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Significant Cases for Canadian Common Law

Updated for 2010 Changes to the Professional Engineers Act

These web pages have been updated to include both enacted and pending changes due to the Open for Business Act, 2010. Note that some changes will not be in force until proclaimed by the Lieutenant Governor; for example, the putting into force the end of the industrial exemption has been delayed numerous times.


All information on this website is provided without any warranty to its correctness. The material on these pages reflects Douglas Wilhelm Harder's best judgment in light of the information available to him at the time of its preparation. Any use which a third party makes of these pages, on any reliance on or decision to be made based on it, are the responsibility of such third parties. Douglas W. Harder accepts no responsibility for damages, if any, suffered by any third party as a result of decisions made or actions based on these pages.

A set of PowerPoint slides are available at Precedent_Cases.pptx, but the reader is advised that the discussion related to the presentation is just as important as the slides themselves.

The precedent cases listed here include those on the following topics:

Liability for the Tort of Negligence

Donoghue v. Stevenson, 1932, House of Lords

Ms. Donoghue and her friend entered an establishment where her friend purchased a sundae with a ginger beer which came in a opaque bottle. Ms. Donoghue poured out some of the beverage and drank it with the sundae. When her friend poured her glass, a decomposed snail came out of the bottle and Ms. Donoghue became sick as a result. Ms. Donoghue did not purchase the drink so no contract existed between her and the owner of the establishment and no contract existed between her and the manufacturer. The snail was not deemed to have been intentionally placed into the bottle by the manufacturer and therefore by the laws of the time, the manufacturer could not be held liable in tort.

The House of Lords, however, decided that the defendant did owe a duty of care to the plaintiff and thus this case introduced the unintentional tort of negligence.

References: Marston, p.42, wikipedia, Leeds.

Hedley Bryne v. Heller, 1964, House of Lords

The plaintiffs had, without contract, requested information about a client from their bank. On the favourable report provided by Heller, the plaintiff extended additional credit for advertising for the client. This resulted in a £17,000 loss for the plaintiff.

The court found that a negligent but not fraudulent misrepresentation may give rise to a financial loss even if there was no contract between the advisor and the advisee. If the advisor has a special skill which is being relied upon by the advisee, the advisor has a duty of care to the advisee. The only mitigating factor was that the defendant had expressly stated that the information was being given "without responsibility".

References: Marston, p.pp.42-43, wikipedia, UBC.

Wolverine Tube (Canada) Inc. v. Noranda Metal Industries Ltd. et al., 1994, Ontario

An environmental audit and assessment for a property was prepared by a defendant for Noranda Metal Industries Ltd. The report included the disclaimer that the report was prepared for Noranda and accepted no responsibility for damages by any third party who may rely upon that report. The property was sold to Wolverine Tube (Canada) Inc. and the audit and assessment was shown to the buyer who relied upon its content. Later, the property was found not to be as described and the plaintiff sued for negligent misrepresentation.

The courts upheld the disclaimer of responsibility which appeared at the top of the document.

References: Marston, p.43-44.

Fundamental Breaches and the "True Construction" Approach

Harbutt's Plasticine Ltd. v. Wayne Tank and Pump Co. Ltd., 1970, Court of Appeals

The plaintiff entered into a contract with the defendant to perform an installation in a factory. The contract limited the liability of the defendant to £2300; however, during the installation, the defendant installed a pipe which was "thoroughly" and "wholly" unsuited for its intended purpose which resulted in a fire costing the plaintiff £170,000. Lord Denning found that the defendant had fundamentally breached the terms of the contract and therefore could not rely on the limitation clause within the contract.

This case introduced the concept of fundamental breach.

References: Marston, pp.155-156.

Photo Production Ltd. v. Securicor Transport Ltd., 1980, House of Lords

The defendant entered into a contract with the plaintiff to provide security services. The contract claimed no liability for any actions of the employees. An employee started a fire which cost the plaintiff £615,000. The plaintiff claimed a fundamental breach and therefore the limitation clause could not be relied upon by the defendant.

The House of Lords found in favour of the defendant.

References: Marston, pp.156-157, wikipedia, BAILII.

Hunter Engineering Co. Inc. v. Syncrude Canada, Ltd., 1989, Supreme Court of Canada

The plaintiff had a contract with the defendant to supply gear boxes. The contract had expressed warranties but also excluded all other warranties including any statute warranties. When the gear boxes broke prematurely and had to be replaced at great cost to the plaintiff, the plaintiff claimed a fundamental breach.

The Supreme Court ruled that when an exemption clause is clearly stated, it should be followed. It was suggested that the doctrine of fundamental breach be "put to rest".

References: Marston, pp.161-162, wikipedia, LexUM.

Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010, Supreme Court of Canada

The defendant had entered into a "Contract A" with the plaintiff where the bidding was explicitly restricted to six proponents who had participated earlier on in the process. The contract was eventually awarded to one of the six parties who had entered into a joint partnership with another corporation. The plaintiff asserted that this was a fundamental breach of the contract and therefore the limitation clause should not be relied upon.

In its decision, the Supreme Court of Canada stated that "With respect to the appropriate framework of analysis the doctrine of fundamental breach should be 'laid to rest'."

References: LexUM.

Bid and Tender Contracts: "Contract A"

Imperial Glass Ltd. v. Consolidated Supplies Ltd., 1960, British Columbia Court of Appeals

The defendant/offeror of a contract made a unilateral mistake in a calculation for a price. The offeree was aware of this mistake but chose to accept the contract. The court found that while there may have been moral and ethical questions with respect to the conduct of the offeree, the behaviour was not determined to be fraudulent and consequently the contractor was not relieved of his contractual obligations.

