Precedent Cases in Common Law Precedent Cases in

Precedent Cases in Common Law Precedent Cases in Canadian Common Law Douglas Wilhelm Harder, M. Math. Department of Electrical and Computer Engineering University of Waterloo WATERLOO ELECTRICAL AND WATERLOO COMPUTER ENGINEERING ELECTRICAL AND COMPUTER ENGINEERING 1

Precedent Cases in Common Law Outline This talk focuses on case studies which have shaped Canada’s common law – – – Liability for the tort of negligence Fundamental breaches and the “true construction” approach Bid and tender contracts: “Contract A” Equitability in contracts Implied terms in contracts WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 2

Precedent Cases in Common Law Liability for the Tort of Negligence First, we look at three cases which defined liability for the tort of negligence – The seminal case was Donoghue v. Stevenson – The significance of disclaimers was defined in Bryne v. Heller – This was upheld in the Superior Court of Ontario with Wolverine v. Noranda WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 3

Precedent Cases in Common Law Liability for the Tort of Negligence Donoghue v. Stevenson, 1932 – The friend of the plaintiff, Ms. Donoghue, purchased a ginger beer at an establishment – Ms. Donoghue drank some of the beer as part of a sundae – Before Ms. Donoghue’s friend drank any, a decomposed snail was discovered in the bottle – No contract existed between either Ms. Donoghue and the establishment or the manufacturer of the ginger beer (the defendant) – The House of Lords, however, decided that the defendant liable for an unintentional tort of negligence WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 4

Precedent Cases in Common Law Liability for the Tort of Negligence Hedley Bryne v. Heller & Partners Ltd. , 1964 – Without consideration, the defendant provided advice on the creditworthiness of a client of the plaintiff • No contract existed – The defendant gave a favourable response but stipulated that the response was made “without responsibility” – The client went bankrupt costing the defendant £ 17, 000 – Heller’s response was found to be negligent misstatement – Despite no contract, the court found that in their professional capacity, the defendants owed a duty of care to the plaintiff – The only mitigating factor was that the misstatement was explicitly given “without responsibility” WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 5

Precedent Cases in Common Law Liability for the Tort of Negligence Hedley Bryne v. Heller & Partners Ltd. , 1964 – This is a fascinating precedence: – The court created a precedence for the duty of care of professionals with regard to the making of statements even outside the scope of contracts – The only reason the court did not enforce this decision was because of the stipulation of “without responsibility” WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 6

Precedent Cases in Common Law Liability for the Tort of Negligence Wolverine Tube (Canada) Inc. v. Noranda Metal Industries Ltd. et al. , 1994 – A confirmation of Bryne v. Heller in Ontario – An environmental consultant prepared an audit and assessment – The report included the statement This report was prepared. . . for. . . Noranda, Inc. . Arthur D. Little accepts no responsibility for damages. . . suffered by any third party as a result of decisions made or actions taken based on this report. – The report was presented to the plaintiff by Noranda as part of a business deal WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 7

Precedent Cases in Common Law Liability for the Tort of Negligence Wolverine Tube (Canada) Inc. v. Noranda Metal Industries Ltd. et al. , 1994 – The assessment was found to be inaccurate and the plaintiff claimed that the defendant owed them a duty of care – The courts found that the disclaimer was sufficient to isolate the defendant from the damages claimed by the plaintiff WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 8

Precedent Cases in Common Law Fundamental Breach Next, we will look at the concept of a fundamental breach of a contract WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 9

Precedent Cases in Common Law Fundamental Breach Harbutt's Plasticine Ltd. v. Wayne Tank and Pump Co. Ltd. (1970) – House of Lords – The contract with the defendant had the liability limited to £ 2300 – The methods used by the defendant were “thoroughly” and “wholly” unsuitable for is purpose – The damage to the plaintiff was £ 170, 000 – The court found in favour of the plaintiff that the limited liability could not be used for such serious breach WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 10

Precedent Cases in Common Law Fundamental Breach Photo Production Ltd. v. Securicor Transport Ltd. (1980) – House of Lords – Harbutt v. Wayne was minimized with this case – An employee of the defendant started a fire which cost the plaintiff £ 615, 000 – This was not seen to be a fundamental breach WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 11

Precedent Cases in Common Law Fundamental Breach Hunter Engineering Co. Inc. v. Syncrude Canada, Ltd. (1989) – Ontario High Court of Justice – The defendant supplied gear boxes for the plaintiff which failed shortly after installation – The plaintiff claimed a fundamental breach of contract in an attempt to void a limitation clause – The court applies the “true construction” approach of interpreting the contract and found the contract to be clearly worded WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 12

Precedent Cases in Common Law Fundamental Breach Tercon Contractors Ltd. v. British Columbia (Transportation and Highways) (2010) – This involves a breach of a “Contract A” – Bidding was restricted to six proponents; however, one proponent entered into a joint partnership – The plaintiff asserted this was a fundamental breach – The decision of the Supreme Court of Canada was: “With respect to the appropriate framework of analysis the doctrine of fundamental breach should be ‘laid to rest’. ” – The court did however, did indicate the exclusion clause was ambiguous and should be construed contra proferentem WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 13

