this newsletter in PDF
In this issue:
1. Firm and Industry News
2. B.C. Court of Appeal Reverses Warehouse Case
3. Supreme Court of Canada - Causation Test Clarification
4. European Court of Justice Reaffirms Passenger Entitlement to
Compensation for Long Delays
5. The Anatomy of an Injunction: Canadian National Railway v.
John Doe, Jane Doe and Persons Unknown
6. A Summary of Recent and Upcoming Amendments to the Fisheries Act (Part 1 of 2)
7. Insurers: Which Duty of Care?
1. Firm and Industry News
2. B.C. Court
of Appeal Reverses on Warehouse Case
In our November 2010 newsletter we reported on a very
important decision having wide ramifications for the shipping and
warehouse industry. In the decision of Kruger Products Limited
v. First Choice Logistics Inc., 2010 BCSC 1242, Justice Burnyeat
had to deal with responsibility for a fire at a warehouse involving
multiple parties. Kruger Products Limited was the owner of paper
products stored at a warehouse operated by First Choice Logistics
Inc. The origin of the fire was a forklift operated by Terrance
Bodnar. The forklift was manufactured by Toyota and leased to the
warehouse by Mason Forklift Ltd. After a twenty day trial, First
Choice was found to be fully liable for the large loss to Kruger
Products. First Choice appealed to the British Columbia Court of
Appeal. Their decision was released in mid January of this year
and it too has wide ramifications for the warehouse industry as
well as the transportation and insurance industry. It is a landmark
At the Original Trial
Prior to the original trial before Justice Burnyeat,
and subsequent to a settlement agreement, the claimant Kruger Products
discontinued its actions against Toyota and Mason. The fire destroyed
a number of large paper rolls stored at the warehouse. The forklift
was powered by propane. An original propane forklift used at the
warehouse was noticed to overheat due to paper debris being sucked
up into the body of the vehicle by the operation of the radiator
cooling fan. Operators also noticed that they could smell paper
smouldering within the machine. They were forced to stop the forklift
and allow it to cool before cleaning it and putting it back into
service. First Choice sought the assistance of Mason regarding these
problems. As a result of discussions, an air compressor was obtained
to "blow out" the forklift at various intervals and to
have the exhaust pipe wrapped with fibreglass insulation in order
to shield paper and debris from the hot surface of the exhaust pipe.
The number of "problems" was reduced.
In mid July 2001, the original forklift was damaged
and taken in for repair. Mason was asked to find a replacement unit
during the repair period. Mason did not install venting and did
not wrap the exhaust pipes of the forklift with fibreglass prior
to delivering the forklift to First Choice. First Choice did not
request the modifications and Kruger was not consulted regarding
the use of the forklift without the modifications.
Mr. Bodnar was aware that the replacement forklift
was not wrapped with
fiberglass fibreglass tape. His supervisor
advised him to proceed to use the forklift but to adhere to the
procedure of "blowing down" the machine with compressed
air as required. Justice Burnyeat held that the forklift was blown
down with compressed air approximately 10 to 15 minutes prior to
the fire. While passing an electric forklift at the warehouse, Mr.
Bodnar did not see any large pieces of paper in the aisle ahead
of him. The operator of an electric forklift noticed a piece of
paper about 2 to 3 feed long in the vicinity of the exhaust grill
of Mr. Bodnar's forklift. The paper was on fire and drifted away
from the back of the forklift landing at the base of a stack of
rolls. The fire spread within the warehouse causing a total destruction
of the building and its entire contents.
Kruger Products claimed against the warehouse under
a partly written and partly oral contract. It claimed that First
Choice breached its contract to take reasonable care of the warehouse,
failure to train employees etc. In addition, it claimed that First
Choice breached its duties at common law and as a warehouser under
the Warehouse Receipts Act of B.C. The losses amounted to
First Choice and Mr. Bodnar defended on the basis
of an agreement set out in a February 1, 2000 Warehouse Management
Agreement accepted by Kruger Products through its conduct (as opposed
to a proposal as alleged by Kruger Products). The Warehouse Management
Agreement included a provision requiring Kruger Products to obtain
insurance on the inventory in the warehouse and naming First Choice
as an additional insured. Kruger Products was therefore barred and
estopped from claiming against First Choice to the extent of the
indemnity which would have been provided by such insurance. First
Choice also relied on an appendix to the Agreement which excluded
or limited the liability of First Choice. The appendix was developed
by the International Warehouse Logistics Association and its "Canadian
Standard Contract Terms and Conditions for Merchandise Warehouse."
First Choice also pleaded that Kruger Products was
negligent by ordering the warehouse to stack the rolls higher than
normal (creating a fire hazard) and by failing to wrap the rolls
in order to avoid paper sloughing off the rolls creating a housekeeping
issue and fire hazard.
The judge found that the paper debris came into contact
with the unwrapped exhaust system of the forklift and caused the
fire. Other possible causes of the fire were rejected.
The judge reviewed the discussions and correspondence
between the parties regarding the Warehouse Management Agreement
("Agreement"). The Kruger Products representative died
shortly after the fire and his recollections of the discussion were
not available for trial. The judge heard the evidence of the First
Choice representative who stated that he explained the Agreement
and left the Agreement with the Kruger Products representative and
that "it was his expectation that [the Kruger representative]
would eventually get back to him with affirmation that the proposed
terms were acceptable or, alternatively, would raise any concerns
so that the parties could then negotiate further".
The judge then reviewed the formation of the Agreement
and the appendix which had an effective date of February 1 2000.
During the spring of 2000, the warehouse was operated by First Choice
and Kruger Products continued to forward product to the warehouse.
First Choice followed up with the Kruger Products representative
on numerous occasions to obtain the Agreement. A number of excuses
were provided as to why no comments were being forwarded. No agreement
was signed. The judge found that the Agreement had many deficiencies
stating, "Some of the drafting is incomprehensible." However,
the judge was satisfied that the Agreement and the appendix accurately
reflected the contract that existed between the two parties.
Justice Burnyeat then proceeded to go through the
Agreement and appendix in detail. He found that:
a) First Choice did not "maintain the warehouse
in food grade condition and cleanliness at all times" in accordance
with the contract requirement. It failed to maintain the warehouse
in a condition that met or exceeded professional warehousing management
practices - housekeeping was poor;
b) First Choice breached its contract to "properly
and safely maintain, and keep in sanitary, neat and orderly condition,
all goods and products" by failing to wrap the exhaust of the
c) First Choice owed Kruger Products a duty of care
under the common law and pursuant to the provisions of the Warehouse
Receipts Act. First Choice failed to meet the standard of care
and the breaches caused the fire and the damages. The court found
that the duty was as described in the Warehouse Receipts Act - as a "careful and vigilant owner." The court also found
that section 2(4)(a) of the Act provides that any attempt by contract
between the parties to reduce the care and diligence cannot prevail.
The onus is a reverse onus - on the warehouse to show that it did
not breach the duty of care, not on the owner of the goods to show
that the warehouse breached such a duty. The court found that First
Choice failed to take adequate preparations regarding dealing with
fires, including a duty not to allow paper debris to build up.
"A careful and vigilant warehouseman
in the position of First would have taken steps to sweep up the
paper debris not only in the aisles but also at the base of the
stacked parent rolls on a regular basis and not just after each
shift. I find that these failures amount to a breach of the duties
owed by First to [Kruger] [p. 116]
I also find that the
failure to wrap the exhaust system of the Forklift was a breach
of the duty owed by First to [Kruger]"[p.117]
d) The Toyota defendants and the Mason defendant were
not liable for the damages.
e) Kruger Products was not contributorily negligent
for the fire. The "unwrapped" rolls were not inherently
dangerous. Stacking at a height over the recommended height was
not contributory negligence.
f) A warehouser may limit its liability but not if
it lowers the statutory duty of care. The paragraph in the Agreement
dealing with any loss of profit or special, indirect or consequential
damages was so poorly drafted that the judge refused to rectify
the paragraph as "I cannot conclude that there would have been
an agreement between the parties [on this issue]."
g) Paragraphs in the Agreement stating that goods
were stored at the owner's risk of loss damage or delay caused by
certain events were found contrary to other paragraphs in the Agreement
and contrary to the duty to properly and safely maintain the goods.
h) There was a conflict in the warehouse receipt being
used and in the Agreement (including the clause relating to indemnification).
The warehouse receipt was also not signed. In addition the reverse
side of the receipt was not provided to Kruger Products. As a result,
the wording in the receipt allowing First Choice to limit liability
was of no effect.
Having found that First Choice could not limit its
liability under the Agreement, the judge then had to decide what
the limitation would be, should he be found incorrect in his decision.
