta Q.B.), where Picard J. approved of the business test suggestedby Lord Wright in Montreal (City) v. Montreal Locomotive Works Ltd (1946), [1947]1 D.L.R. 161, [1946] 3 W.W.R. 748 (P.C.). The question is "whose business is it"?This is answered by considering factors such as who owns the tools, earns the profits,and risk of loss.

[Vol. 23:1


the basis of the risk-regulation role of vicarious liability, but on its roleto shift losses to those who can better afford either to absorb or redis-tribute them.

Another issue which arose in recent cases relates to the questionof non-delegable duties which may be imposed on employers. Where aduty is non-delegable, the person upon whom it is imposed is liable forits non-performance, even if the non-performance is caused by thenegligence of an independent contractor. Duties of care arising fromintrinsically dangerous or ultrahazardous activities illustrate this cate-gory. In C.NR.,351 the New Brunswick Court of Appeal, while acknowl-edging the principle, disagreed with the trial judge's finding that therunning of passenger trains was such an inherently dangerous activity.In Scarmar Constructions,352 on the other hand, the use of explosivesby an independent contractor was recognized as such a duty. This,however, gave rise to a further issue. Is the employer's liability in sucha case a personal one or is this a case of vicarious liability? In otherwords, is the employer being held responsible for its own failure toensure that its duty was carefully performed or for the breach of dutyby its independent contractor?353 While recognizing that the employer'sliability in this case is based on a breach of its personal duty of care,the Court of Appeal nevertheless accepted the contention that the partiesin such a case were joint, and not separate, concurrent tortfeasors.

The second requirement of vicarious liability, that the tort becommitted during the course of the employee's employment, is consis-tent with the risk-regulation theory of vicarious liability. Employers areonly responsible for torts of their employees which occurred duringcourse of employment. It is over these activities that the employer canexercise control. Unfortunately, how closely connected the tortious con-duct must be to the employment activity in order for it to be consideredwithin the course of employment is an extremely difficult matter. InGeneral Engineering Services Ltd v. Kingston and Saint Andrew Cor-poration,354 the Privy Council affirmed the generally accepted test. Alocal authority was sued for the complete destruction of the appellant'spremises by a fire. The fire brigade, operated by the authority, haddeliberately delayed its arrival at the fire as part of a "go slow" policyin furtherance of an ongoing industrial dispute. Lord Ackner askedwhether the deliberate delay was the wrongful and unauthorized modeof committing an authorized act, and therefore within the course of theemployment, or an act so wrongful as to be unconnected with theauthorized act itself, and hence, outside of the scope of the employment.Their Lordships agreed with the Court of Appeal that the fire brigade's

351 Supra, note 258.352 Supra, note 228.353 The issue was important because the plaintiff alleged that the parties were

not joint tortfeasors, but several, concurrent tortfeasors. Thus, the one-judgmentrule applying in cases of joint torts could be circumvented. The Court of Appealrejected this argument.

354 (1988), [1989] 1 W.L.R. 69, [1988] 3 ALL E.R. 867 (P.C.).

1991]


conduct was outside of the scope of their employment. To have delib-erately allowed the fire to destroy the property was the very opposite ofwhat the brigade had been hired to do. In other words, it was not anunauthorized mode of doing an authorized act; it had nothing to do withthe authorized act. 355

As in other areas of tort where arbitrary lines must be drawn, thedifference between activities which are within or outside of the courseof employment is a matter of the court's discretion. However, certainfactors are relevant to this determination. The seriousness of the wrong-doing, the motives of the employee, whether express instructions wereignored and the time and place of the wrongdoing, will be relevant. Moreimportantly, the purpose of the vicarious liability doctrine must be keptin mind. If the doctrine is used to find a "deep pocket" or to shift losses,the tort's connection to the employee's work will be de-emphasized.However, if it is used to regulate risks, a more substantial connectionwill be necessary.

VI. DEVELOPMENTS IN THE BUSINESS TORTS

A. Deceit

There have been several actions for deceit in the survey periodwhich have highlighted the elements of this cause of action.

The vendor of land's obligation to disclose defects which renderproperty dangerous or uninhabitable was affirmed in Sevidal v.Chopra.356 The matter is interesting because this duty to disclose mustbe reconciled with the common law rule that mere silence or concealmentordinarily cannot give rise to an action for deceit. 357 The Sevidal caseinvolved the purchase by the plaintiffs of a house in an area which hadbeen contaminated by radioactive material. The vendors of the property,who were aware of this radioactivity, deliberately failed to reveal this

35 A recent Canadian case which discussed the scope of the employmentrequirement is Plains Engineering Ltd v. Barnes Security Services Ltd (1987), 83A.R. 170, 43 C.C.L.T. 129 (Q.B.). Arson damaged the plaintiff's building, whichwas being patrolled by the defendant's employees. The fire had been set by thesecurity company's employee. Since the security company had been hired by thetenant of the building, and not by the plaintiff, the Court held that the securitycompany owed no duty to the plaintiff, and could not be held vicariously liable forthe tort of its employee. In other words, when the employee set fire to the building,he was not performing any employment function which had anything to do with theplaintiff. Also note Janzen v. Platy Enterprises, [1989] 1 S.C.R. 1252, 59 D.L.R.(4th) 352, where in the context of a human right's complaint, an employer was heldliable for the sexual harassment committed by an employee.

356 (1987), 64 O.R. (2d) 169, 41 C.C.L.T. 179 (H.C.) [hereinafter Sevidal citedto O.R.]. See discussion of this issue in relation to C.R.F. Holdings v. FundyChemicals (1981), 33 B.C.L.R. 291, 19 C.C.L.T. 263 (C.A.), in Tort Law, supra,note 1 at 397.

