CHAPTER 1

FUNDAMENTAL LEGAL RIGHTS

- Purpose of the course is to make you a sophisticated business client so you can use the law to your
advantage and to recognize when you need to consult a lawyer (p. 178 Lyons v. Multari ) it saves
money to see a lawyer in the early stages rather than have big legal fees later when a major problem arises
-lawyers are expensive ($200-$1,000 per hr.) 40,000 in Ont. - avg. cost of a civil case with a 3 day trial
is $60,000
LAW a body of rules enforced by a court or government agency
Two Sources of Law
1) Common Law - judge made law based on old British judges decision
- it is based on the rule of precedent- judges must follow the decisions of previous higher court judges
- to change common law, a judge breaks from the precedent for a good reason and a higher court agrees
-

2) Statutory Law - government made law - the public elect politicians who pass laws
to change a statutory law, elect a new government

- BNA Act 1867 then became The Constitution Act in 1982 (p.33-35), and it sets out areas (jurisdiction)
each level of government has the right to pass laws in:
S.91 Federal govn.- criminal law, banking, bankruptcy, divorce, trade & commerce, customs,
immigration, defense, post office, taxation and for POGG (peace, order and good
government)
S.92 Provincial govns. - health, education, labour laws, civil & commercial property rights, taxes
Municipal govns. they have no powers but are given powers by the federal and provincial to deal with
local issues (e.g. local land use, police, fire, garbage, local roads, property tax)
- if a government passes a law in an area it does not have jurisdiction it can be challenged as ultra vires
and ruled invalid p. 6 in the cases of local airport regulations the SCC ruled local laws were invalid as it
was under federal govn. powers p. 6 the SCC also ruled the federal govn. could not create a national
securities regulator (even though it is needed), as it falls under provincial jurisdiction
Charter of Rights and Freedoms 1982 (p. 36-40)
- it is the supreme law in Canada gives the SCC big power - protects people and companies from bad
actions of the government and government agencies- no law can violate the Charter rights
- the Charter though only applies to the actions of the government or a government agency, not to the
actions of a private company
- most cases under the Charter are criminal law not business law
- s.1 - the rights listed below are protected unless it is justified to ignore these rights for a very good
reason
- also s. 33 notwithstanding clause govn. can violate the rights using this clause even if it is not
justified (Quebec language laws) but it must be reviewed then every 5 years after
-s. 1 Tobacco ad restrictions justified, toy ad restrictions justified, search of private bank records
justified if fraud suspected

-2-

Ch. 1

- s.2 freedom of religion, speech, press, association - p. 9 Big M Drug Mart, billboard restrictions,
transit co. ads, Sikhs & turbans, p. 10 Whatcott and anti-homosexual flyers/ hate speech laws, p. 13
Fraser farm workers right to form an association not unionize
- s. 7 life, liberty and security of the person - p. 13 Sue Rodriguez 1993 SCC - dr. assisted suicide,
Morgentaler and abortion right
- s. 8-11 big criminal law rights when police search and arrest
-

s.11(b) right to be tried in reasonable time - Askov 1990 SCC over 100,000 charges dropped as trial
not within 6-8 mo.
S. 15 (1) freedom from discrimination cant discriminate based on for example; race, nationality,
colour, religion, sex, age, disability
also sexual orientation protected p. 16 Vriend 1998 SCC - and in 2004 SCC rules gays can marry
S. 15(2) affirmative action programs are allowed, an organization can set up a program to offset past
discrimination (even though it discriminates now against the previously favoured group)
as often systemic discrimination has occurred over a long period of time

Human Rights Code

- most discrimination is not a Charter case, as it is done by a company or individual ( not the government)
- usually an employer or landlord or seller of goods and services discriminates so the Charter does not
apply BUT the provincial Human Rights Code will apply
- if a company/person does discriminate, you can complain to the Human Rights Commission which
conducts a hearing and give remedies if they find discrimination or harassment
- cos. must try to accommodate religion and disabilities unless it causes undue hardship (too
expensive) for the co.
- OMalley v. Sears SCC 1985 co. cut her to part time from full time when her religion required her
to take Fri. night and Saturdays off SCC said she gets back full time status and the time off, not
undue hardship on Sears
- p. 20 Zurich Insurance higher insurance rates to males under 25 is a justifiable discrimination due to
their higher risk of accidents
- cos. have to be careful not to discriminate when they are asking questions when hiring- good list in
text
- harassment is any unwanted physical or verbal conduct that offends or humiliates
- sexual harassment some flirting can be legal but only if both at the same job level, but never by a
boss cos. must put in company policies and practice due diligence or the co. can be liable for the
workers conduct p. 24 Robichaud SCC 1987 major case of sexual harassment
-