The question to be determined was what constituted a "package
or stored unit" for the purposes of limitation. First Choice
took the position that a "unit" was a pallet or lift,
given how the warehouse dealt with the product. Kruger Products
took the position that the "unit" measure was a case,
given how customers ordered the product. The court found that the
limitation amount (if he was incorrect in his determination that
there was no limitation) was the lesser of the monetary amount of
the damage incurred or twenty five times the monthly storage rate
on any "case" (not pallet or lift).
i) The court rejected the position of First Choice
that the Agreement required Kruger Products to obtain insurance
for the inventory and to name First Choice as an additional insured.
First Choice did not have an insurable interest in the goods. First
Choice had a lien on the goods and that was the extent of its interest.
The court also found that First Choice's position would result in
an impairment of the duty of care owed by First Choice to Kruger
Products and thus would be contrary to the Warehouse Receipts
Act. It was this last ruling that formed a major part of the
appeal to the British Columbia Court of Appeal.
British Columbia Court of Appeal
Madam Justice Newbury wrote the unanimous decision
of the Court of Appeal. The decision is found at 2013 BCCA 3 (CanLII).
On the appeal, First Choice challenged only two substantive
conclusions reached by the trial judge: (1) his finding of fact
that Kruger's losses and damages were caused by negligence on the
part of First Choice; and (2) his conclusion of law that Kruger's
claim against First Choice (which the Court was told was a subrogated
claim) was not barred by the application of certain insurance provisions
in the Warehouse Management Agreement.
The Court of Appeal dismissed First Choice's argument that the judge
erred in finding that Kruger's losses and damages were caused by
the negligence of First Choice. Justice Newbury noted that there
was substantial evidence that the fire began, as fires or near-fires
had on previous occasions known to Toyota, when paper came into
contact with the extremely hot exhaust system of the forklift. She
concluded that "First Choice was also aware of this problem
which, in combination with the fact that paper debris was all around
the warehouse, created a 'perfect storm' of dangerous conditions."
The real crux and importance of the Court of Appeal
decision deals with the second basis of the appeal: that the subrogated
claim of Kruger was barred by paragraph 17 of the Warehouse Management
Agreement. The ruling has wide implications for any contract that
contains an insurance clause. Most contracts today contain such
Clause 17 of the Warehouse Management Agreement contained
covenants on the part of both parties with respect to insurance.
Clause 17 [Kruger is referred to as Scott] stated:
A. Liability Insurance
The Contractor [FCL] will maintain, throughout
the Term of this Agreement, and any Extension Term, comprehensive
general liability insurance and industry standard warehouseman's
legal liability insurance. Scott will maintain general liability
insurance, tenant's legal liability insurance, and insurance of
its inventory and property within the warehouse.
All insurance shall name Scott or the Contractor
as applicable as an additional insured against all liability for
bodily and/or personal injury and property damage, arising from
the insured's fault or negligence, or the fault or negligence
of any of its or their shareholders, directors, officers, employees,
servants and agents, its and their affiliated, related, parent
and subsidiary companies, and its and their appointees, successors
and assigns, in connection with the Management Services hereunder.
If the comprehensive general liability policy
contains a general aggregate, that aggregate limit shall apply
separately, per location, so that the Warehouse will have its
own aggregate limit. All insurance policies contemplated hereunder
shall constitute and respond as primary coverage to any insurance
otherwise available Scott and any of its shareholders, directors,
officers, employees, servants and agents, its affiliated, related,
parent and subsidiary companies, or its and their appointees,
successors and assigns.
B. Insurance on Building Contents
Scott shall, at its own costs and expense,
insure and keep insured any of its own property in, on or about
the Warehouse, in which Scott itself has an insurable interest,
including, without limitation, Scott'[s] inventory, furniture,
fixtures, and equipment.
D. Warehouseman's Legal Liability Insurance
The Contractor shall obtain and maintain industry
standard Warehouseman's Legal Liability Insurance that covers
against risk of loss of inventory and property belonging to Scott
or its divisions, subsidiaries, affiliated or related corporations,
and arising from or relating to the Contractor's gross negligence,
which insurance shall be in the amount of (Cdn.) five million
dollars. Damaged or lost inventory and products insured hereunder
will be valued at Scott'[s] selling price to the trade.
The Contractor will add both the Landlord
and Scott as additional insureds. The Contractor will obtain and
pay the premiums for such insurance coverage as an Allowable Operating
E. Notice of Loss or Damage to Goods
The Contractor agrees to notify Scott promptly
in writing of any loss or damage of any kind to any product or
goods stored or handled under the terms of this Agreement. [Emphasis
added by the Court.]
(Paragraph 17 contained no section "C".)
The Court was advised that the Kruger claim was a
subrogated claim - Kruger's property insurer had paid the claim
and now sought to recover the amounts it paid to Kruger from First
The Court reviewed the Supreme Court of Canada's "trilogy"
of cases dealing with the requirement in a contract to obtain insurance
and the issue of subrogation being barred: Agnew-Surpass Shoe
Stores Ltd. v. Cummer-Yonge Investments Ltd.  2 S.C.R.
221, Ross Southward Tire Ltd. v. Pyrotech Products Ltd. 
2 S.C.R. 35, and T. Eaton Co. v. Smith  2 S.C.R. 749.
The cases dealt with landlord - tenant contracts. Justice Newbury
did not dwell on these decisions but rather quoted the Ontario Court
of Appeal for a summary of the law after the trilogy of the cases
in the Supreme Court of Canada. She referred to the relevant passage
of Justice Carey's decision in Madison Developments Ltd. v. Plan
Electric Co. (1997) 36 O.R. (3d) 80 (Ont. C.A.):
... The law is now clear that in a landlord-tenant
relationship, where the landlord covenants to obtain insurance
against the damage to the premises by fire, the landlord cannot
sue the tenant for a loss by fire caused by the tenant's negligence.
A contractual undertaking by the one party to secure property
insurance operates in effect as an assumption by that party of
the risk of loss or damage caused by the peril to be insured against.
This is so notwithstanding a covenant by the tenant to repair
which, without the landlord's covenant to insure, would obligate
the tenant to indemnify for such a loss. This is a matter of contractual
law, not insurance law, but, of course, the insurer can be in
no better position than the landlord on a subrogated claim. The
rationale for this conclusion is that the covenant to insure is
a contractual benefit accorded to the tenant, which, on its face,
covers fires with or without negligence by any person. There would
be no benefit to the tenant from the covenant if it did not apply
to a fire caused by the tenant's negligence. [At 84; emphasis
The Court then examined the trial judge's decision
and his reasons for not allowing First Choice's position on this
The trial judge had reasoned that the language of
the type seen at clause 17 of the Warehouse Management Contract
simply meant that the bailee does not accept risk of loss to goods
which may arise other than as a result of its own fault, citing Rose v. Borisko Brothers Ltd. (1981) 33 O.R. (2d) 685, aff'd
(1983) 41 O.R (2d) 606 (Ont. C.A.).
On a policy level, the trial judge was also of the
view that barring the subrogated action would impair the duty of
care owned by First Choice to Kruger, contrary to s. 2(4)(b) of
the Warehouse Receipt Act. He noted that there were no Canadian
cases on point, but that in two American decisions, Brown v.
Sloan's Moving & Storage Co., 296 SW2d 20 (S.C. Mo., 1956)
and Kimberley-Clark Corporation v. Lake Erie Warehouse, Division
of Lake Erie Rolling Mill Inc. 375 NYS2d 918, 49 A 2d 492 (S.C.,
App. Div.), the courts had declined to give effect to clauses requiring
a bailor to obtain its own insurance, on the basis that the bailee
should not be exempted from its contractual or statutory duties
As well, the trial judge said, disallowing the subrogated
claim in this instance would "make meaningless" the indemnification
provisions at clause 12 of the Warehouse Management Agreement, under
which each of Kruger and First Choice had covenanted to hold the
other harmless from all losses and claims arising, inter alia, from
property damage 'related to' the negligence of the other. Given
the policy implications of barring a party from enforcing its rights
to indemnity, he suggested that very clear and specific language
would be required for that purpose.
The trial judge had also distinguished bailment situations
from landlord - tenant situations holding the First Choice did not
have an insurable interest in the goods.
On this last note, Justice Newbury found that the
trial judge was incorrect. First Choice had an insurable interest
in the property that was destroyed by the fire. The warehouser was
subject to the "possibility of liability" under the Warehouse
Management Agreement. The goods were "entrusted" to the
warehouse. She stated (at paragraph 52):
It seems to me that this question was answered
by the Supreme Court of Canada in Commonwealth. As seen above,
de Grandpré J. for the Court observed that in the field
of bailment "in the widest sense", persons other than
the owner have been held to have insurable interests in the subject
property "because of their special relationship with the
property entailing [the] possibility of liability."
Justice Newbury then dealt with the trial judge's
concerns regarding the warehouser's obligation to indemnify Kruger
for negligent acts. Specifically, the trial judge was concerned
there was a conflict between the obligation to indemnify and the
insurance provisions. The Court of Appeal disagreed, stating that
indeed one may see insurance covenants as a means of
strengthening indemnification obligations, which alone are only
as strong as the indemnifier's particular financial situation."