References: Marston, p.116.

Compare this case with the next where only a bid was made.

Belle River Community Arena Inc. v. W.J.C. Kaufmann Co. et al. , 1977, Ontario High Court of Justice

In this case, the defendant submitted a bid of $641,603 which was $70,000 lower than intended. The defendant realized the error and attempted to withdraw the bid; however, the plaintiff accepted the bid and when the defendant did not accept the offer of the contract, the plaintiff went with the next lowest bidder and attempted to sue the contractor for the difference.

The court held that no contract existed between the plaintiff and the defendant and therefore there was no legally enforceable agreement.

References: Marston, pp.116-118.

Ron Engineering et al. v. The Queen in right of Ontario et al., 1981, Supreme Court of Canada

This is a case where the submission of a bid was combined with all the elements of a contract including consideration. The bid was submitted with a $150,000 deposit cheque. The bid of $2,748,000, however, was determined to be $750,058 lower than intended as the result of a unilateral mistake on the part of the plaintiff who was attempting to withdraw from the bidding process. The tender documents included a term that if a tender was withdrawn, the defendant could retain the deposit. The plaintiff attempted to argue that this case was similar to the previous Belle River case, but in that case, no contract existed. In this case, the court determined that the tendering process was itself a separate contract from the resulting construction contract.

It is an interesting quirk of history that the court appears to have referred to the tender contract as "Contract A" and the resulting construction contract as "Contract B" to distinguish the two (no different than a report using the terms Figure 1 and Figure 2). The consequence, however, has been that in much of the literature since, rather than referring to the tender contract by an appropriate name, it is referred to as "Contract A".

References: Marston, p.119-120 and 121-122, wikipedia, LexUM.

Equitability in Contracts

Conwest Exploration Co. Ltd. et al. v. Letain, 1963, Supreme Court of Canada

The optionor owned mining claims and the optionor had to take certain steps including incorporation by a given date in order to exercise the options. Before the date, the optionor (the defendant) implied that the date could be extended. Upon this gratuitous promise (as it was offered without consideration), the optionee continued to take the steps towards incorporation. Afterward, the optionor attempted to revert to the strict date provided in the contract. The optionee applied for relief on the grounds of equitability.

The court found that that it would inequitable to revert to the strict interpretation of the contract and therefore estopped the optionor from enforcing the date.

References: Marston, pp.92-93, LexUM.

John Burrows Ltd. v. Subsurface Surveys Ltd. et al., 1968, Supreme Court of Canada

The contract the defendant agreed to pay back a borrowed sum of $42,000 over nine years and 10 months at 6% annual interest in monthly payments. The contract had a clause that if a payment was more than 10 days late, the whole amount payable would become immediately due. Out of the following 18 months, eleven payments had been accepted more than ten days after they were due; however, on December 7th, 36 days after the November 1st payment was due, the defendants demanded full payment of the $42,000 with interest. At this point, the defendant set a registered letter indicating that the plaintiffs were in default and that the defendants were exercising the clause. The plaintiffs attempted to pay both the November and December payments, but this was refused.

The issue here is that in setting up a pattern of accepting late payments, defendants were essentially setting up a situation where the plaintiffs would fall into the habit of submitting late payments thereby allowing the defendants to enforce the default clause at their whim.

The appellate court found this to be a question of equitability and therefore estopped the defendants from enforcing the clause in the contract; however, the Supreme Court found that equitable estoppel requires a communication between the parties must occur: the passive acceptance of payments did not imply any form of consideration; the Supreme Court quoted the trial judge, "I do not believe that John Burrows ever gave any consideration to the fact that in accepting late payments of interest..., he was thereby leading Mr. Whitcomb into thinking that strict compliance would not be required at any time." and the dissenting voice, Bridges, of the Court of Appeals, "For estoppel to apply, I think we must be satisfied that the conduct of Burrows amounted to a promise or assurance, intended to affect the legal relations of the parties to the extent that if an interest instalment became in default for ten days the plaintiff would not claim the principal as due unless it had previously notified the defendants of its intention to do so or, if it had not so notified them, that notice would be given them the principal would be claimed if such instalment so in default were not paid. This is, I think, a great deal to infer." Consequently, for equitable estoppel to arise, it requires the active participation on the part of the party making the gratuitous promise.

References: Marston, pp.93-95, LexUM.

Owen Sound Public Library Board v. Mial Developments Ltd. et al., 1979, Ontario Court of Appeals

The contract stipulated that the owner/plaintiff was to honour payment certificates issued by the architect within seven days. With one payment certificate, the plaintiff requested that a document supporting the payment certificate be sealed by the relevant sub-contractor. The defendant agreed but did not obtain the seal until after the seven-day time limit passed.

The contractor attempted to claim a breach of contract and the plaintiff brought the case to court on a question of equitability. The count found that as it was the actions of the contractor which caused the owner to default, they estopped the defendant from enforcing the strict terms of the contract.

References: Marston, pp.95-96.

Implied Terms in Contracts

The Moorcock, 1889.

The Moorcock was a ship, the owner of which had a contract with a dock to moor the ship for unloading. The ship was moored and when the tide went out, the ship struck bottom and was damaged. The contract did not have an obligation that the ship would be safe during the time it was docked.

The judge, however, determined that under such a circumstance, it would be an implied term in the contract that the ship should, under normal circumstances, be safe while moored. The judge only allowed for implied terms when in all events as it must have been the contemplation of both parties.

References: Marston, p.137, wikipedia.