Different cases where discrimination was based on: pregnancy, religion, deafness, family status (not
accommodating workers work schedule for child care needs)
p. 26 Quebec Hydro SCC 2008 worker had missed 4 out of 6 years of work due to physical & mental
illness and still not able to return to work in the reasonably foreseeable future so SCC ruled co. could
fire her as it had made accommodations and she still couldnt work
p. 27 Lane v. ADGP Group 2007 - Lane gets $80,000 for 8 days work he couldnt perform as he was
mentally ill ct. rules co. had not done enough to accommodate his disability

-3-

Ch. 1

-BFOR bona fide occupational requirement sometimes discrimination is legal due to necessary job
requirements Bhinder- Sikh must wear hard hat, fireman must retire at age 60, p. 20 TD bank had no
right to drug test all employees though- p. 29 Meiorin the fitness test discriminated against female fire
fighters and was not a valid BFOR
-

Some people are angry at the type of cases that are being filed at the Human Rights tribunals as they
are considered frivolous or inappropriate e.g. right to smoke medicinal marijuana in front of a
restaurant (Gator Teds), comments made by comedian in a comedy club (Guy Earle), or cases of
minor issues resulting in large damages
In Ontario complainants have their legal fees paid for by the government in human rights cases and
this encourages some to make questionable claims

Remedies Human Rights Commissions Can Award

- Human Rights Commissions can award money, order the behaviour stops, force new co. policies,
force rehiring of worker
- e.g. p. 30 CN case - women in Quebec felt that they were not hired because of their sex
- 40% of local workers were women but only 6% at CN, so the women claimed discrimination
- CN then told that for new hires, 1 in 4 had to be women until 13% of its workers were women

CHAPTER 2

THE CANADIAN COURT SYSTEM

Weir/Smyth 6th

Laws rules of conduct that are enforced by government agencies ( e.g. courts and police)
Rule of law the law is supreme & applies to everyone including the Prime Minister & the government
3 Categories of Law
1) Civil Law private law- deals with individual disputes between two or more people and/or
companies- Big areas are breach of contract, negligence, other torts
2) Criminal Law - deals with cases between society and an individual person or company
- crimes impact all of our society, not just the victim e.g. the murder of a child upsets and affects
everyone not just the victim & family
3) Administrative Law - Governments pass many laws with rules and regulations in specific areas.
Often there are disputes, but the civil court system cant handle them all, so many areas have their own
court often called a review board or commission or tribunal that will hear disputes in these specific areas.
It is faster, cheaper, less formal usually and more efficient. Ex: Human Rights Commission, Landlord
Tenant Review Board, Tax Review Board, Immigration Board, Liquor board, land zoning boards
-thousands of cases are heard each year at these boards or commissions
- Most also have another appeal level you may be able to go to if an error is made and some cases even
go on to be appealed in the regular civil court system even (rarely) up to the Supreme Court
Comparison of Criminal and Civil Law
Criminal Law

Civil Law
Purpose
- To punish wrong doers (jail / fines)
- Compensate the victim
- Deter (other) people from committing crimes
(e.g. first degree murder)
Terms
-Accused (wrongdoer), accused is charged
- Defendant (wrongdoer)
- Complainant (victim)
- Plaintiff (the victim), sues defendant
- Accused is either guilty or not guilty
- Liable or not liable
Lawyers
- The accused picks and pays their own lawyer - Each side picks and pays own lawyer
- Victim does not hire a lawyer; the
- Beware, good expensive lawyers can win,
government appoints a crown attorney
often beat weak lawyers, so wrong result can
(government lawyer) to prosecute the accused. occur
Jury
- 12 people on the jury, all 12 must agree
-Ont. 6 people on the jury, 5 of 6 must agree
Timing
- s.11(b) of the Charter, requires the trial to
- No right to speedy trial, often wait 3-5 years
occur in a reasonable time. About 6-8
for a court date for a large civil trial
months for small offence, longer if murder
trial (collection of evidence, etc.)
Burden (Standard) of Proof
- Higher, harder standard of proof, hard to get - Easier lower standard, the plaintiffs lawyer
a conviction, as the crown must prove
only has to prove ON THE BALANCE OF
BEYOND REASONABLE DOUBT the
PROBABILITIES that the defendant did it.
accused did it.