357 See, e.g., Macdonell J.'s statement in Canson Enterprises Ltd v. Boughton& Co. (1988), 31 B.C.L.R. (2d) 46 at 55, 45 C.C.L.T. 209 at 219 (S.C.), that,"[s]imple reticence or silence does not amount to fraud. There must be a positiveassertion which amounted to a misrepresentation."

[Vol. 23:1


fact to the purchasers prior to the real estate closing. The purchaserssubsequently lost money on the resale of their home. The vendors wereheld liable in deceit for (1) failing to disclose, at the time of enteringinto the agreement of sale and purchase, that radioactive material wasin the area and (2) failing to disclose, prior to the closing, that they hadlearned that their specific site was affected by radioactivity. 358 Whetherthis result will be confined to the particular facts of this case, 359 orextended to other less dramatic situations, remains to be seen. 360

The falsehood, whether contained in a statement, written represen-tation, by act of concealment, or by silence, must have been made withthe intention to deceive, although not necessarily to injure the represen-tee. This requires that the representor knew of the falsity of the repre-sentation and deliberately used it to deceive the representee. Thisexplains why fraud by silence or concealment is more difficult toestablish than fraud by active misrepresentation. As well, allegations offraud made against corporations cannot succeed unless it can be provedthat those who made the representations on behalf of the corporation didso with the requisite dishonest intention. In three recent judgments,actions for fraud brought against companies failed for this reason. 361

Damage assessment for actions based on deceit have raised somedifficult issues. Damages are assessed on a tort and not on a contractbasis. Plaintiffs are entitled to be put back into the position in whichthey would have been had the false representations not been made. Theyare not entitled to the value of the "lost bargain". 362 If they have sufferedas a result of the fraud, they are entitled to compensation. 363 Whether,and on what test, a plaintiff should be entitled to receive consequentialdamages flowing from a fraud are matters of disagreement. In Under-wood v. Ocean City Realty Ltd,364 the Court concluded that damages for

358 See J. Irvine, Annot.: Sevidal v. Chopra (1987) 41 C.C.L.T. 181 [hereinafterIrvine]. Irvine notes that the judgment is important because it extends the duty todisclose the defects which render a property uninhabitable as well as unsafe.

359 For example, the purchasers were clearly concerned with the potentialradioactivity of the site. It was an emotionally charged issue. The agents andlawyers, and probably the vendors, knew of these concerns.

360 See, e.g., Modern Livestock, supra, note 339, where the Court refused toextend this "new species of deceit" by failing to disclose a sale of hogs which wereinfected by disease.

361 See BG Checo Int. Ltd v. B.C. Hydro & Power Authority, [1990] 3 W.W.R.690,44 B.C.L.R. (2d) 145 (C.A.); Dixon v. Deacon Morgan McEwen Easson, supra,note 35; and Rainbow Industrial Caterers Ltd v. C.N.R. (1988), 30 B.C.L.R. (2d)273, 46 C.C.L.T. 112 (C.A.).

362 See Metro. Stores v. Nova Construction (1987), 39 C.C.L.T. 185 (N.S.T.D.).363 See, e.g., Sugar v. Peat Marwick Ltd (1988), 66 O.R. (2d) 766, 55 D.L.R.

(4th) 230 (H.C.). The plaintiff was able to prove that had it not been for the fraud,she would not have invested money in the company. She was accordingly entitledto be restored to her previous position by recovering her lost investment. The casealso illustrates the proposition that a principal who knowingly allows an agent tomake false statements is liable for fraud, even though the agent who made therepresentations did not himself or herself know that they were false.

364 (1985), 34 C.C.L.T. 128 (B.C.S.C.), affid (1987), 12 B.C.L.R. (2d) 199(C.A.).

1991]


fraud cannot include consequential damages. However, in Sevidal,365 theCourt held that consequential damages, limited by a test of foreseeability,could be awarded. A broader view, which has some support, is that allconsequential damages, whether foreseeable or not, can be recovered. 366

B. Inducing Breach of Contract by Direct and Indirect Means

Several interesting aspects relating to the tort of inducing breachof contract, and other business torts, were canvassed in Sherritt GordonMines Ltd v. P.P.F..367 The case concerned the plaintiffs' request for aninjunction to restrain picketing at the construction site of a large fertilizerplant in Saskatchewan. The strike involved one of the subcontractors onthe site, but because of picketing at the site, the entire project wasbrought to a halt. The plaintiffs, the project owner and a subcontractor,sought injunctions to restrain the picketing. The subcontractor allegedthat the picketers had induced the former's employees to breach theircontracts with it, and had interfered with its own contract with thegeneral contractor. The project-owner alleged that the strike had inter-fered with the general contractor's ability to perform its contract. Thetwo judgments written in this case provide an excellent discussion ofthe role of the economic torts in the context of labour disputes, anddiscuss in detail the elements of these causes of action.

Cameron J.A. made some valuable preliminary observations on the useof tort in the resolution of labour disputes. First, Cameron J.A. empha-sized that picketing per se is not unlawful. Only criminal, tortious orother unlawful acts, committed during the course of the picketing, makeit so. Second, Cameron J.A. noted that in applying the economic tortsto labour disputes, the courts must balance the right of those affectedby a labour dispute to have their contractual rights protected with therights of workers to engage in free collective bargaining without inter-ference by third parties who might be detrimentally affected by labourdisruptions. In this respect, the common law of torts has clearly favouredfreedom to trade as opposed to free collective bargaining and thisimbalance has been rectified by statute. According to Cameron J.A., theposition has now been reached that trade unions, free collective bargain-ing, and strikes must be regarded as positive features of our law, ideasto be respected and not resisted. This must be reflected in the way thatcourts apply the common law to trade disputes. More particularly, thecourts must consider whether the defence of justification ought to beintroduced more strongly with respect to the tort of inducing breach ofcontract.