Justice Newbury added (at paras. 56-57):
"Furthermore, the obligation of a negligent
warehouser to indemnify its bailor for breaches of its duty of
care arises even without a provision such as para. 12 [a general
covenant to indemnify]. It would make no commercial sense to permit
an indemnity provision to overwhelm or supersede an insurance
provision such as para. 17A.
Nor can I agree on a more general
level that the application of the "covenant to insure"
defence in the case at bar would "make meaningless"
the warehouser's obligation to maintain the warehouse premises
to the standard specified in the Warehouse Receipt Act, or "impair"
the duty of care owed to [Kruger] as the owner of the goods.
The Court of Appeal did comment, in obiter,
regarding limitation of liability clauses in contracts and the effect
of such a clause on the duties under the legislation or the contract
to provide the required standard of care. In dealing with the insurance
clause and the duty of the warehouse under the Warehouse Receipts
Act, Justice Newbury used a limitation clause as an example
of why the insurance clause and the legislation could co-exist.
She noted that the Supreme Court of Canada in Evans Products
v. Crest Warehousing  1 S.C.R. 83 found valid a clause
in a contract limiting the warehouser's liability to $50 per package
unless a higher value was declared by the owner. The Supreme Court
of Canada rejected the argument that giving effect to the limitation
clause would "engender carelessness" on the warehouser's
part, thus contravening what was then s. 3(4) of the Warehouse
Receipts Act. She rejected American authorities on this issue.
The Court of Appeal also rejected the trial judge's
decision that an insurance clause was "simply a means of stipulating
that the warehouse does not accept the risk of loss to goods which
may arise other than as a result of its own fault."
The Court of Appeal dismissed Kruger's case on the
basis that the subrogation action was barred by the insurance clause
in the Warehouse Management Agreement.
In summary, this decision is important and wide reaching
for the transportation industry.
1. The Court affirmed that a properly drafted insurance
clause in a storage contract supercedes and does not impinge on
the standards of conduct in legislation such as the Warehouse
Receipts Act. This same principle can be applied to freight
forwarding contracts, logistics contracts and carrier contracts.
2. In comparing the application of the insurance clause
to a limitation clause the Court of Appeal affirmed that a properly
drafted limitation clause in a contract will protect the warehouser
from large liabilities. The risk can be capped. This same principle
can be applied to other transportation contracts.
The lesson learned is that risk can be managed and
claims reduced by properly drafted and signed contracts. Courts
will enforce what parties have agreed to in a contract. Freedom
of contract does exist and is alive and well in Canada.
3. Supreme Court of Canada - Causation Test Clarification:
Jumping the Evidentiary Gap: The Court Weighs In on the "But
For" Causation Test and the "Material Contribution to
Risk" Exception - Clements v Clements 2012 SCC 32
In any civil case in order to find a party negligent,
the trier of fact must find that there was (1) a duty by the defendant
to the plaintiff; (2) a breach of that duty (a negligent act); and
(3) damage arising out of the breach. The plaintiff must prove that
he or she would not have suffered a loss without or "but for"
the negligent acts of the defendant. If the defendant owes a duty
to the plaintiff not to be negligent and commits a negligent act
that damages the plaintiff, then liability will follow and damages
awarded as compensation. The plaintiff must, therefore, prove the
fact on a balance of probabilities that the negligent acts of the
defendant caused the injury. If the plaintiff cannot do so, he or
she will be unsuccessful.
But what happens in situations where it impossible
to know whom amongst multiple possible tortfeasors actually caused
In the transportation area, consider a fire on a vessel
at a marina where the cause might be a careless cigarette tossed
from a neighbouring slip or perhaps shoddy electrical repair or
maintenance by the owner of the vessel or marina. The Fire Marshall's
report in this scenario might conclude that the source or cause
was undetermined. A non-transport example might include a situation
where three hunters each released gunshots and a person was injured
thereby, but there is no conclusive evidence as to which hunter
actually caused the damage. In such cases, each defendant might
point the finger at the others claiming that there is no proof of
his or her own liability or, for that matter, on the part of any
of the defendants.
Where no party can clearly be blamed in such a scenario,
the plaintiff, it would seem, might risk losing all simply because
he or she cannot prove which defendant actually caused the loss.
However, defendants cannot escape liability simply by arguing that
no party should be liable in those cases where it is "impossible"
to know who is at fault. The law provides an exception to the "but
for" test by relaxing it from a factual inquiry to one which
examines whether the defendant(s) "materially contributed to
the risk of injury" by his or her acts.
The Supreme Court of Canada in Clements v Clements 2012 SCC 32, on appeal from a decision of the British Columbia Court
of Appeal, has clarified when the "but for" test can be
bypassed and the less stringent material contribution test can be
used. Essentially, the latter test can be used for situations where
there are multiple defendants and where it is impossible to know
which defendant actually caused the damage. This review by the highest
court in Canada was necessary given the varied treatment of the
causation test and its exception in previous caselaw throughout
the land. The decision of the Supreme Court of Canada, as rendered
by McLachlin C.J., for the majority, has made it very clear that
the use of the material contribution test exception should be rare
and is "justified only where it is required by fairness and
conforms to the principles that ground recovery in tort". (*1)
Facts and Issues in Clements v Clements
Mr. and Mrs. Clements were motorcyclists. On the date
of loss, Mr. Clements was operating their motorcycle. Mrs. Clements
was seated behind as passenger. The motorcycle was overloaded by
about 100 pounds and the weather was wet. Unfortunately, a nail,
unbeknownst to Mr. Clements, had punctured one of the tires on the
motorcycle. The evidence at trial was that Mr. Clements accelerated
his motorcycle to at least 120 km/h as he crossed over the centre
line to pass another vehicle. As he manoeuvred the motorcycle, the
nail fell out and the tire deflated sending the motorcycle out of
control. Mrs. Clements suffered a brain injury and commenced action
against her husband for damages arising out of Mr. Clements' negligence.
The issue on appeal was whether Mr. Clements' negligence
actually caused Mrs. Clements' injuries. Expert evidence at trial
concluded that the probable cause of the negligence was the puncture
by the nail and the resulting deflation of the tire and, further,
that the accident would have happened anyway, even without Mr. Clements'
negligent acts (acceleration over the speed limit on an overloaded
bike). (It should be noted that this was not a case with multiple
At trial, the judge held that, due to limitations
in scientific reconstruction evidence, the plaintiff was, through
no fault of her own, unable to prove the "but for" test.
The trial judge then went on to apply a "material contribution"
test instead and found Mr. Clements liable for his wife's injuries
as Mr. Clements' negligent actions had materially contributed to
the risk of his wife's injuries.
At the Court of Appeal, the trial decision was reversed
because the plaintiff could not prove the "but for" causation
test. The Court of Appeal found, as there was no proof that Mr.
Clements' actions had caused his wife's injury, he was not liable.
This court found that the material contribution test had no application.
The matter was appealed to the Supreme Court of Canada.
The majority of the Supreme Court of Canada agreed that the material
contribution test did not apply but could not conclude whether the
trial judge would have made the same finding had he applied the
"but for" test appropriately. Therefore, the appeal was
allowed and the matter sent back for a new trial with the "but
for" test to be properly applied. Two judges dissented indicating
that the appeal should simply be dismissed as there was nothing
in the trial decision that suggested that the trial judge would
have found Mr. Clements' acts to have been the "cause"
of the accident pursuant to the "but for" test.
The Supreme Court of Canada Decision
Chief Justice McLachlin writing for the majority confirmed
that the "but for" test was to be applied in a "common
sense robust fashion" which does not require scientific evidence
for the precise contribution of the defendant's negligence to the
injury. The plaintiff must still prove causation but the judge can
infer that the defendant's negligence "probably" caused
the loss without scientific evidence. In such cases, the defence
rebuts by calling evidence that the accident would have happened
anyway and without the defendant's negligence. The judge is then
left to draw inferences and weigh all the evidence within the power
of one side to produce and the other side to contradict. (*2) The
judge at trial then apportions liability between the defendants,
each to his measure of fault.
The Basic Causation Rule and the Material Contribution
Exception- Treatment in Prior Cases in Canada and the U.K.
McLachlin C.J. reviewed the basics stating that the
plaintiff must prove on a balance of probabilities that the defendant
caused the plaintiff's injury using the "but for" test.
However, where there are multiple possible tortfeasors who may have
committed the acts causing injury to the plaintiff, it might be
impossible to know who actually caused the damage. In such situations,
the court may then hold that a defendant(s) is liable because he
materially contributed to the risk of injury.