-2-

Ch. 2

Structure of Court System - 3 Levels

1) Trial level 2 main trial courts:
a) Superior Court of Justice - about 234 judges, who do every big criminal case & all civil
cases
b) Ontario Court of Justice- most criminal and many family cases, about 287 judges & 349
JPs
- there are other divisions of these two courts such as: Small Claims Court (when suing for $25,000 or
less), Traffic Court, Family Court, Youth Court, Domestic Violence Court, Surrogate Court (wills and
estates)
-There are over a million possible cases and thousands are heard each year by hundreds of judges
at this level
2) Ontario Court of Appeal you apply for an appeal claiming that at the trial the judge (or jury) made
a mistake in the application of the law and/or their fact finding - 1-2 year wait to be heard
- 23 judges, hear over 1,000 cases per year, 3 or 5 judges per case depending on how important it is
- an appeal is NOT a new trial, it is just lawyers arguing about the law and if there was an error in the
trial
- The Court of Appeal usually agrees with the trial court, about 90% of appeals lose because the trial
courts do a good job and there was no error made
- But it can also decide there was an error at the trial and then it can give certain results Ex: overturn a
conviction, order a new trial, change the amount of money awarded, change the jail time given
3) Supreme Court of Canada SCC - 9 judges hear about 80-100 cases/year (5, 7 or 9 judges per case)
- deals with big issues or new areas of law you apply and claim that an error was made at the lower
court if granted an appeal then you wait 2-3 years for the SCC to hear it
- Again it is NOT a new trial, only lawyers arguing if mistakes were made at a lower level. SCC can
give the same type of results as the Court of Appeal 90% of SCC appeals also lose
5 Stages In a Civil Trial how to sue someone in civil court (Steps in Litigation)
Jurisdiction - what court can hear the case? (what court has jurisdiction)? - the plaintiff can sue either
where the event occurred OR where the defendant lives
Limitation period you must start the legal action within a certain time limit - in 2004 in Ontario it
became 2 years for most cases if you are too late then you cant sue
- p. 53 Markevich 2003 SCC tax dept. waited 15 years to go after him on unpaid taxes and SCC said it
was too late, so he gets off paying $770,000 and 70,000 other avoid $1.26 billion in unpaid taxes
STAGE 1 - PLEADINGS: - 2 parts statement of claim and statement of defence
- a) - Plaintiff (injured party) files a Statement of Claim at the court that has jurisdiction and it outlines
the plaintiffs version of event, law that applies and remedies they want (usually money), plus interest,
plus legal costs. The court will serve the statement of claim on the defendant (so you must know where
the defendant lives or you cant sue as the defendant cant be served)
b) - Defendant then has 21 days to complete their Statement of Defense, outlining their version,
applicable law and any counterclaims (remedies) they want and files it with the court

-3-

Ch. 2

-p. 62 Class Action - occurs when a group of plaintiffs all have a similar complaint against one
defendant.
- If the plaintiffs sue as a group/class it can save them legal fees as they share costs
- In Canada, the court must certify the group as a class, before there can be a class action, but it is often
hard to get certified but if you do get certified, the defendant usually will settle and pay the class to
avoid a trial e.g. 1993-2001 only 300 class actions were certified and only 5 went to trial in Ontario
Nobody has to join the class; you can sue on your own instead, but you cant do both - if you sue and
lose on your own you cant then join the class (one chance only) one or two people will be the
representative plaintiffs for the class
-p.64-67 Major Class Actions Settled in Canada: Residential schools almost $4 billion, Hepatitis C $2.7
billion, Nortel shareholders $2.64 billion, Maple Leaf Foods $27 million, Chocolate cos. $23 million,
Merck (Vioxx) $36 million, Consumers Gas $22 million
- lawyers often get 20 -30% of the award in Canadian class actions
- Stages 2 & 3 are designed to get you to settle out of court and avoid a trial, as the system is too
overloaded
STAGE 2 - DISCOVERY: 2 parts
a) Discovery of Documents - each side must give the other side their key documents e.g. business,
medical and financial records, even deleted computer files (also beware of Facebook comments)
b) Examination for discovery - the plaintiff and defendant each get questioned under oath by the other
sides lawyers, usually the same questions that they will be asked at trial - No judge is present, but a
written copy of the answers is produced. Often it is used later if trial answers are different from discovery
answers (it may make the person look like a liar if they change their story)
- Almost like a sample/practice run on the key trial questions many cases settle after this stage as you
know who has the stronger case usually after discovery
STAGE 3 - Pretrial conference - Both parties and their lawyers get together with a judge and
informally discuss the case it is NOT a trial, just a discussion - the judge will give his opinion on the
outcome and push the parties to settle- the pretrial judge can NEVER be the same judge at the actual trial
though
SETTLEMENT - the parties (plaintiff and defendant) can settle at anytime up to a second before the
judge gives the decision most usually settle earlier than that, the earlier, the less legal fees incurred
- over 80-90% of civil cases are SETTLED out of court and never go to trial - in the Settlement
Agreement there is a release that releases the defendant from any further legal action regarding this case
- there is also often a confidentiality clause that says the parties cannot discuss the terms of the
settlement with anybody, it remains confidential, a secret (i.e. dont tell others how much money you
agreed to take) or you can be sued e.g. p. 511 Jan Wong settled with the Globe & Mail but said in her
book it had paid her a big pile of money so Wong had to repay the money for making these comments
STAGE 4 -Trial less than 20% of cases that start at stage 1 will actually go to trial - the average civil
trial in Ont. costs $60,000 so it is very expensive
- a judge (and sometimes a civil jury) hears the case and decides the legal issues, and if someone is liable,
the court will/can award relief/remedies