365 Supra, note 356.366 This stems from Lord Denning's judgment in Doyle v. Olby (Ironmongers)

Ltd, [19691 2 Q.B. 158, [1969] 2 W.L.R. 673 (C.A.). See Irvine, supra, note 358 at184, where it is noted that this view has some acceptance in Canada as well.

367 (1987), 59 SASK. R. 104, (sub nom. Garry v. Sherritt Gordon Mines Ltd)42 C.C.L.T. 241 (C.A.). It must be noted, however, that the labour dispute whichgave rise to this litigation was settled prior to this judgment being rendered. Thus,the judgment is in effect entirely obiter.

[Vol. 23:1


Two torts were of particular importance in this case - inducingbreach of contract by direct means and procuring breach of contract byindirect means. As to the first, brought by the subcontractor against thepicketers with respect to the decision of the subcontractor's employeesnot to cross a picket line, Cameron J.A. and Bayda C.J.S. disagreed. Thetort requires that the defendant with the intention of breaching another'scontract and with knowledge of that contract, directly procures or inducesa party to it not to perform. There were several matters in this case whichcaused Cameron J.A. concern. First, there was doubt whether the pick-eting had in fact resulted in a breach of contract between the subcon-tractor and its employees. 368 Second, Cameron J.A. doubted whetherpickets, which advise or inform workers that there is a strike in progress,actually induce or procure these workers not to cross the lines and tobreak their own employment contracts. In other words, information or advicemay not be the same as inducement. Further, it must be proven that theinducement relates to breaching a contract, as opposed to lawfully with-holding one's services. Finally, Cameron J.A. cast doubt on the causalconnection between the pickets and the workers' refusal to cross. Did theworkers decide on their own not to cross or did they do so because ofthe picketers' inducement?

Bayda C.J.S., on the other hand, had no such concerns. First, heheld that interference with performance of the contract was sufficient tomake out the tort. Thus, whether there was a breach or not would notbe a relevant concern. In this case, that there was an interference withperformance was beyond doubt. The law, as expressed by the House ofLords in Merkur Island Shipping Corp. v. Laughton,369 that any inter-ference with the performance of a contract, even if this interference fellshort of breach and did not give rise to monetary compensation, wasactionable, was accepted by Bayda C.J.S.. Second, the Chief Justice heldthat since the interference with performance was deliberate, intentionaland direct, the action was accordingly made out.

In respect to the tort of procuring breach of contract by indirectmeans, both judgments recognized that this tort can be made out only ifthe indirect means used are unlawful. This became the major point ofdeparture between the two justices. Since the picketing, according toCameron J.A. was not unlawful, the action failed. According to BaydaC.J.S., however, the picketing, constituting the tort of inducing breachof contract by direct means, was unlawful, and indirectly led to theinability of the general contractor to perform its contract with the projectowner.370 Thus, this action was also made out.

Although a defendant's motive for inducing someone to breach acontract with the plaintiff is not a factor in the tort of inducing breach

36s There were several aspects to this issue. Whether the tort applies to workerscovered not by individual contracts but by collective agreements, and whether theseagreements were in fact breached, were far from certain matters according toCameron.

369 [1983] 2 A.C. 570, [1983] 2 W.L.R. 778 (H.L.) [hereinafterMerkurlsland].370 Both justices doubted whether the party who could not perform the contract

could use this tort. It probably should be confined to the party whose contract wasbreached. See, however, Merkur Island, ibid., where this was permitted.

1991]


of contract, the courts have made an exception in the case of actionsbrought against officers and employees of companies. Since the deci-sions of companies to terminate contracts they have with others is madeupon the advice and initiative of their officers, unless the officers'motives are taken into consideration, they will be liable each time theyadvise their companies to terminate their contractual relationships withothers, should these terminations be wrongful. As well, the threat ofpersonal tort liability might interfere with the directors' obligations toact in the best interests of their company. In Imperial Oil Ltd v. C. &C. Holdings Ltd,371 the Newfoundland Court of Appeal, per MarshallJ.A., applied existing law by holding that a director who acts bona fidewithin the scope of his or her authority cannot be sued for inducingbreach of contract. The Court went further by stating that even if thedirector's act exceeded its authority and was malafide, the director couldnot be liable for the tort unless "his or her dominating concern wasfocused upon depriving the complainant of its contractual benefits". 372

The Court was concerned that if the good faith of the director is theCourt's sole concern, this will invite unwarranted third-party assessmentof the director's performance of his or her services for the company.

C. Conspiracy

Although somewhat circumscribed by the Supreme Court of Can-ada in Canada Cement Lafarge v. B.C. Lightweight Aggregate,373 thetort of civil conspiracy has been frequently pleaded in the survey period.