The court confirmed that the "but for" test
engages a factual inquiry into what likely happened. The "material
contribution test", however, is entirely different as it imposes
liability not because the act caused the injury but because the
act contributed to the risk that injury would occur and not to the
injury itself. As set out by Smith J.A. in MacDonald v. Goertz,
2009 BCCA 358, 275 B.C.A.C. 68, at para. 17,
(material contribution) is a policy-driven
rule of law designed to permit plaintiffs to recover in such cases
despite their failure to prove causation. In such cases, plaintiffs
are permitted to 'jump the evidentiary gap'
Because the material contribution test does not engage
a factual inquiry and, accordingly, is not a test of causation,
its use, McLachlin C.J. stated, must be rare.
The Supreme Court of Canada in its lengthy decision
then outlined and examined the various Supreme Court cases where
the "material contribution" test was considered and determined
that it had never actually been applied by the Supreme Court of
Canada, but rather there was only acknowledgment that in special
circumstances there might be application of the material contribution
test such as where there is difficulty of proof in multiple tortfeasor
The Court also reviewed the UK toxic agent cases where
all of the defendants could have caused the injury, but it was impossible
to know which one did in any particular case. Each defendant though
had materially contributed to the risk of the injury. The use of
the material contribution test was confirmed by the UK courts as
being in keeping with fairness, deterrence and corrective justice
When Can the Material Contribution Test be Used?
The material contribution to risk of injury test can
be substituted for the "but for" test of causation when
only causation is "impossible" to prove. McLachlin C.J.
reviewed this answer in detail because it would seem that, in any
difficult case, every plaintiff could complain that causation was
"impossible" to prove.
To maintain the principles of fairness, deterrence
and corrective justice, the court stressed that the use of the material
contribution test should not stray from the fundamental principle
that the defendant must only be liable for the consequences of his
In the Clements case, the trial judge had erred
in finding that "scientific impossibility" ousted the
use of the 'but for' test. In fact, the court confirmed that common
sense inferences can indeed be made to determine liability. Scientific
proof is, therefore, not required to find causation and its absence
cannot oust the "but for" test of causation.
The Chief Justice stated that the only kind of cases
where there will be such "impossibility" is where there
are a number of tortfeasors, all are at fault and one or more have
actually caused the injury. Viewed globally, the plaintiff would
not have been injured "but for" their negligence. However,
because each can point at the other to avoid liability, it is "impossible"
for the plaintiff to prove, on a balance of probabilities (as being
more likely than not), which one actually caused the damage. The
plaintiff must, therefore, show that the "but for" test
has been met globally even though it is impossible to prove causation
against any one defendant. In such cases, it is the defendants who
contributed materially to the risk who will be found liable.
McLachlin C.J. confirmed that the use of the material
contribution test in circumstances of "impossibility",
as defined, satisfies all three prongs of fairness, deterrence and
The Chief Justice further acknowledged that new situations
might arise and further provide for new considerations. However,
she confirmed that the "but for" test applies in situations
where there are multiple actors and where contributory negligence
legislation allows for the apportionment of liability. The material
contribution test is left only for situations where the actual negligence
cannot be proved against any one defendant though one or more of
those defendants is clearly negligent on a global basis.
The successful plaintiff (in a case where causation
is "impossible" to prove given multiple tortfeasors) then
proves (1) a duty owed by each defendant; (2) that each defendant
has breached that duty owed; and (3) that the injury has arisen
because the defendant(s) has materially contributed to the risk of that injury (as opposed to proving that damage arose directly
as a result of the breach).
McLachlin C. J. provided the following summary at
1) As a general rule, a plaintiff cannot succeed
unless she shows as a matter of fact that she would not have suffered
the loss "but for" the negligent act or acts of the
defendant. A trial judge is to take a robust and pragmatic approach
to determining if a plaintiff has established that the defendant's
negligence caused her loss. Scientific proof of causation is not
(2) Exceptionally, a plaintiff may succeed by showing
that the defendant's conduct materially contributed to risk of
the plaintiff's injury, where (a) the plaintiff has established
that her loss would not have occurred "but for" the
negligence of two or more tortfeasors, each possibly in fact responsible
for the loss; and (b) the plaintiff, through no fault of her own,
is unable to show that any one of the possible tortfeasors in
fact was the necessary or "but for" cause of her injury,
because each can point to one another as the possible "but
for" cause of the injury, defeating a finding of causation
on a balance of probabilities against anyone.
The Supreme Court of Canada allowed the appeal and
sent the matter back for a new trial and the proper application
of the "but for" test.
The Clements decision reaffirms that the "but
for" test is the appropriate test in most negligence cases
and use of its less onerous exception, the "material contribution
to risk" test, will be for narrow circumstances only. We can
also now expect that all cases considering the potential application
of the "material contribution to risk" exception will
follow the Summary above. (*4)
Kim E. Stoll
*1. at para. 16
*2. at para 11 quoting Sopinka J. in Snell v. Farrell 
2 S.C.R. 311
*3. at para 14
*4. As an aside, it is noted that a recent decision of the Nova
Scotia Court of Appeal, Awalt v Blanchard 2013 NSCA 11 dealt
with the application of the "material contribution" test
over the "but for" test but did not follow the elements
of the Summary noted above (including that there was only one defendant
not multiple defendants). In that case, the application of the "material
contribution" test was not considered as it was not argued
but also because the "but for" test had been correctly
4. Controversies under Regulation 261/2004 : The
Passenger Entitlement to Compensation for Long Delays to Flights
in Nelson v. Deutsche Lufthansa AG and TUI Travel plc et al v.
Civil Aviation Authority
Legislating in the European Union in never a simple
undertaking, not least owing to the 23 official languages in which
Regulations and other legislative instruments are drafted, with
each version being equally authentic. Few legislative initiatives
have however proved more divisive or controversial than Regulation
Regulation 261/2004 was adopted by the European Parliament
and the Council of the European Union on February 11, 2004. It was
an innovative instrument seeking to comprehensively address air
transport consumer rights in cases of irregular operations. Although
the Regulation repealed the earlier Regulation 295/91, the scope
of Regulation 261/2004 is substantially broader than its predecessor
which was limited to compensation for denied boarding. In addition
to this, Regulation 261/2004 provides for air passenger rights in
cases of delay and cancellation of flights in the forms of care
and compensation to be provided by the airline.
Whereas denied boarding for overbooking is squarely
the responsibility of the air carrier, and thus a legislative compensation
scheme raised little polemic, flight delays and cancellations can
occur for a plethora of reasons. Some causes of delays being the
responsibility of the airline (staffing), others being completely
beyond the airline's control (weather), and yet further causes fall
into a grey area with respect to whether or not an airline is blameworthy
for the delay. Mechanical caused delays are commonly perceived to
fall into this latter grey category, airlines being the best placed
entity to control and avoid mechanical delays, yet there being a
legislative reluctance to provide any economic impetus inciting
a carrier to operate a flight where an aircraft has any safety concern.
Arguably, the drafters of Regulation 261/2004 did
not perceive the complexity of the task upon which they had embarked
when they undertook to prescribe these rights for passengers in
2004. The Regulation has been enormously litigious, not least including
an immediate legal challenge brought by the International Air Transport
Association (IATA) and the European Low Fares Airline Association
(ELFAA), which resulted in a 2006 decision of the European Court
of Justice holding that the Regulation was not in conflict with
the Montreal Convention of 1999. (*2) The latter text being a global
treaty concluded under the auspices of the International Civil Aviation
Organization and which provides uniform rules on liability for airlines
engaged in international carriage.
The Regulation was broadly criticized by the industry
in the wake of the 2010 Eyjafjallajökull volcano eruption in
Iceland which led to the closure of vast parts of European airspace
for more than a week, entailing the cancellation of upwards of 100,000
flights affecting approximately 10 million passengers. Although
the Regulation excludes passenger entitlement to compensation for
losses resulting from a force majeure, (*3) no such exclusion
applies for the duty of care incumbent on the air carrier,(*4) thus
even ultra-low margin airlines such as Ryanair were expected to
provide hotel accommodation, meals, refreshments and telecommunications
to inconvenienced passengers.
This has resulted in Ryanair introducing a lamented
Regulation 261/2004 passenger levy of €2 per passenger per
sector to cover its liability exposure under the Regulation, and
the Irish airliner is pursuing an ongoing legal challenge to its
liability under the Regulation for the Eyjafjallajökull disruption.(*5)
While a final decision of the European Court remains pending at
this time, the influential Advocate General (AG) decision has been
published, and AG Bot has upheld that Ryanair was required
to comply with the care provisions of the Regulations during the
Regulation 261/2004 does not only impose compensatory
and care obligations upon European Union airlines, but also upon
all air carriers with respect to their operations out of European
Union airports.(*7) Thus, Canadian airlines are required to compensate
and provide care for passengers in accordance with the Regulation
whenever they involuntarily deny boarding to a passenger, or cancel
or delay their flights out of European Union airports. For the major
Canadian international carriers - Air Canada and Air Transat - European
operation represent the lion's share of their overseas networks
and thus the implications of Regulation 261/2004 and jurisprudence
rendered thereunder are more than marginal for Canadian operators.