-4Ch. 2
REMEDIES a Court Can Award a court can award monetary and non-monetary remedies
#1 Remedy Given by the court in over 97% of cases is Monetary Damages (MONEY)
There are 5 categories of monetary damages (Useful for answers to the case study test questions)
1) Pecuniary Damages (Financial losses) provable economic losses before the trial e.g. repair
costs, medical costs, lost wages and future economic losses such as future lost wages and future
medical costs no maximum limit here, sometimes there are arguments over future cost estimates
2) Non-pecuniary Damages (Non-financial losses) for pain and suffering, loss of enjoyment of
life and shorter life expectancy a maximum amount was set by SCC in 1978 at $100,000 and
now is about $380,000 due to inflation you only get the maximum if a catastrophic injury
3) Aggravated Damages money given for humiliation and stress, not a lot given ($50,000 is quite
big) - sometimes given in a cruel job firing but you need medical proof of the upset
4) Punitive Damages - extra money awarded against the defendant to punish them for intentionally
evil/obnoxious behavior no max. limit but the highest given so far is under $5 million in Canada
5) Nominal Damages - Court gives a small amount ($1-$1000) to show defendant was wrong, but
there were no real economic losses for the plaintiff just their legal rights were violated
Non-Monetary Remedies- often the plaintiff wants something other than just money these are
remedies that the court can give that are orders to do (or not do) something
1. Injunction - a stop order - it is a court order to the defendant to STOP doing something.( Ex: stop
polluting, trespassing, stealing companys confidential info.)
2. An order of specific performance - court orders the defendant to perform the contract, but only if it is
a contract for the sale of something unique. Ex: sale of a house or a rare painting)- fairly rare, courts
wont enforce a personal service contract such as forcing a performer to sing or a painter to paint a house
3. An accounting the defendant has to account for money and pay profits to the plaintiff
4. A deliver up order court tells defendant to give up something (e.g. illegal copies of DVDs)
5. An Anton Piller order a surprise search warrant
STAGE 5 - ENFORCING THE JUDGMENT often after you win a civil case the defendant does
not want to pay the money that they owe
- If the defendant wont pay, the plaintiff has the court order the defendant to come to a Debtors
examination, where the defendant must tell what assets and money / wages they have under oath
- Plaintiff then has the court issue a Garnishment Order that lets the plaintiff take money out of
the defendant back account and/or (a small) part of the defendants wages.
- Plaintiff can also get a Seizure and Sale order that authorizes a sheriff (a court officer) to go to
the defendants home and take specific asset(s) and sell them at a sheriffs auction and give the
money to the plaintiff from the sale
Alternative Dispute Resolution (ADR)
- Some civil cases go to ADR either before or instead of a civil trial (litigation)
- 2 main types of ADR- mediation, arbitration
- ADR can be cheaper and faster and keep info. private and confidential, no publicity and lead
to happier future relations than a full civil trial
- in mediation an outside 3rd party (mediator) comes in and negotiates and then suggests a solution, but
the 2 sides do not have to accept it
- in arbitration an outside 3rd party (arbitrator) comes in and negotiates and then forces a binding decision
on both sides and it usually cant be appealed

CHAPTER 3

INTENTIONAL TORTS

Weir/Smyth 6th

Tort - a wrongful act that causes harm in civil law (e.g. accidental damage, spreading damaging lies)
- torts are not part of contract law - some torts are also criminal offences ( e.g. tort of conversion is also
the crime of theft)
2 types of torts: a) Intentional the defendant meant to do it
b) Unintentional the defendant didnt mean to do it, it was an accident (negligence)
-Vicarious liability - Companies are liable for injuries caused by their employees in the normal course of
their work
Intentional Torts:
1) False imprisonment - holding or confining a person against their will and no legal right to do so
- stores must be careful if they force a suspected shoplifter to go to the managers office, its legal if
the person did steal but if a crime wasnt committed, a person can sue store for false imprisonment
-p. 77 Sangha falsely held in Home Depot awarded $4,000 general damages p.78 Nichols store
not liable as partner had stolen Yarmie v. Can. Tire $5,000
- stores cannot search a person, it can only take them to the managers office using reasonable force
if they actually stole it is only the police who can search people p.78 Chopra excessive force
and racial remarks made in false imprisonment $38,000 damages
- p. 79 Chen tied up a man who had stolen from his store 1 hour earlier Police charged Chen with
assault and forcible confinement Chen found not guilty and law changed to allow citizen arrest
within a reasonable time after the offence committed
2) Malicious prosecution - causing a person to be tried for a crime without an honest belief they actually
did it - the defendant is usually the police &/or crown attorney, or coroner e.g. Dr. Charles Smith
-p. 80 McNeil beer store fired worker and store charged him with theft & withheld video proving he had
not stolen worker got $2,078,120 for malicious prosecution including $500,000 punitive damages
3) Trespass - is entry onto anothers land without permission or a legal right to (ex. police and fire dept.)
trespass is also a criminal offence - stores, bars etc. can ask people to leave
- you can use reasonable force to remove a trespasser, but should give them notice first to leave
4) Trespass to Goods intentional damage or interference with anothers goods or property e.g. if you
break anothers windows on purpose then liable for the repair costs
5) Conversion - stealing anothers good or getting goods under false pretenses (ex. writing a bad cheque
when you knew there was no money in the account, or using a stolen credit card) innocence or
negligence are not defenses e.g. bank liable on fraudulent cheque it pays out on (p.82 Khosla)
6) Nuisance - intentional interference with someones use or enjoyment of their property (such as loud
noise, bad smell, pollution, golf balls) it must be a substantial and unreasonable interference
- courts look at: nature of the area, severity & duration, sensitivity of the plaintiff, importance of activity
- there can be private and public nuisances it is public nuisance if it happens on govn. owned land e.g.
p. 83 oil tanker sunk in St. Lawrence for 26 years cost $40 million to remove, a public nuisance
- Toronto ticket scalpers near Rogers Centre were public nuisance
- often damages and an injunction are the remedies given
-p. 83 Antrim Truck awarded $393,000 when highway relocated and cut off access to restaurant