The Supreme Court of Canada has looked at this cause of actionin two recent cases. Although the Court rejected the tort's applicationto a case of a family dispute, going so far as to label the action forconspiracy as an "anomaly", 374 which should not, without pause forthought, be extended beyond the commercial context,375 the Court refusedto strike out a cause of action for conspiracy in a subsequent case notinvolving a commercial dispute. In Hunt v. Carey Con. Inc.,376 the Courtheld that a cause of action for conspiracy could not be ruled out in acase involving a plaintiff who alleged that he became ill as a result ofexposure to asbestos. The plaintiff's statement of claim alleged that thedefendants conspired to withhold information about the dangers ofasbestos exposure. In allowing the claim to proceed, the Court held that itsreluctance to extend the tort beyond the commercial context could notbe viewed as a suggestion that it cannot be applied to other contexts. 377

371 (1989), 78 NFLD & P.E.I.R. 1, 62 D.L.R. (4th) 261 (Nfld C.A.) [hereinafterImperial Oil cited to D.L.R.].

372 Ibid. at 266.373 [1983] 1 S.C.R. 452, 24 C.C.L.T. 111.374 See Frame, supra, note 304 at 11, La Forest J.375 Ibid. at 22, Wilson J.376 [1990] 6 W.W.R. 385, 49 B.C.L.R. (2d) 273 (S.C.C.).377 On this matter see also Surrey (District) v. Marrall Homes Ltd (1988), 32

B.C.L.R. (2d) 174, 48 C.C.L.T. 70 (S.C.), where the Court struck out a statementof claim brought by a municipality against builders and others alleging a conspiracyto breach zoning and building by-laws. Hinds J. stated that the action for conspiracyshould be restricted to labour and commercial disputes.

[Vol. 23:1


VII. DEVELOPMENTS IN PRIVATE NUISANCE

A. The Role of Nuisance Law

In contemporary tort law, the action for private nuisance operatesin two different contexts. Its traditional role is to regulate the conflictinguses of land of two neighbors. Thus, where the activity of one persondisrupts or interferes with the activities of another, the court mustdetermine which of the conflicting uses is to prevail. A few cases decidedduring the survey period illustrate the problem. In Fogarty & Crouse v.Daurie,37s the plaintiffs complained that the odors emanating from thedefendant's piggery made their home life intolerable. They could notleave their windows open, could not dry their laundry outdoors, couldnot eat outside nor enjoy outdoor activities. In Sullivan v. Desrosiers,379

the plaintiffs had similar complaints concerning their neighbor's pig-gery. In MacNeill v. Devon Lumber Co.,380 the plaintiffs' complaintsrelated to problems caused by the defendant's cedar mill. The dust, asidefrom being annoying, provoked allergic reactions and asthmatic attacks.In these cases, the courts applied traditional nuisance law principles indeciding whether the defendants' uses of their lands interfered unrea-sonably with the plaintiffs' use and enjoyment of theirs. The courtsconsidered the nature of the damage caused, the sensitivities of thecomplainants, the nature of the defendants' conduct and other factors inweighing the conflicting uses.381

Frequently, nuisance is being used not as a means of regulatingconflicting uses of land, but as a vehicle to compensate those who sufferproperty damage from accidental occurrences arising on lands occupiedby others. This use of nuisance law is illustrated in recent law by thenumerous cases of damage caused by the flooding of homes due tobursting water mains, and sewage and drainage systems which overflowor backup.38 2 Assisting the courts in this area is the principle that anyuse of land which materially damages the property of another is anuisance. Since reasonable care on the defendant's part is not a defencein such a claim, the courts have been able to use nuisance law to providea strict liability vehicle to shift the accident costs of socially beneficial,but potentially harmful, activities to defendants who can redistributethese accident costs.

378 (1986), 77 N.S.R. (2d) 34, 40 C.C.L.T. 48 (C.A.) [hereinafter Fogarty].379 (1986), 76 N.B.R. (2d) 271, 40 C.C.L.T. 66 (C.A.) [hereinafter Sullivan].380 (1987), 82 N.B.R. (2d) 319, 42 C.C.L.T. 192 (C.A.) [hereinafter MacNeill].381 In Fogarty, the trial judge had decided that there was no nuisance, but the

Court of Appeal found that the trial judge had erred in considering irrelevant factors,and ordered a new trial. A nuisance was found in both Sullivan and MacNeill. Inthe latter case, the Court held that non-proprietary occupants such as children, whoinhabit the home as family members, have the status to sue in nuisance.

382 See Dressew Supply Ltd v. Vancouver (City), [1989] 6 W.W.R. 73, 38B.C.L.R. (2d) 119 (C.A.); Canada (A.G.) v. Ottawa-Carleton (Regional Municipal-ity) (1988), 65 O.R. (2d) 79, 44 C.C.L.T. 242 (H.C.); Tock, supra, note 338; Bishopv. Gander (Town) (1986), 60 NFLD & P.E.I.R. 310, 39 C.C.L.T. 208 (Nfld T.D.),among others.

1991]


While not disagreeing with the goal of the redistribution of accidentcosts in certain areas, I believe that the use of nuisance law to accomplishthis is inappropriate. The nuisance action is limited to those with pro-prietary interests in land. This means that while those without property-based interests who are damaged by socially beneficial activities mustresort to the law of negligence, those with proprietary interests can usethe avenue of nuisance law. This area of law should be rationalized sothat accident-cost redistribution by means of strict liability can beaccomplished outside of the boundaries of nuisance.