On October 23, 2012, the European Court of Justice
confirmed its interpretation of a particularly litigious aspect
of the Regulation in the cases of Nelson v. Lufthansa AG(*8)
and TUI Travel plc v. Civil Aviation Authority(*9) which
were heard jointly. The first remarkable feature of these cases
is that they arose in the immediate aftermath of the 2009 decision
of the European Court of Justice in the cases of Sturgeon v.
Condor Flugdienst GmbH (*10) and Böck v. Air France
SA. (*11) Those cases involved passengers who were significantly
inconvenienced when their flights were delayed for an extensive
time period. In the Sturgeon case, the passengers arrived at their
destination some 25 hours behind schedule albeit on a Condor flight
bearing the original flight number, whereas in the Böck case, passengers were moved to another airline's operations in light
of mechanical failures on the Air France aircraft. In both cases,
however, the originally scheduled flights did operate without passengers
being "rolled over" onto another flight of the operating
airline which would have amounted to a cancellation of the original
flight. Domestic courts in Germany and Austria respectively had
denied the Sturgeons and the Böcks compensation on the basis
that their flights were delayed rather than cancelled and Regulation
261/2004 provides only for compensation in cases of cancellation.
Thus, per the domestic court judgments, the only duties incumbent
upon the carriers under the Regulation were those of care.
On reference by domestic courts to the European Court
of Justice, the Fourth Chamber of the Court held that the Sturgeons
and Böcks were entitled to compensation. It was the position
of the court that, despite the lengthy duration, both the Sturgeons
and the Böcks had been inconvenienced by delay and not by cancellation
of a flight. The court, however, held that the claimants were entitled
to damages. It justified this judicial law-making on two bases,
first it engaged in a teleological interpretation of the Regulation,
"that is implicitly borne out by the objective
of Regulation No 261/2004
.that the regulation seeks
to ensure a high level of protection for air passengers regardless
of whether they are denied boarding or whether their flight is
cancelled or delayed, since they are all caused similar serious
trouble and inconvenience connected with air transport ".
The court further justified its position by referring
to the jurisprudential principle that Community laws must be interpreted
in a manner which avoids comparable situations from being treated
differently at law. The court found that the prejudice suffered
by a passenger whose flight is delayed for a defined time is the
same as the passenger who suffers the same delay reaching his destination
owing to a flight cancellation. As such, the court held that it
would be a violation of the principle of equal treatment if the
passenger whose flight were cancelled should receive monetary compensation
but not the passenger whose flight were delayed.
Doctrine and industry revolted against the decision
of the court owing to the judicial addition of further obligations
to air carriers beyond those prescribed by already controversial
legislation. In particular, authors noted that the granting of damages
in cases of delay represented an illegal encroachment into the domain
of the Montreal Convention, which provides an exclusive code for
air carrier liability within the parameters of its scope.(*12) Indeed,
it was noted that in the initial decision of the ECJ upholding the
validity of the Regulation when challenged by IATA and ELFAA, the
ECJ had specifically referred to the fact that only care was prescribed
by the Regulation in cases of delay, thus distinguishing the care
duties imposed on a carrier in case of delay by the Regulation from
the compensatory obligations which may arise under the Montreal
Convention. The ECJ had stated that,
"Any delay in the carriage of passengers by
air, and in particular a long delay, may, generally speaking,
cause two types of damage. First, excessive delay will cause damage
that is almost identical for every passenger, redress for which
may take the form of standardised and immediate assistance or
care for everybody concerned, through the provision, for example,
of refreshments, meals and accommodation and of the opportunity
to make telephone calls. Second, passengers are liable to suffer
individual damage, inherent in the reason for travelling, redress
for which requires a case-by-case assessment of the extent of
the damage caused and can consequently only be the subject of
compensation granted subsequently on an individual basis."
The Nelson case arose out of a refusal by Lufthansa
to compensate the Nelsons for more than a day of delay on their
return flight to Frankfurt from Lagos. Despite the Sturgeon decision
being decided during proceedings, Lufthansa contended before its
domestic courts that the ECJ decision was incompatible with the
Montreal Convention and that the court had exceeded its jurisdiction
in its ruling. This resulted in the Local Court, Cologne referring
the issue back to the ECJ.
The TUI case arose out of a number of airlines
petitioning the UK Civil Aviation Authority in the wake of the Sturgeon
decision, seeking confirmation that despite the ruling, the UK Authority
would not require carriers to compensate in cases of delay. This
petition was predictably denied by the UK Civil Aviation Authority,
paving the way for the carriers to seek judicial review from the
High Court. Viewing the arguments of the airlines as not without
substance, the High Court referred questions to the ECJ concerning
whether the Regulation required that damages be paid in cases of
delay, and, if so, whether the Regulation were valid in light of
the Montreal Convention and the principles of proportionality and
The ECJ reaffirmed its position articulated in Sturgeon,
confirming that despite the exclusion of monetary compensation from
the terms of the Regulation in cases of delay, an indemnity was
owed by the carrier to passengers inconvenienced by delay as if
the flight were cancelled. In an effort to reconcile this position
with the IATA/ELFAA decision, the court held that the fixed quantum
compensation for delay was a measure of redress for inconvenience
to be provided to all passengers irrespective of their circumstances,
and thus this head of damage fell into the first category of damages
identified in the IATA decision, namely those suffered equally by
The court stated that, "a loss of time cannot
be categorised as 'damage occasioned by delay within the meaning
of Article 19 of the Montreal Convention". It is however a
quantum leap to extend the entitlement of passengers to "refreshments,
meals and accommodation and of the opportunity to make telephone
calls" as referred to in IATA/ELFAA decision to automatic damages
of up to €600. Indeed, the care requirements mentioned in the
IATA/ELFAA decision could have been understood to intentionally
contrast with the unmentioned monetary compensation which was not
to be provided under the auspices of the Regulation in case of delay
in order not to usurp the domain of the Montreal Convention.
The Court in the joint Nelson/TUI decision
went on to dismiss the arguments that the financial compensation
for delay violated the principles of legal certainty and proportionality.
With respect to certainty, the court held that it was explicit to
carriers since the Sturgeon decision the cases in which compensation
was due and in what amount. The court moreover held that the compensation
was proportionate to the purpose of the Regulation, being to ensure
a high level of protection to air travelers. The court articulated
"Given that the loss of time suffered is irreversible,
objective and easily quantifiable, the measure granting all the
passengers affected by that inconvenience immediate fixed pecuniary
compensation is particularly appropriate".
Regulation 261/2004 is currently under review, and
it is to be hoped that the European Union will clarify its intentions
by way of legislation in order to relieve the controversy of the
judicial law-making undertaken by the European Court of Justice
in respect of the Regulation.
However, pending any such clarification, per the ECJ
decision, compensation is due to all passengers who travel on flights
operated by European Union carriers which operate from or to an
EU airport, as well as to passengers traveling on any other carrier
outbound from an EU airport, where such flights are significantly
delayed for reasons other than extraordinary circumstances. Applying
the rules of Articles 5 and 9 of Regulation 261/2004 as interpreted
by the Court in Sturgeon, a delayed passenger is entitled
- dependant on the flight distance - to 250, 400 or 600 Euros as
pecuniary compensation for any flight delayed more than three hours,
albeit that the €600 level of compensation is to be halved
where the delay is between three and four hours. The incremental
compensation sums are due, in the lowest amount of €250 for
flights shorter than 1,500 kms, in the mid-amount of €400 for
flights up to 3,500 kms or beyond 3,500 kms if intra-EU, and in
the high amount of €600 for all other flights. Since even the
shortest operated flight from Canada to Europe, being St John's
Newfoundland to London Heathrow covers circa 3734 kms, any passenger
entitled under the scope of the Regulation to compensation for delayed
operations to or from Canada is entitled to the highest band of
*1. REGULATION (EC) No 261/2004 OF THE EUROPEAN PARLIAMENT AND OF
THE COUNCIL of 11 February 2004 establishing common rules on compensation
and assistance to passengers in the event of denied boarding and
of cancellation or long delay of flights, and repealing Regulation
(EEC) No 295/91.
*2. Case C-344/04, International Air Transport Association and
European Low Fares Airline Association v. Department for Transport.
*3. Regulation 261/2004 Art. 5.3.
*4. Regulation 261/2004 Art. 9.
*5. Case C-12/11, McDonagh v. Ryanair Ltd.
*6. Ibid, Opinion of AG Bot delivered on March 22,
*7. Regulation 261/2004 Art. 3.1.
*8. Case C-581/10 Nelson v. Deutsche Lufthansa AG.
*9. Case C-629/10 TUI Travel plc et al v. Civil Aviation Authority.