-2Ch. 3
- p.84 Sammut person builds house next to a golf course and sues for the nuisance of the balls in their
yard homeowner gets damages and an injunction to stop the balls, so golf course had to be redesigned
-picketers in a strike can be a nuisance if they picket private residences or have aggressive behaviour
7) Assault and battery: - assault in tort law is the threat of physical harm
- battery is intentional physical contact without consent
- consent can be a defence to a battery claim
- doctors must be careful to get patients consents for medical procedures or they can be liable for
battery & significant damages - p. 85 Malette and Mohsina cases
- it must be an informed consent & theyre made aware of possible risks, if not, it is battery - Halushka
- consent can be a defence in sporting activities but what level of violence do players consent to in a
hockey game? - Moore v. Bertuzzi 2004 - $60 million lawsuit - settled in 2014
- self-defense in a fight can be a defense if you prove there was a genuine fear of injury and you struck
the plaintiff for self-protection, but you cant use excessive force
- provocation only can reduce damages, but it is not a complete defense
- parents can spank kids for discipline (but only an open hand, on butt, ages 2-12 and not in anger)
8) Intrusion upon Seclusion no tort in Canada for invasion of privacy until this tort recognized in 2012
in Jones v. Tsige (ONCA) p. 88 3 requirements: it is to intentionally intrude upon the private affairs of
another and itd be considered highly offensive to a reasonable person causing distress or anguish
Tsige, a bank employee, repeatedly checked the bank records of her boyfriends ex-wife
must be a serious intrusion, not a frivolous claim and the upper range of damages is only $20,000
9) Defamation - a lie that damages the reputation of a person or a company
2 types: Slander- the lie was a spoken statement and there is no permanent record of it
Libel - the lie was written down or recorded
- the defendants are often the media Ex: TV, radio, newspaper, publishing companies
- p. 91 Leenen & Myers v. CBC 2001 - CBC paid $2million to 2 Sunnybrook doctors for libelous 5th
Estate show
- no cap on general damages in defamation though in most cases awards are under $30,000 ( only 6-7
reported cases in most years) - p. 91 Hill $1.6 million, Fennimore $3 million
- when defamatory remarks are made on the internet the ISP is not liable, but it may be forced to shut
down the site and reveal the name of the person who posted it defamatory posts on web sites can be libel
ex. p. 93 Butler $450,000 lies on mining stocks, Halstead B.C. woman cyber bullied teachers and trustee
and was liable for libel for $676,000
- p. 90 Crookes posting a defamatory hyperlink is not libel but could be if you add comments to tell
others to read it
Defenses for Defamation:
a) The truth a defendant can make statements that destroy a reputation if they are true
b) Innocent Dissemination - bookstores and libraries not liable for libel if they sell / loan books
that have lies - they use innocent dissemination defense, but the writer and the publishing
company can be sued
c) Absolute Privilege - when politicians speak in parliament or people testify at a trial they cant
be sued for defamation they have absolute privilege and cant be sued even if they lie
d)