B. The Defence of Statutory Authority

The major development in the area of nuisance law during thesurvey period has been the Supreme Court of Canada's restriction of thedefence of statutory authority. In Tock,383 Wilson J., speaking for herself,Lamer and L'Heureux-Dub6 JJ., held that statutory authority, as adefence to a nuisance action brought against a defendant whose nuisancecreating activity had a statutory base, is limited to activities which arestatutorily mandated, as opposed to being merely permitted. Statutoryauthority, for this purpose, means that the statute must have eitherimposed a duty on the authority to conduct the specific activity inquestion, or failing that, have specifically provided that an authorizedactivity be conducted in a certain manner or location. Where the activityis statutorily mandated in this sense, an action for nuisance cannotsucceed if the nuisance was the inevitable consequences of the activity.Inevitable consequences mean that considering the existing state ofknowledge, the feasible alternatives, the costs, and common sense, thenuisance could not possibly have been avoided. In Tock, Wilson J. heldthat since the defendant board's activity, which was the operation of apublic sewage system, was not statutorily mandated, the defence ofstatutory authority did not apply.

Mr Justice Sopinka, while disagreeing with Wilson J.'s restrictionof the defence of statutory authority to statutorily mandated activities,also took a narrow view of the defence. While applying it to all casesof statutorily authorized activities, whether mandatory or permissive,Sopinka J. held that the defence requires that the nuisance be theinevitable consequences of the activity. This requires proof that theactivity conducted by the defendant was the only one practically feasible,and the nuisance was practically impossible to avoid.

Mr Justice La Forest, whose judgment was concurred in by DicksonC.J.C., argued for the abolition of the defence of statutory authority.Except where the statute contains authority to construct a work at aparticular place, the courts should look to a number of factors to deter-mine whether the costs of an activity should be borne by an individualvictim or shifted to the defendant authority. These include such thingsas the nature of the defendant's conduct, the available alternatives, thecosts of avoiding damage, the nature of the damage, and the utility of

383 Tock, ibid.

[Vol. 23:1


the activity. In other words, the courts should approach this nuisancedispute as they do all others and ask whether it is reasonable for thedefendant or plaintiff to bear the loss.

Tock has reaffirmed the role of nuisance law to redistribute accidentcosts of socially beneficial activities to those who gain from theseactivities. It has severely limited the defence of statutory authority and,save in cases of express immunity, statutory defendants have littlelikelihood of succeeding in this defence.

VIII. DEVELOPMENTS IN DEFAMATION LAW

A. Introduction

Issues in defamation litigation in Canada continue to revolvemainly around the defences to the action, and not proof of the plaintiff'sprima facie case. Canadian courts treat virtually all critical commentsas defamatory, and plaintiffs generally have little difficulty in makingout a case for defamation. This focus on the right to reputation asopposed to freedom of speech is unlikely to be changed by the CanadianCharter of Rights and Freedoms, if cases decided to date are followed.Not only are courts unable to apply the Charter to private litigation notinvolving a governmental connection, 384 but even where defamationlegislation has been involved, the courts have held that the existingCanadian balance between freedom of speech and reputation is consis-tent with Charter rights.385

B. The Plaintiffs Case

In order to make out a primafacie case for defamation, the plaintiffmust prove that (1) the material was defamatory, (2) it referred to theplaintiff and (3) it was published.

The question of the "colloquium" or reference to the plaintiff wasan interesting issue in two cases. In Dale's Trad'n Post Ltd v. Rhodes,386

defamatory material was published in a local newspaper complaining ofthe quality of workmanship of a "local vendor" of a fireplace insert. Theonly vendor of the product in question in the locality sued for defama-tion. In deciding whether the material - assuming it to have beendefamatory - referred to the plaintiffs, the Court noted that a two-stagetest must be applied. The first asks whether, as a question of law, thematerial is capable of referring to the complainant. In this case, the trialjudge decided that it was so capable. The second stage asks whether, asa question of fact, reasonable persons who read the material would thinkthat it referred to the complainant. The evidence in the case indicated

384 See R.W.D.S.U. v. Dolphin Delivery Ltd, [1986] 2 S.C.R. 573, 33 D.L.R.

(4th) 174.385 See Coates v. The Citizen (1988), 85 N.S.R. (2d) 146, 44 C.C.L.T. 286

(T.D).386 (1987), 19 B.C.L.R. (2d) 73, 43 C.C.L.T. 37 (S.C.) [hereinafter Dale's

Trad'n Post].

1991]


that business associates of the plaintiffs thought that the material referredto them. There was no evidence adduced, however, which indicated that"average sensible readers", who did not have a close connection to theplaintiffs, would think that the material referred to the plaintiffs. Thetrial judge accordingly held that the onus of proving that the materialreferred to the plaintiffs was not satisfied, and the action was dismissed.The judgment is important in reminding plaintiffs that where they arenot specifically named or referred to in defamatory material, they mustadduce evidence to establish this element of their case.

The second case of note is A. U.P.E. v. Edmonton Sun. 387 In news-paper articles, defamatory material was published concerning the staffat a correctional institute. No particular persons were identified. Theprison employed 200 guards, and of these, 25 sued for defamation.Despite the large size of the group, the Court found that the ordinary,sensible reader would reasonably believe that the defamatory commentsreferred to all the guards, and thus that the ordinary reader would thinkless of each individual guard.388

C. Defences

1. Absolute Privilege

A few cases decided during the survey period have successfullyemployed the defence of absolute privilege. In Fabian v. Margulies,389

the defence applied to a written report prepared by a doctor with respectto litigation in which he was to act as a witness. As well, in Dingwallv. Lax,390 a draft statement of claim and accompanying letter sent by alawyer representing one party to lawyers acting for the other party wasabsolutely protected. Finally, in Sussman v. Eales,391 a written complaintsent to the Complaints Committee of the Royal College of DentalSurgeons was protected by an absolute privilege, since this body was alegally recognized tribunal carrying out quasi-judicial functions. TheCourt refused to distinguish between the Complaints Committee, whichinvestigated complaints, and the Discipline Committee, which adjudi-cated upon them, for the purpose of the privilege's application.392

387 (1986), 75 A.R. 253, 39 C.C.L.T. 143 (Q.B.).388 It is interesting to note that the only evidence that the material referred to

each of the guards came from the plaintiffs themselves. They testified that commentsfrom "friends, neighbours, relatives, acquaintances and strangers" convinced themthat they were identified by these readers with these articles. Compare Dale's Trad'nPost, supra, note 386, where the Court rejected this type of evidence as hearsay.