Precedent Cases in Common Law “Contract A” The request for bids or tenders has with sufficiently large construction projects become so involved that the request itself has become a contract separate from the final construction contract WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 14

Precedent Cases in Common Law “Contract A” Imperial Glass Ltd. v. Consolidated Supplies Ltd. (1960) – British Columbia Court of Appeals – The defendant/offeror made a unilateral mistake in a calculation of a price in a contract – The plaintiff/offeree was aware of the mistake but chose to accept the contract – The court found there were moral or ethical questions in the conduct of the offeree but the behaviour was not fraudulent – The contractor was not relieved of his obligations WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 15

Precedent Cases in Common Law “Contract A” Belle River Community Arena Inc. v. W. J. C. Kaufmann Co. et al. (1977) – Ontario High Court of Justice – The defendant submitted a bid of $641, 603 which was $70, 000 lower than intended and attempted to withdraw the bid – The plaintiff accepted the bid of the contractor and had to go to the next lowest bidder – The plaintiff sued for the difference – The court held that there was no contract between the plaintiff and the defendant WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 16

Precedent Cases in Common Law “Contract A” Ron Engineering et al. v. The Queen in right of Ontario et al. (1981) – Supreme Court of Canada – The defendant submitted a bid of $2, 748, 000 which was $750, 058 lower than intended – The defendant had given a bid deposit cheque of $150, 000 – The defendant attempted to withdraw from the tendering and to get the bid deposit back – The Supreme Court of Canada found that the tender contract was separate from the bidding contract and the defendant was required to forfeit the bid deposit WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 17

Precedent Cases in Common Law Equitability We look at some questions of equitability in contracts WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 18

Precedent Cases in Common Law Equitability Conwest Exploration Co. Ltd. et al. v. Letain (1963) – Supreme Court of Canada – The contract required that a company must be incorporated by a certain date for an option to be exercised – The optionee (plaintiff) indicated that the incorporation could not be completed on time and the optionor (defendant) implied the date was extended – The court estopped the optionor from reverting to a strict reading of the contract WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 19

Precedent Cases in Common Law Equitability John Burrows Ltd. v. Subsurface Surveys Ltd. et al. (1968) – Supreme Court of Canada – The contract required specific monthly interest payments – The contract indicated if a payment is overdue after 10 days, the full principal amount would be immediately due – The plaintiff began to regularly make payments which were more than 10 days late but which were still accepted – Without notification, the defendant reverted to the original terms of the contract and attempted to collect on the principal – The court estopped the defendant from enforcing the strict terms of the contract WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 20

Precedent Cases in Common Law Equitability Owen Sound Public Library Board v. Mial Developments Ltd. et al. (1979) – Ontario Court of Appeals – The owner/plaintiff was required honour payment certificates issued by the architect within seven days – The plaintiff requested a document from a subcontractor to be sealed – The defendant agreed but did not obtain the seal until after the seven-day time limit passed – The defendant claimed a breach of contract – The court estopped the defendant from a strict interpretation of the contract WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 21

Precedent Cases in Common Law Implied Terms Finally, we conclude two cases which define the implied terms of a contract WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 22

Precedent Cases in Common Law Implied Terms The Moorcock (1889) – England – A ship was docked and when the tide went out, the ship was damaged – The contract did not have an obligation that the ship would be safe while the ship was moored – The judge found that the safety of the ship was an implied term in the contract “. . . what the law desires to effect by the implication is to give such business efficacy to the transaction as must have been intended at all events by both parties who are business men; not to impose on one side all perils of the transaction, or to emancipate one side from all the chances of failure, but to make each party promise in law as much, at all events as it must have been in the contemplation of both parties that he should be responsible for in respect to those perils or chances. ” WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 23

Precedent Cases in Common Law Implied Terms TBC WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 24

Precedent Cases in Common Law Outline This talk reviewed cases from five aspects relevant to professional engineers – – – Liability for the tort of negligence Fundamental breaches and the “true construction” approach Bid and tender contracts: “Contract A” Equitability in contracts Implied terms in contracts WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 25

Precedent Cases in Common Law References [1] D. L. Marston, Law for Professional Engineers, 4 th Ed. , Mc. Graw Hill Ryerson, 2008. [2] Lex. UM, Judgements of the Supreme Court of Canada, http: //csc. lexum. umontreal. ca/en/, Faculty of Law, University of Montreal, 2010. WATERLOO ELECTRICAL AND COMPUTER ENGINEERING 26

Precedent Cases in Common Law Copyright and Disclaimer • • • These slides are Copyright © 2010 by Douglas Wilhelm Harder. All rights reserved. These slides are made publicly available on the web for anyone to use No warranty is given that any information in these slides is correct The use of these slides in studying for the PPE is fully at your own risk If you choose to use them, or a part thereof, for a course at another institution, I ask only three things: – That you inform me that you are using the slides, – That you acknowledge my work, and – That you alert me of any mistakes which I made or changes which you make, and allow me the option of incorporating such changes (with an acknowledgment) in my set of slides Sincerely, WATERLOO ELECTRICAL AND COMPUTER ENGINEERING Douglas Wilhelm Harder, MMath dwharder@alumni. uwaterloo. ca 27