*10. Case C-402/07 Sturgeon et al v. Condor Flugdienst GmbH.
*11. Case C-432/07 Bôck & Lepuschitz v. Air France
*12. Robert Lawson & Tim Marland, "The Montreal Convention
1999 and the Decisions of the ECJ in the Cases of IATA and Sturgeon
- in Harmony or Discord?" (2011) 36 Air & Space L. 99.
5. The Anatomy of an Injunction: Canadian National
Railway v. John Doe, Jane Doe and Persons Unknown
The courts award an "injunction" when there
is a substantial risk of serious harm being suffered by a plaintiff
if certain conduct on the part of the "offending" defendant
is not prevented or stopped. The recent Superior Court of Ontario
case of Canadian National Railway Company v. John Doe, Jane Doe
and Persons Unknown (*1) provides an analysis of the considerations
behind the issuance of an injunction.
CN's "Main Line": A Critical Artery
The Canadian National Railway Company ("CN")
operates what is referred to as a "Main Line" between
Toronto and Montreal. The Main Line is a part of CN's Eastern Region
Transcontinental line running between Dugald, Manitoba and Halifax,
Nova Scotia. This is the main rail artery between Toronto and Montreal.
The Main Line between Belleville and Kingston, Ontario features
a three-track rail corridor owned by CN. The "Wymans Road Crossing"
being the focal point of this story is located along this stretch.
The Main Line is used by CN for the carriage of all
types of freight and in the transportation of passengers by VIA
Rail. This stretch is one of the busiest in the entire CN rail network.
Affidavit evidence was filed that CN operates an average of 18 commodity,
mixed freight and container freight trains daily over the Main Line
each typically being between 110 to 190 cars in length. Each train
may carry freight for as many as 90 shippers. The value of freight
carried daily along the Main Line is said to be over 80 million
dollars a day. In addition, the CN has operating agreements with
VIA Rail Canada Inc. for rail passenger trains to run both east
and west along the Main Line. There are 24 VIA Rail passenger trains
that cross the Wymans Road Crossing every day.
The Blockage at the Wymans Road Crossing
At 4:00 p.m. on Saturday, January 5, 2013, a CN inspector
received word that the Wymans Road Crossing was being blocked by
a number of individuals. The CN owns a right of way over the crossing,
which is located on a First Nations Reserve. The CN inspector attended
at the crossing at 5:30 p.m. and noted that there were approximately
15 individuals blocking the Main Line by intermittently walking
across the rail line. These individuals all had their faces covered.
The railway crossing warning system had been activated and there
were fires on the north and south sides of the tracks. A pick-up
truck was parked on the north side of the tracks. Those individuals
present refused to identify themselves with the exception of a spokesperson,
who advised that the blockade was to show support for First Nations
Chiefs in respect of an upcoming meeting with Prime Minister Stephen
Harper. Asked how long the blockade would last, the spokesperson
advised that it was "open ended".
The blockade was, by that point, preventing the movement
of CN and VIA Rail trains along the Main Line. CN was forced to
make the decision, in the interest of public safety, not to run
any trains through Wymans Crossing until a Court Order could be
obtained and related steps taken to remove the blockade.
CN, accordingly, instituted this court action, seeking
an injunction requiring the immediate end of the blockade. CN filed
affidavit evidence in support of its application, which evidence
listed the factual circumstances including the facts listed above.
The affidavit evidence also indicated that the Council for the First
Nation territory in question was not involved with the blockade
and, that to CN's understanding, there was no issue pertaining to
the ownership of or any claims to the Wyman Road Crossing lands.
The affidavit evidence further provided that, as of 8:00 p.m. on
January 5, five freight and container trains had been blocked, each
consisting of approximately 125 cars, and that a sixth train would
be blocked by approximately 10:00 p.m. that day. The evidence was
also that, by 7 o'clock the next morning, nine additional freight
trains would have to be held at Montreal or Toronto due to the blockade.
The affidavit evidence also addressed the impact on
passenger traffic. As of 8:00 p.m. on January 5th, four passenger
trains had been impacted affecting approximately 1,000 passengers
requiring buses to be deployed to begin moving those passengers
to their destination. Further, were the blockade to continue into
Sunday, January 6th, some 23 trains and a further 7,000 customers
would be impacted - the evidence also being that January 6th is
one of the busiest days for VIA Rail travel on the Main Line. The
affiant of the CN affidavit also swore that there would not be sufficient
resources available to mitigate the impact of the blockade on the
rail passengers as of January 6th in that there simply would not
be enough buses available to VIA Rail to then re-route passengers.
The evidence went on to approximate that, if the blockade were to
continue through to Monday, January 7th, a further 27 trains and
3,000 shippers would be impacted, not including a significant number
of rail commuters.
The evidence demonstrated that there was simply no
"work around" to the blockade and that same would cause
significant economical damage to CNR, its customers and others.
The evidence was clear as to the adverse and widespread
adverse effects of the blockade. Specific evidence was filed as
to the nature of various rail carriage contracts between CN and
its customers wherein CN had the responsibility to deliver goods
within specified periods of time. Some shipments were "extremely
time sensitive" including and particularly food stuffs, certain
"intermodal" or "container shipments", destined
for overseas shipment to international customers and certain commodities
being shipped for "just-in-time" delivery. Examples provided
of freight in this last category included parts for the automobile
industry and 15 tankers of jet fuel transported along the Main Line
daily for Air Canada and other airlines.
CN's Request for an Injunction to End the Blockade
Counsel for CN attended before a judge of the Ontario
Superior Court with CN's affidavit evidence shortly before 9:30
p.m. on Saturday, January 5, 2013 - just hours after confirmation
that there was a blockade. Matters could simply not wait for a conventional
court hearing. CN was seeking an ex parte "interim"
injunction, restraining the blockade with an order to issue clearing
the tracks. (*2) Counsel for CN argued that an injunction immediately
ending the blockade was necessary as the blockade would, on the
strength of the evidence filed and summarized above, cause "irreparable
harm" to CN and others. In addition to the adverse effects
touched on above, the affidavit evidence delved further into both
degrees of immediate and "secondary" harm as follows:
a) Any ongoing service interruptions would compromise
the scheduling of labour, and possibly the employment of CN employees,
possibly culminating in the lay-off of employees;
b) Further service delays were problematic as to the carriage
of certain cargoes including government bulk commodities and goods
including chemicals, hazardous commodities, food products (including
perishables, automobile parts and automobiles (which are highly
sensitive to damage and theft), to name some of the goods being
c) Further delays would cause increased yard congestion at CN's
facilities resulting in increased costs of yard care activities;
d) Further delays would cause a disruption of motive power (engine)
cycles from a "normal balanced use" and routings affecting
CN's operations; and
e) Delays would result in lost revenue to CN and increased costs
to CN customers.
Counsel asserted that, given the likely scale to the
above losses, it would be extremely difficult, if not impossible,
to quantify any foreseeable losses in monetary terms.
CN's Case Certainly Appears Compelling. Would the
Court Issue an Injunction to End the Blockade?
The judge hearing the application cited the well known
test articulated by the Supreme Court of Canada in RJR McDonald
Inc. v. Canada (Attorney General) for an injunction to be issued:
i) The moving party must demonstrate a serious question
to be tried;
ii) The moving party must convince the court that
it will suffer irreparable harm if the relief is not granted.
In this sense, "irreparable" refers to the nature of
the harm rather than its magnitude;
iii) The third branch of this test requires an assessment
of the "balance of inconvenience". In addition to the
damage each party alleges it will suffer, the interest of the
public must be taken into account. The effect that a decision
on the application will have upon the public interest may be relied
upon by either party.
The court noted that CN complied with the further
requirement that it, as a party asking for an injunction, would
give an "undertaking as to damages". A party seeking to
enjoin or disrupt the conduct of other by suing for an injunction
must undertake to indemnify that other party for any the damages
suffered by it should it ultimately be established that the party
seeking the injunction had no legal basis to do so.
i) Was There a Serious Question to be tried?
Not surprisingly, the court found that the evidence
filed by CN demonstrated an overwhelming case of trespass to property,
tortious interference with the Main Line and that there was a serious
ii) Was There to be "Irreparable harm"
The court likewise found no question that CN, VIA
Rail and those using [or needing to use] the Main Line for personal
and freight transportation would suffer "irreparable harm".
iii) How Should the Court Weigh the Issue of "Balance
The court noted that, on any traditional analysis,
the balance of convenience overwhelmingly favoured CN. Simply put,
the protesters had no legal right to be doing what they were doing.
This was not a case of trying to determine the respective rights
between two parties having legitimate interests.
This said, the Court addressed the "bigger picture"
of the public protest element behind the blockade and any possible
rights pertaining to the exercise of "freedom of expression".