389 (1985), 53 O.R. (2d) 380 (C.A.).390 (1988), 63 O.R. (2d) 336, 47 D.L.R. (4th) 604 (H.C.).391 (1985), 33 C.C.L.T. 156, 1 C.P.C. (2d) 14 (Ont. H.C.).392 See also Parsons v. Windsor Star (1989), 71 O.R. (2d) 5, 63 D.L.R. (4th)

732 (H.C.). The Court held that complaints to the Windsor Police Department wouldhave been protected by a qualified privilege, had the defendant not published thesecomplaints to the media. The judge referred to Boyachyk v. Dukes (1982), 37 A.R.199, 136 D.L.R. (3d) 28 (Q.B.), where complaints to the police were protected byan absolute privilege.

[Vol. 23:1


2. Qualified Privilege

The right of politicians to communicate information to the publichas been protected by the defence of qualified privilege in recent defa-mation cases. In Parlett v. Robinson,393 and Loos v. Robbins,394 Courtsof Appeal have upheld the right of a Member of Parliament in the formercase, and a Cabinet Minister in the latter, to make statements to thepublic through the media, which although defamatory were made infurtherance of their public duties. These decisions demonstrate a greaterlatitude to the types of statements which will be protected, particularlywith regard to the breadth of their publication, than had been the casein earlier Canadian law. 395

In Leverman v. Campbell Sharp,396 Lambert J.A. held that thedefence of qualified privilege will be defeated if the defendant publishesa statement which is not his honest belief. Although carelessness informing the belief will not defeat the defence, carelessness in publishingit, so that the statement does not represent one's views, will.

3. Fair Comment

Canadian courts continue to take a restrictive approach to thedefence of fair comment. In Christie v. Geiger & Edmonton Sun,3 9 7 themajority of the Alberta Court of Appeal affirmed a trial judgment whichrefused to apply the defence of fair comment to a newspaper editorialconcerning the plaintiff, a lawyer and a leading figure in the Westernseparatist movement. The Court found that the material consisted not ofcomment, but of fact, and in this respect, the factual assertions werefalse. The majority further held that the comments were not objectivelyfair. In another case, Russell v. Pawley,398 the defence failed on theground that the comment did not involve a matter of public interest. Thiswas so despite the fact that the statement made by the Premier concernedthe plaintiff, a private person who was actively engaged in a publicdebate concerning French language rights in Manitoba. Since the com-ment related to the plaintiff's integrity, it was held to be outside of thebounds of the debate and not on a matter of public interest.

393 (1986), 5 B.C.L.R. (2d) 26, 37 C.C.L.T. 281 (C.A.), rev'g (1985), 33C.C.L.T. 161 (S.C.), leave to appeal den'd (1986), 33 E.C.L.T. xxxi (note), [1987]1 W.W.R. lxviii (note).

394 (1987), 37 D.L.R. (4th) 418, 55 SASK. R. 183 (C.A.).395 The leading ones are Douglas v. Tucker, [1952] 1 S.C.R. 275, [1952] 1

D.L.R. 657, and Jones v. Bennett, [1969] S.C.R. 277, 2 D.L.R. (3d) 291. Anotherrecent case is Russell v. Pawley (1987), 36 D.L.R. (4th) 625, 45 MAN. R. (2d) 235(C.A.). This involved statements made by the Premier of Manitoba. The defendantwas found liable, but the defence of qualified privilege was withdrawn by thedefendant, leaving only the defence of fair comment to be considered.

396 (1987), 12 B.C.L.R. (2d) 57, 40 C.C.L.T. 73 (C.A.).397 (1986), 74 A.R. 1, 38 C.C.L.T. 280 (C.A.).398 Supra, note 395.

1991]


In order for the defence of fair comment to play a useful role inpromoting active public debate on contraversial issues, courts must takea less rigid approach to its various requirements. Case law indicates thatunless a broader approach is taken, the role of the defence will continueto be minimal.

D. Damages

Three defamation judgments are of particular note with respect todamage assessment in defamation cases. In Westbank Band of Indiansv. Tomat,399 the largest Canadian award for damages in a reporteddefamation action was made. A plaintiff was awarded $400,000 indamages, consisting of $350,000 in general damages and $50,000 forpunitive damages. 400 This amount was assessed based on the seriousnessof the attacks made concerning the plaintiff, and the financial andemotional impact which they had upon him.40 1 This award is particularlyinteresting in view of the Supreme Court of Canada's judgment in Snyderv. Montreal Gazette.402 In this case, ajury awarded the plaintiff $135,000in non-pecuniary damages for defamation. The Quebec Court of Appealreduced this award to $13,500, based in part on the unreasonableness ofthe award, when compared to the ceiling of $100,000 which the SupremeCourt had only recently applied to non-pecuniary damages in personalinjury cases. On appeal to the Supreme Court, the jury's award wasrestored. Although Beetz J., for the majority, suggested that the awardseemed high, it was not so unreasonable as to be interfered with by anappellate court. Beetz J. also agreed with L'Heureux-Dub6 J.A.'s dissentin the Court of Appeal, that comparisons from other jurisdictions inarriving at assessments in Quebec are not a useful guide in defamationcases. Lamer J., in his dissenting judgment, noted that damage awardsin Quebec must not contain a punitive aspect, and thus comparisons withcommon law awards, where punitive considerations are a factor, areinappropriate. His Lordship suggested a rough, upper limit of $100,000for such awards, which could be exceeded in truly exceptional cases.403