-3Ch. 3
e) Qualified Privilege - a person with a duty or right to make a legitimate evaluation or
complaint cant be sued if there is a reasonable basis for it e.g. employer said worker not great,
or client thought accountant was negligent- but if it is done with malice (an evil intent) and no
valid reason then they can be liable
f) Fair Comment Defence - comments or opinions of public concern (often on politics and art)
may not be libelous so long as a fair person could honestly express that opinion
-p. 95WIC Radio 2008 SCC shock jock comparing homophobe to Nazis and KKK is a fair
comment
f) Public Interest Responsible Communication Defence SCC 2009 defence that a party can
use if they did their due diligence & tried to confirm that their public interest story was true, if
only a small part is false and most is true, then they can use this defence p. 96 Grant v. Torstar
10) Injurious Falsehood product defamation or trade slander - a lie that damages the reputation of a
product or service p. 97 Bell tried to claim Rogers ads were lies & injurious falsehood ct. disagreed
- people can protest bad products so long as they dont trespass and their signs and statements are true
11) Deceit lies that cause economic losses, it is called fraud in criminal law e.g. p.100 XY v. Zhu co.
lied about its sales to avoid paying royalties
12) Passing Off - Passing off someone elses work/goods as your own - Ex: fake Rolex, Louis Vuitton
- plaintiff sues the one with the fake copies and must prove three things: a) the names are similar
b) it confuses the public
c) it causes economic losses
- p. 99 Dentec Safety- website name almost identical so passing off - p. 99 Lego case-not passing off as
Lego had patent protection which had expired and couldnt claim trademark rights based on the shape
- if plaintiff wins they could get pecuniary and often punitive damages and an Anton Piller order
(surprise search warrant), an injunction to stop future sales of the fakes and a deliver up order forcing
the defendant to give up all the fake copies to the plaintiff and an accounting of profits the copier made
13) Inducing breach of contract - A has a contract with B, then C induces A (gives $) to break the
contract, (usually so that A can make a contract with C)
- B can sue A for breach of contract and B can sue C for the tort of inducing breach of contract
e.g. p. 99 A Getty Oil - offered to sell 1 billion barrels of oil for $3.4 billion to Penzoil
B - Penzoil - contracted with Getty Oil to buy the oil
C Texaco then told Getty to break contract with Penzoil and Texaco paid Getty $3.87
billion for the oil and promised to pay all Gettys legal liability
- Texaco knew it would be sued for inducing the breach, but it expected damages to be $1 billion, instead
damages were $11 billion due to a crazy Texas jury, they settled out of ct. for $3 billion.
14) Misuse or Breach of Confidential Information & Inducing Breach of Confidential Information
- If a worker leaves company A for a competitor, company B, and takes key secret/confidential
information from company A, then company A can sue the worker for the tort of breach of confidential
information and company A can also sue company B for the other tort of inducing breach of confidential
information if B induced/paid worker to take the info. p. 100 Lopez v. GM VP of GM quit and went to
VW and both were sued by GM for taking key info. for $5 billion, settled out of court

-4Ch. 3
- p. 100 XX v. Zhu co. had taken the secret technology and was using it in China despite their
agreement not to and also lied about sales to avoid paying royalties
-p. 100 Lac v. Corona large mining co. breached the confidential info. it was given and bought land
worth $1 billion in gold 1989 SCC forced large co. to give up the mine due to this breach
- Note: if a worker has many clients and goes to a new firm, the worker can tell the clients of their new
location once, but cant continually actively solicit their old clients nor can they take company
information with them
15) Intentional interference with Economic Relations: if C knows there is an existing business
relationship between A and B and C intentionally interferes with the relationship by using unlawful
means (e.g. C offers A a bribe or kickback) and this causes economic losses to B, then C and A can be
sued for this tort by B
- p. 101 Sagaz kickback scheme designed to cut out one supplier injured supplier sued and won $2
million lost profits and $50,000 punitive damages - Valcom- co. intentionally lied to get woman & her
co. removed from military contracts so was liable for this tort and $700,000 in damages

CHAPTER 4 NEGLIGENCE

Weir/Smyth 6th

1) NEGLIGENCE unintentional careless conduct that results in reasonably foreseeable damages

4 CONSIDERATIONS IN A NEGLIGENCE ACTION:
a) Duty of care - you owe a duty of care to your neighbour - in law your neighbour is anyone you
should reasonably foresee can be affected by your actions.
- p. 108 Donoghue v. Stevenson 1932 UK this case set the duty of care principle, a woman found a
dead snail in her ginger beer - this case established manufacturers liability for defective or dangerous
products
- there has been an expansion of the duty of care e.g. police sued by victims of crime & wrongfully
convicted, drs. sued if their patients cause injuries (mentally ill or driving), govn. inspectors (building,
agriculture, roads) p. 109 see Ingles, Hill, Adams and Just cases
- it is two stage test: 1) Is there a close enough relationship to impose the duty? 2) Are there any policy
reason to limit or refuse to impose the duty? (the Anns test) p. 111 Cooper and Morgis cases
- govn. not liable for people who got West Nile virus or SARS (Abarquez case p.111)
b) Standard of Care - How much care do you have to take? The amount of care that a reasonable
person with the same skills in the same circumstance would use
- it is the amount of care of a careful, cautious person not just an average person though
- p. 113 Fullowka p. 114 Paxton
c) Causation - plaintiff must prove that the defendant actually caused the damages
- the but for test but for the defendants negligence the plaintiff would have no damages
- beware of circumstantial evidence that seems to point to one conclusion
- p. 115 Fontaine 1998 SCC - two dead men in a truck off a mt. road, does not mean the driver was
negligent if there is no other evidence available p. 116 Michel rock flew off a truck
- beware of junk science that finds a causal link and holds big cos. liable for their products to the
customers because the jury feels sorry for them, and it turns out the product didnt cause the injuries
- e.g. breast implant case - $4.5 billion paid by Dow
d) Remoteness of Damages - courts will only hold a defendant liable for damages that are reasonably
foreseeable - if they are too remote or too far down the chain of events the defendant is not liable for
those damages even if they caused them - the defendant must be the proximate cause of the damages
- p. 119 Mustapha SCC 2008 man finds dead fly in water bottle and has severe psychological
problems SCC said his damages were not reasonably foreseeable so co. not liable
- if however the plaintiff is a thin skull plaintiff a person who has a fragile pre-existing medical
condition then if the defendants actions would cause very little injury to a healthy person, but this
delicate victim has major injuries, the court protects the delicate person and the defendant is liable
- the defendant takes the victim as he finds them with a thin skulled plaintiff and even though the large
physical damages may not be foreseeable, he is still liable