The Court noted that, while expressive conduct by lawful means enjoys
strong protection in our system of government and law, expressive
conduct by unlawful means does not:
"No one could seriously suggest that a person
could block freight and passenger traffic on one of the main arteries
of our economy and then cloak himself with protection by asserting
freedom of expression. The Canadian Charter of Rights and Freedoms does not offer such protection (*3)."
The Court also noted that the blockade had nothing
to do with legitimate negotiations concerning land or land usage
claims under federal law but was rather a "straight forward
political protest, pure and simple". Accordingly the apparent
aboriginal identity of the protesters or their message did not immunize
them from the standard balance of convenience analysis on a motion
for an interlocutory injunction.
Based on the foregoing evidence and the legal principles
taken into account, the Court granted an Injunction Order that the
blockade cease no later than 12:01 a.m. on Sunday, January 6th.
The Order restrained those persons (who were at the time unknown,
and who therefore could not be specifically named in the Order)
from trespassing at the area in question or anywhere else on the
Main Line or physically preventing ongoing CN and VIA Rail operations
in or about the Main Line. The injunction was issued to remain in
force until Tuesday, January 15th, 2013 when, if necessary, CN could
return to Court to apply, on notice to all parties concerned, for
a further "interlocutory" injunction.
And In The Aftermath, a Judicial Note of Concern
It turned out that the blockade ended prior to the
actual service of the injunction order upon those involved with
the blockade. Evidently, they simply dispersed later in the evening
of January 5th of their own accord. By that time, the injunction
order in hand, CN had, in fact, asked the local sheriff to serve
that order on the protesters at the blockade. The sheriff reported
that she then contacted the Ontario Provincial Police officer on
the scene at the blockade to assist with that process. That police
officer apparently advised [evidently on the basis of an order from
a superior] that it was "too dangerous" to attempt to
serve the injunction order that evening, but that the OPP would
accompany the sheriff to the blockade to serve the order first thing
the next morning. In the result, no attempt was to be made to immediately
serve the injunction order.
Justice D.M. Brown, the judge who issued the injunction
order, has since these events expressed concern that such a time
sensitive order was not to be timely served by the Ontario Provincial
Police on account of the concerns expressed that the process might
be "dangerous". In a post-script to the reasons issued
in this case (as to why the injunction order was to be issued),
Justice Brown commented on the necessity that the agencies of police
enforcement to work alongside the courts in the service of and enforcement
of such injunction orders. Orders should be timely enforced - especially
such time sensitive orders. This is absolutely necessary for the
"rule of law" in an organized and democratic society.
Justice Brown also expressed concern as to why a landowner such
as CN must resort to having to apply for a court injunction to stop
the sort of unlawful conduct engaged by the protesters in this case.
In this respect the judge questioned whether the police already
enjoy adequate powers of arrest to deal with such unlawful conduct
under the provisions under federal law (*4) without the need of
a court injunction.
*1 2013 ONSC 115
*2 The reference to "ex parte" refers to the fact
that the court application was brought without notice to any of
the opponents in interest to CN, or to any of the persons involved
or alleged to be involved in the offending conduct. CN was appearing
before the court "all by itself". On such occasions, the
party attending for such an order has a well established duty to
be entirely forthright in providing all details of the circumstances
in question. Such "ex parte" orders, if and when
issued, are usually only ordered for a temporary period, such as
10 days, so as to allow time for the defendants / respondents to
weigh into the process with their own counsel, if and however they
may so choose. The process may then continue - if the impugned conduct
is threatened to again surface - with the plaintiff seeking an extension,
or, in effect, an "interlocutory injunction" pending a
*3 2013 ONSC 115 at para. 11 and see also: Batty v. City of Toronto 2011 ONSC 6862
*4 For example, the Judge cites s. 26.1 of the Railway Safety
Act, R.S.C. 1985 c. 32 (4th Supp.) providing that "no person
shall, without lawful excuse, enter on land on which a line work
is situated" and s. 430(1) of the Criminal Code ("
everyone commits mischief who willfully
or interferes with the lawful use, enjoyment or operation of property")
6. A Summary of Recent and Upcoming Amendments to the
Fisheries Act (Part 1 of 2)
This is the first part of a summary and discussion
of the recent amendments to the Fisheries Act that were enacted
pursuant to last year's budget bill, C-38. One round of the amendments
took effect on June 29, 2012, while the second round will come into
effect at a later date yet to be determined. This article, being
Part 1 of 2, focuses on the amendments that are already in place,
while Part 2 will focus on the pending amendments.
Pursuant to the division of powers as between the
federal government and the provinces as set out in sections 91 and
92 of the Constitution Act, 1867 (formerly the British North
America Act, 1867), the federal government maintains responsibility,
subject to delegation, over "Sea Coast and Inland Fisheries." The Fisheries Act, R.S.C., 1985, c. F-14, which was enacted
in 1867 and has undergone numerous amendments since that time, is
the primary piece of federal legislation that governs fisheries
in Canada. The focus of the Act is on the management of fisheries,
habitat and aquaculture; moreover, in recent years, environmental
considerations have been weaved into its mandate.
On March 29, 2012, the Minister of Finance tabled
bill C-38, an omnibus budget bill that - to its critics' consternation
- bore the understated title: "An Act to Implement Certain
Provisions of the Budget." At more than 400 pages, the legislative
leviathan contained more than 700 sections and amended dozens of
statutes. On June 29, 2012, the Act and the amendments therein received
Royal Assent and, as such, the amendments became official laws of
Canada subject to their coming into force.
The Fisheries Act was included among the dozens
of statutes that underwent revision as a result of the budget bill
and, despite the bill's presentation as a legislative housekeeping
exercise, the amendments to the Fisheries Act are considerable
in their breadth and effect.
Curiously, rather than having all of the amendments
come into force at the same time, the bill was structured such that
a first round of amendments came into force immediately following
Royal Assent, while the second round of amendments will come into
force on a day to be fixed by an order of the Governor in Council,
which acts on the advice of the Federal Cabinet. What is even more
curious is that some of the second round amendments substantially
alter the first round amendments, as will be discussed in great
detail in Part 2 of this article.
The following is a summary of the significant changes
to the Act as of its June 29, 2012 (the order is based on section
number, not importance):
i. Agreements with the Provinces or other Ministries
The amendments implemented an entirely new section
of the Act at section 4.1. This new section outlines the Minster
of Fisheries and Oceans' (the "Minister") power to enter
in agreements, arrangements or transactions with any person or body,
or any federal or provincial minister, department or agency regarding
the subject matter of the Act. The section codifies the parameters
by which the Minister can delegate or cooperate with other government
bodies and the section's inclusion may suggest a shift whereby the
Minister of Oceans will increasingly delegate or share the regulation
of the fishing industry. It remains to be seen how this section
will be utilized.
ii. Offence of Killing Fish
Section 32 of the Act makes it an offence to kill
fish without legislative reason. The section was amended such that
the exceptions to the offence are codified and made punishable on
summary conviction and liable, on first offence, to a fine not more
than $100,000 and, on second offence, a fine of not more than $100,000
or imprisonment for a term not exceeding six months. A peculiar
aspect of this amendment, which will be discussed in Part 2 of this
article, is that this section will be repealed in its entirety pursuant
to the pending second round of amendments,
iii. Protection of Fish Habitat
Section 35 of the Act restricts conduct that results
in harm to a fish habitat with certain exceptions. The amendment
expands the type of restricted conduct to include "activity"
in addition to "any work or undertaking". On its face,
the purpose of this amendment appears to expand the restriction
beyond the commercial sphere to capture all manner of conduct, recreational
or otherwise. As will be discussed in Part 2 of this article, the
second round of amendments includes a substantially revised version
of this section that will narrow the section's application from
prohibiting conduct that causes harm generally to only "serious
iv. Fish Habitat Protection and Pollution Prevention
Section 36, which addresses "Fish Habitat Protection
and Pollution Prevention, was amended in a manner that appears to
be directed at limiting the Minister's authority and discretion
to regulate pollution under the Act while empowering the Federal
Cabinet via the Governor in Council. Subsection 5.1 empowers the
Governor in Council to make regulations establishing the conditions
for the exercise of the Minister's regulation-making power under
this section of the Act. In theory, this means that cabinet is vested
in de facto power to limit the Minister of Fisheries and
Oceans on the issue of fish habitat protection and pollution prevention.
v. Minister may Require Plans and Specifications
Section 37 of the Act sets out the circumstances and
process by which a person, whom "carries on or proposes to
carry any work or undertaking that results or is likely to result"
in either the destruction of a fish habitat or the discharge of
a prohibited substance in water frequented by a fish, must provide
the Minister with a plan in connection with same. The plan must
include of all information necessary for the Minister to determine
whether or not he or she should exercise his or her powers to prohibit
or authorize the conduct that is the subject of the plan.
Akin to the aforementioned revision to section 25,
the amendments to this section expand the type of conduct to include
"activity" in addition to "any work or undertaking".