In Farrell v. C.B. C.,404 the Newfoundland Court of Appeal reduced adefamation award from $80,000 to $45,000. The Court noted that defa-mation awards should be consistent, and thus regard must be had to other

399 (1989), 50 C.C'L.T. 257 (B.C.S.C.).400 There were two other plaintiffs; one received $70,000 and the other

$45,000.401 The plaintiff was a former chief and band councilor. He was accused of

fraud and the misappropriation of band funds. He lost his position as chief andsuffered severe financial and personal problems thereafter. The judgment has beenappealed.

402 [1988] 1 S.C.R. 494, 43 C.C.L.T. 216, rev'g (1983), 5 D.L.R. (4th) 206,[1983] C.A. 604 (Que.), rev'g (1978), 87 D.L.R. (3d) 5, [1978] Que. S.C. 628.

403 The award was set at $35,000 based on the upper limit, which at the timeof the trial would have been $50,000.

404 (1987), 66 NFLD & P.E.I.R. 145, 43 D.L.R. (4th) 667 (Nfld C.A.).

[Vol. 23:1


cases. In light of these other cases, the Court determined that the trialjudge's award in this case was excessive.

E. Slander of Goods

The elements of the tort of slander of goods were outlined in RustCheck Can. Inc. v. Young.40 5 It is tortious to maliciously publish a falsestatement in disparagement of another's goods, and thereby cause thatperson special damage. Comparison of one's goods with those of acompetitor is legitimate. Disparaging another's goods by falsely repre-senting their qualities or character is not. In another recent case, ProcorLtd v. U.S.W.A., 406 an action for injurious falsehood, based on thedefendant's allegations that the plaintiff company was guilty of customsfraud, succeeded. In order to succeed in these actions, malice must beestablished.

IX. DEVELOPMENTS IN DAMAGE ASSESSMENT

A. The Collateral Source Rule

In Ratych v. Bloomer,407 the Supreme Court of Canada reviewedwhat has been one of the more controversial aspects of the damageassessment process, the collateral source rule. The issue relates towhether the courts, when assessing a plaintiff's losses, should take intoconsideration benefits which the plaintiff has received from othersources. These other sources may include welfare benefits, employeedisability benefits, or even gratutious payments from friends or relatives.The problem here is clear. If benefits, which reduce a plaintiff's actuallosses from an accident, are not deducted from a plaintiff's award, theremay be overcompensation of the plaintiff. If collateral benefits received,however, do reduce a plaintiff s tort award, the wrongdoer's burden offully restoring the plaintiff is eased, having been assumed in part by thecollateral benefits.

In Ratych, the plaintiff was a police officer who was injured in amotor vehicle accident caused by the negligence of the defendant. Theplaintiff was unable to work for several months, during which time hereceived his full salary pursuant to the terms of his collective agreement.He did not lose any accumulated "sick credits" while on leave. In thesecircumstances, was the plaintiff entitled to damages for loss of wagesfrom the defendant?

The majority judgment was delivered by McLachlin J., concurredin by Lamer, La Forest, L'Heureux-Dub6 and Sopinka JJ. The corner-stone of McLachlin J.'s judgment was the principle that the purpose of

405 (1988), 47 C.C.L.T. 279, 22 C.P.R. (3d) 512 (Ont. H.C.). The plaintiff wasseeking an interlocutory injunction which was refused.

406 (1990), 71 O.R. (2d) 410, 65 D.L.R. (4th) 287 (H.C.).407 (1990), 69 D.L.R. (4th) 25, 107 N.R. 335 (S.C.C.) [hereinafter Ratych cited

to D.L.R.].

1991]


damages in tort is to restore the plaintiff as fully as possible to his orher pre-accident position. Overcompensation or "double recovery" mustbe avoided, even if this means that the tortfeasor' s burden to compensatethe plaintiff will be eased by the victim's collateral benefits. After areview of Commonwealth, American and Canadian authorities, and aconsideration of the policies, including the social and economic impli-cations of the collateral source issue, the majority's conclusion in thiscase was as follows: unless it can be shown that the plaintiff has in someway paid for the collateral benefits which he or she received, or unlessthe double recovery problem can be avoided, wage benefits which aplaintiff receives while unable to work must be brought into account anddeducted from the tort claim for lost earnings. Since, in the case beforeit, there was no evidence of any benefit paid by the plaintiff for hissick-leave pay, or any other obvious way to avoid double recovery, theCourt disallowed the tort claim for loss of wages.

There was a strong dissent by Cory J., concurred in by DicksonC.J.C., Wilson and Gonthier JJ.. The principle of the collateral sourcerule that payments received from insurance are not deductible from tortawards was stated to be unquestioned in Canadian or English jurispru-dence. In this respect, Cory J. noted that wage benefits received pursuantto a collective agreement or private contracts of employment have in thepast been correctly treated as akin to benefits received from privateinsurance plans.40 8 The thrust of the dissent was that to maintain thecollateral source rule for private insurance benefits, but now to eliminateit for payments made pursuant to collective agreements, would be terri-bly unfair to those working under collective agreements. These workerscould not possibly prove what they have given to receive their sick-leavebenefits, although Cory J. had no doubts that there always is a quid proquo for the benefits. If the legislature decides to abolish the collateralsource rule for all insurance benefits, that would at least be fair to all.However, for courts to treat benefits received from collective agreementsdifferently than those from private insurance would not be.