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Ch.4

Two Defenses in Negligence:

1) Contributory negligence - the plaintiff themselves is partially responsible for their own injuries
e.g. seatbelts not used can reduce the plaintiffs damages by 15-25%, if you can prove that using the belt
would have lessened or prevented the injury.
-it is done on a percentage basis: e.g. p.121 Kahlon drs. negligent but patient 30% liable as he hadnt
followed up on diagnostic tests
-p. 131 Holton: 3 guys drink at 2 bars in Whistler and get drunk one drives and causes accident and
passenger Holton is injured 2 bars each 15% liable, driver 40%, Holton 30%
- Buehl drunk doctor at hotel falls from room with missing balcony hotel 35% liable doctor 65%
2) Voluntary assumption of risk - the plaintiff voluntarily assumed ALL (100%) of the risks involved in
the activity and the plaintiff is totally responsible for their own damages or injuries
- defendant argues the plaintiff knew it was a very risky activity and chose to do it so the plaintiff is
100% liable and defendant is 0% liable
- courts tend to say if you get in a car with a drunk driver and are injured, it IS contributory negligence
(15-50%) rather than voluntary assumption of risk
- frequently used in dangerous high risk sports activities, companies often make participants read and
sign a waiver or disclaimer so they cant sue the company if they are injured
- sometimes waivers work for cos. even if the participant hurt or dies p. 122 Dyck (snowmobiling),
Ochoa (heli-skiing), p. 125 Isildar (scuba diving)
- sometimes waivers dont work for the co. e.g. p.123 Parker in Crocker a drunk at tube race could sue
ski resort even though he signed a waiver - often hard to predict result
-to work the company must clearly bring it to the attention of the person and provide proper facilities and
instructions to participants
- if the waiver is not clearly worded or there is misrepresentation by the co. the waiver will not work
Occupiers Liability: If you own or occupy land then you have a duty to take reasonable care to keep the
property reasonably safe for people who come on it e.g. repair broken steps or clear snow & ice
- stores need to clean up spills so no slip & fall accidents (install cameras to catch fake claims though)
- even a duty owed to trespassers to make sure they are not recklessly harmed
-p. 127 Zsoldos CP liable to motorcyclist as unsafe train crossing
- but still must prove the defendant was negligent p. 127-128 Charlie, Fulber and Duddle cases
- businesses may be liable to customers who are attacked by other customers p. 130 McGinty, but only if
they had failed to take reasonable care Walker and Donaldson cases
3 Standards of Care for Hosts that Serve Alcohol to Others
- the liability of people or companies for the safety of people who drink on their premises and then drive
and injure themselves and/or others on the road falls under occupiers liability
1. Commercial Host Liability the liability of a bar, restaurant, hotel etc. to their customers and others
- since bars make money selling alcohol there is a very high duty of care on them e.g. p.131 Hague v.
Billings driver 85% bar 15% - bars often liable for 15-30% of damages if drunk customer is injured
and/or injures others
-p. 132 McIntyre v. Grigg 2006- driver 70%, McMaster pub 30% - $250,000 plus $20,000 punitive dam.
-bar needs to see them leave with a sober adult or agree to take a taxi and that meets a reasonable care p.
133 Stewart v. Pettie 1995 SCC