As will be discussed in Part 2 of this article, this section will
undergo significant revision pursuant to the pending second round
of amendments that will narrow its application from governing conduct
that causes harm generally to only conduct that causes "serious
vi. Offence Enforcement and Procedure
An entirely new section was added to the Act with
the amendment of section 39. The new section is focused on the enforcement
measures available to any fishery officer or inspector and covers
a range of topics, including: the authority to search, the authority
to issue a warrant, the use of force, and exceptions to the requirement
that a warrant is necessary.
Notably, pursuant to the new law, fishery officers
and inspectors can search a place, premises vehicle or vessel (if
and only if the place, premises vehicle or vessel is not used as
a "dwelling-place") without a warrant in "circumstances
in which the delay necessary to obtain a warrant would result in
danger to human life or safety or the loss or destruction of evidence."
This significance of this amendment remains to be seen; however,
it is intuitively worrisome as fishery officers are authorized to
use their discretion to execute warrantless searches, which presents
a potential moral hazard.
vii. Limitation of Suits
On the issue of offences under the Act, the amendment
to section 82 is perhaps the most significant amendment of the first
round. Prior to the amendment, the limitation of suits provision
read as follows:
Proceedings by way of summary conviction in respect
of an offence under this Act may be instituted at any time within
but not later than two years after the time when the Minister
became aware of the subject-matter of the proceedings (emphasis
Several courts have considered the proper interpretation
of that part of the provision that is underlined above and the end-result
is that the courts interpreted the section to have more or less
the same effect as the discoverability principle of limitations
at common law with the difference being that, rather than the discoverability
date being the date that the Court determines that the reasonable
person should have discovered the cause of action, it is the date
that the Court determines that there was ministerial knowledge of
the offence. (*1)
The amended section 82 reads as follows: "A proceeding
by way of summary conviction in respect of an offence under this
Act may not be commenced later than five years after the day
on which the offence was committed (emphasis added)." In
one fell swoop, the limitation period for summary conviction has
been raised from a soft two-year limit (subject to ministerial awareness)
to a hard five-year limit. This amendment may be aimed at addressing
environmental offences that can often take years to manifest, while
relieving the Minister from the time pressure imposed by the Court's
interpretation of its previous wording.
viii. Conclusion of Part 1
In isolation, no single amendment is indicative of
a radical shift in the focus of the Fisheries Act; however,
as will be expanded upon in the continuation of this article, the
net effect of the two rounds of amendments appears to be a policy
movement from express codification of prohibited activity to a system
more-heavily reliant on discretionary regulation, wherein much of
the Act's application is subject to the discretion of the Minster
and/or the Federal Cabinet, via the Governor in Council. Whether
this is a good or a bad thing depends on your faith in the Minister
and the Federal Cabinet and, in any event, it is understandable
why environmental interests are nervous about the changes. Nevertheless,
those parties subject to the act should pay careful attention to
these amendments as well as the second round of amendments. Some
of the new additions described above will be revised and, in some
cases, repealed entirely, such that - for the time being - the Fisheries
Act remains in a state of flux.
*1. R. v. Gemtec Ltd., 2004 NBQB 371 (CanLII) at para. 28.
7. Insurers: Which Duty of Care?
For more than thirty years, since Fine's Flowers
Ltd. v. General Accident Assurance Co. of Canada (*1), it has
been held by our Courts of law that insurance brokers owe a duty
to their clients to not only advise them about the possible coverage
available to them, but, where the circumstances require, to also
advise them about which insurance coverage they actually need. Recently,
in Ostenda v. Miranda (*2) the Superior Court of Ontario
had to decide whether insurers owe the same duty of care to insurance
1. The Facts
This action resulted from a motor vehicle accident
involving Mr. Ostenda, a professional truck driver employed by a
large transportation company called Synergy Transportation System
Inc. (hereinafter referred to as "Synergy"). Synergy was
the holder of a fleet motor vehicle coverage policy issued by Zurich,
Mr. Ostenda was covered by that policy. The policy had been obtained
through the services of Synergy's insurance broker, Jones Deslauriers
Insurance Management Inc. (hereinafter referred to as "JDIMI").
Unlike most standard automobile insurance policies issued to individuals
in Ontario, the policy did not contain an OPCF 44R endorsement providing
uninsured and underinsured coverage.
Mr. Ostenda's accident resulted from the negligence
of a driver, Mr. Miranda, who, unfortunately, did not have insurance
coverage. Since the policy did not contain the OPCF 44R endorsement,
Mr. Ostenda had unfortunately no claim under the policy.
Mr. Ostenda brought an action against, Zurich, asserting
its negligence for failing to require JDIMI to inform and advise
him and Synergy of the availability and need to obtain underinsurance
Zurich brought a motion for summary judgment seeking
the dismissal of the action as against it on the basis that there
was no genuine issue requiring a trial.
2. The Issues
The Court had to decide the following issues:
a) Was this case suitable for determination by way
of a motion for summary judgment?
b) In relation to the non-inclusion of the OPCF 44R endorsement,
did Zurich stand exposed to liability equivalent to that of a
broker's, regarding its dealings with Synergy?
c) Was Zurich liable to Ostenda, as principal, for the mistakes
of JDIMI as its agent?
3. The Ruling
To the first question, after taking into consideration
the modest size of the evidentiary record before it and the question
of fairness, the court held that yes, this case was suitable for
determination by way of a motion for summary judgment.
b) Zurich's Duty of Care
Before answering the second question, whether Zurich
owed the same kind of duty of care as JDIMI did to Synergy and Ostenda,
the Court reminded us of the extent of the duty of care owed by
a broker to its clients as decided in Fine's Flowers Ltd. v.
General Accident Assurance Co. of Canada and Fletcher v. Manitoba
Public Insurance Co (*3):
"It is well established that insurance brokers
owe a duty to their customers to provide not only information
about available coverage, but also to advise about which forms
of coverage the costs customers require in order to meet their
] In Fletcher, the Supreme Court of Canada recorded
with approval the following passage from an article by Professor
Snow, "Liability of Insurance Agents for Failure to Obtain
Effective Coverage: Fine's Flowers Ltd. v. General Accident Assurance
Co." as follows:
"Consumers who place their faith insurance
agents holding themselves out as competent and find their faith
misplaced, will frequently be able to find recourse against
the agent. [
] The extent of the duty owed by an insurance
agent, both in placing insurance and in indicating to the insured
which risks are covered and which are not, as set out in this
case, is a fairly stringent one for the agent.[
It is both reasonable and appropriate to impose
upon them a duty no only to convey information but also to provide
counsel and advice."
Further, the Court considered the fact that JDIMI
was involved on behalf of Synergy:
"In the present case, a broker (JDIMI) was
involved on behalf of the insured. Presumably (although the issue
of the liability of JDIMI is not before me) it had the duties
imposed upon the broker as recognized in Fine's Flowers.
JDIMI submitted Synergy's application for insurance to Zurich.
JDIMI spelled out in the application the specific coverage sought
and did not include OPCF 44R uninsured and underinsured coverage
in the application. The coverage that was offered by Zurich and
the policy is it ultimately issued were consistent with that requested
by JDIMI, in that they did not reference or include OPCF 44R."
Counsel for Mr. Ostenda argued that Zurich had conducted
its own risk assessment of the business of Synergy, and that accordingly,
it should have advised Synergy of its need for uninsured and underinsured
coverage. This argument was dismissed by the Court as it was held
that the risk assessment conducted by Zurich had been done from
the perspective of underwriting the risk, not in order to become
familiar with the business and insurance needs of Synergy to then
advise it of its insurance requirements.
From a public policy perspective, the Court also held
that there was no need to impose insurers with a similar duty to
that undertaken by brokers, as it would result in considerable duplication
of efforts and would require the insurers to perform virtually the
same functions as brokers.
Accordingly, the Court answered no to the second question,
that Zurich in its dealings with Synergy, did not have the duty
of care of a broker as defined in Fine's Flowers.
c) Zurich as Principal
Finally, the Court also answered no to the third question,
that Zurich was not liable to Ostenda, as principal of JDIMI:
"In my respectful view, the evidence in the
present case falls well short of establishing that JDIMI had legal
authority to represent Zurich so as to affect Zurich's legal position.
At best, JDIMI served as the intermediary or courier by which
the request for insurance was submitted by Synergy and Zurich's
quotation was delivered in reply. There is no evidence that JDIMI
had authority to bind Zurich in relation to this risk or to countersign
the policy. Rather, this was a policy issued by Zurich and not
*1. Fine's Flowers Ltd. v. General Accident Assurance Co. of
Canada, (1977), 17 O.R. (2d) 529 (C.A.).
*2. Ostenda v. Miranda, 2012 ONSC 7346 (CanLII).
*3. Fletcher v. Manitoba Public Insurance Co.,  S.C.J.
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