Cory J.'s argument that collective agreement benefits are part ofthe employee's total wage package which are received in return for workis convincing. It seems clearly unfair that disability or sick-leave benefitsreceived through private insurance will be treated differently than ben-efits received from collective agreements. One wonders then what themajority judgment in Ratych was meant to signal. Was it an indicationthat in the appropriate case the Court will generally abolish the collateralsource rule, and is starting to do so now on a piecemeal basis? Was ita subtle call for legislative action? Or was it merely advice to employeesand employers that if they wish to benefit from the collateral sourcerule, they must in the future structure their affairs differently? One mustnot lose sight of the fact that McLachlin J. left open numerous possibleexceptions to the general rule that wage benefits paid while a plaintiff

408 Cory J. cited the leading Ontario case, Boarelli v. Flannigan, [1973] 3O.R. 69, 36 D.L.R. (3d) 4 (C.A.).

[Vol. 23:1

Recent Developments in Canadian Law: Tort Lmv

is unable to work will be deducted from the tort claim. Consider thefollowing: if the plaintiff can prove that there was some benefit givenup in exchange for the collateral benefits received, there will be nodeductibility. Even if there is an inescapable inference that there werebenefits given up in exchange, there will be no deductibility. If there isa right of subrogation on the part of the donor of the benefits, there willbe no deductibility. If there is on the plaintiff's part a legal or moralobligation to repay the benefits, there will be no deductibility. If thecourt can impose a trust on the funds for the benefit of third party donors,there will be no deductibility. If the donor has an independent action toreclaim the funds, there will be no deductibility. It is possible that theexceptions to the rule in Ratych may become more common than therule itself. One should hesitate therefore before declaring that the col-lateral source rule with regards to wage or sick-leave benefits is deadin Canada.

B. The Lump-Sum Approach

In Watkins v. Olafson,409 the Supreme Court of Canada held thatthe decision of the Manitoba Court of Appeal which ordered that theplaintiff's damages for the cost of future care should be paid monthly,and not in a lump sum, was wrong. Despite agreeing with argumentswhich support a periodic payment to damages, as opposed to a lump-sumapproach, McLachlin J. held that in the absence of legislation, or theparties' consent, it was not open to the courts to order that a plaintiffforgo the traditional right to a lump-sum judgment. The lump-sumapproach was a fundamental principle of tort law, a change which wassimply too major and far-reaching for courts to make.

I would disagree with the judgment in one respect. The fundamentalbasis of tort, that wrongdoers should account to their victims for theconsequences of their wrongs, is unrelated to how the victim's damagesare to be paid. Courts have adopted the lump-sum approach, presumablyfor reasons of ease of administration. A periodic system of paymentwould not affect tort philosophy, although it might be more complex toimplement. McLachlin J.'s decision that a system of periodic paymentsinvolves complexities which courts cannot suitably address is convinc-ing. How the awards are to be tailored to meet the plaintiff's changingneeds, or how future payments will be secured, for example, may bematters which courts cannot, on their own, adequately address. However,if these matters could be resolved by courts or legislatures, it would notbe inconsistent with tort principles for these changes to be made.

409 (1989), 61 D.L.R. (4th) 577, [1989] 6 W.W.R. 481 (S.C.C.) [hereinafterWatkins cited to D.L.R.].

1991]


C. Tax Gross Up

In the Supreme Court of Canada's 1978 trilogy, 410 it appeared thatthe Court rejected the concept of "grossing up" an award of damagesfor cost of future care in order to account for the impact of taxation onthe income produced by the award.411 In two recent cases, however,Watkins, 4 12 and Scarff v. Wilson,4 13 the Supreme Court of Canada hasheld that the conclusion in the trilogy did not forbid taking into accountthe impact of taxation on the award for cost of future care, as long asthere is sufficient evidence adduced as to what the impact of taxationwould be. In both cases, the Supreme Court ordered a gross up of theawards.

D. Management Fee

In Mandzuk v. LC.B.C.,414 the Supreme Court of Canada, perSopinka J., discussed the factors which the courts ought to consider indeciding whether to include, in a plaintiff's award, an amount for amanagement fee or investment advice. These include evidence that themanagement assistance or investment advice was necessary, due to theplaintiff's inability to manage or to invest the award, and evidence asto the costs of these services.

410 The term "trilogy" refers to the following cases: Andrews v. Grand & ToyAlberta Ltd, [1978] 2 S.C.R. 229, 3 C.C.L.T. 225 [hereinafter Grand & Toy citedto S.C.R.]; Arnold v. Teno, [1978] 2 S.C.R. 287, 3 C.C.L.T. 272; Thornton v. SchoolDist. No. 57 (Prince George), [1978] 2 S.C.R. 267, 3 C.C.L.T. 257.

411 See, e.g., Dickson J.'s judgment in Grand & Toy, ibid., at 260.412 Supra, note 409.413 (1989), 61 D.L.R. (4th) 749, [1989] 6 W.W.R. 500 (S.C.C.).414 [1988] 2 S.C.R. 650, (sub nom. Mandzuk v. Vieira) 47 C.C.L.T. 63.

[Vol. 23:1

Date post:	07-Jul-2018
Category:	Documents
Upload:	lamnhan
View:	223 times
Download:	2 times

RECENT DEVELOPMENTS IN CANADIAN LAW: TORT … · RECENT DEVELOPMENTS IN CANADIAN LAW: TORT LAW ......

Documents