-3Ch. 4
2. Business Host Liability - duty of a company to its employees at a company party when alcohol is
served- a high duty of care on the company
- in the Linda Hunt 2001 case the trial court said co. must take her keys or force her into a taxi or a hotel
room this was a mistrial & no higher court has set this high of a requirement though
- court felt that a company has a lot of control over an employee & has a duty to protect them
p. 133 gives a good list on what the co. should do at the office party to avoid liability use bartender,
serve food, no last call, free taxi rides or hotel rooms, early emails stating no one drives home if drinking
3. Social Host Liability the liability of a person who has a house party and has their friends over and
they drink and then the friend leaves drunk and injures themselves or others
p. 134 Zoe Childs 2006 SCC ruled that a social host is not liable if their guests leave drunk and cause
injury to others as people are responsible for their own actions but this was a BYOB party and the hosts
had provided no alcohol to the drunk driver there is still a very small opening that could find a social
host liable if the host provided the alcohol, knew the person was very drunk and did nothing to prevent
them from driving to keep home insurance rates down the SCC doesnt really want to find social hosts
liable but it could happen if the facts were different than the Zoe Childs case
- p. 135 Prevost 2001 B.C. parents liable when their young teen had a party and an underage drinker
drove home drunk and injured a young passenger parents should have protected underage drinkers at
their home
Products / Manufacturers Liability: Plaintiff sues because a product has injured them or caused losses
-there are 3 general areas:
a Negligence in the manufacturing process normally the product was fine, but something went wrong
in the manufacturing plant at a certain time e.g. snail in ginger beer
b Negligent design - bad design of the product e.g. auto manufacturers put gas tanks in the wrong spot
and vehicles had fires - p. 138 Resch bad bicycle design p. 140 More v. Nike hockey helmet not
negligently designed
c Inadequate warnings for dangerous products p.140 Hutton v. GM inadequate notice of defective air
bags - p. 141 Walford girl hurt on pool slide
Strict Liability when the courts impose liability without requiring proof the defendant was at fault
in U.S. this is used in products liability cases and saves plaintiffs much money from having to prove
negligence but no strict liability in products liability cases in Canada, victim must prove negligence
- strict liability can be imposed in Canada in other situations e.g. if a party owns something dangerous and
it escapes through no fault of theirs and causes damages (e.g. leaking water or chemicals)
Professional Negligence: involving accountants, doctors, lawyers, engineers etc. - they still follow the
four negligence considerations but the duty of care is more restricted in cases of pure economic loss $
than when there is personal injury or property damage
- the extent of the duty of care is restricted to people who paid for the services or were in a special or
close relationship with the professional so they knew that they were relied upon for that specific purpose

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Ch. 4

Duty of Care of Accountants: p. 145 Hercules Management v. Ernst and Young, 1997 SCC
- a major case that had a huge impact on the liability of accounting firms for negligence
- in the 80s & 90s courts constantly found accountants liable when companies went bankrupt
- investors said they had relied on the bad fin. statements, so the accountants were held liable
- in Hercules Management, financial statements were prepared by Ernst and Young for the companys
annual general meeting (AGM ) and they were inaccurate
- investors who bought shares in Hercules, said the bad AGM fin. statements misled them, so the
accountants should be liable for their losses
- BUT SCC in Hercules said accountants only owe a duty of care to people who specifically ask or
request particular information or used it for the specific purpose it was meant for; there must be a
close proximate relationship between the accountant and the client for a duty of care to exist
-SCC said the financial statements were for the AGM, not for investment purposes, so shareholders lost
- SCC in the Hercules case limited the extent or scope of accountants liability - SCC felt courts had
gone too far & accountants were becoming almost liable for unlimited amounts of money to an
unlimited number of people & big acct. firms would go bankrupt so this had to be stopped by Hercules
2. Standard of Care of Professionals: What would a reasonably competent professional with the same
skills do in the same circumstances?
- they do not expect professionals to be perfect, but it is a high standard
- if the professional follows standard industry procedures, they might not be liable p.146 Cavan nurse
not liable for negligence despite major injury to patient as she followed standard practices
- but in other cases the professional can be liable if they followed the standard practice if the court feels
the standards are not good enough e.g. p. 146 Kripps 1997 BCCA accountant liable for not disclosing
mortgage defaults even though GAAP didnt require it
Exemption and Disclaimer Clauses - companies have disclaimer clauses that state, we will not be
liable for any losses you may incur, so you cant sue us for negligence
- accountants, doctors, lawyers, dentists, engineers cant use the clauses they buy malpractice insurance
to protect themselves though
- bankers, stockbrokers, financial planners, real estate agents can use these clauses but only sometimes
- courts are very inconsistent with disclaimers, the clauses may or may not work it is hard to predict
- p.148 Wolverine Tube disclaimer worked even though enviro. co. said site was fine & it wasnt
- p. 149 Micron bank liable for false statements despite disclaimer as there was reasonable reliance
- judges play games and make exceptions to get the result they want
- court often asks in consumer cases (person vs. company), did the person get adequate notice and
understand this clause? If there is any doubt the clause probably wont work and the company is liable
- if it is a disclaimer clause between two companies though often the courts uphold the clause and say it
works because the courts think that companies should read these clauses and be held to them
Auditors Liability
- Hercules greatly limited when accounting firms could be held liable for negligence & shareholders very
frustrated some cases recently have had some success e.g. p. 152 Wightman where they proved the
reliance on the false statements and acct. firm liable for $1 billion and Livent where accts. held liable to
co. not shareholders when sued by bankruptcy receiver
-other cases Nortel and Sino-Forest the accounting firms agreed to settle the negligence cases for millions

-5Ch. 4
Fiduciary Duty - sometimes there is a higher duty of care, a fiduciary duty, on professionals, if the
client they are dealing with is very trusting and vulnerable and depends heavily on the professional
- a fiduciary duty is a duty of utmost or maximum care and good faith and the professional must put the
clients interests first and protect them e.g. lawyer or broker and rich older nave client
-breaches of fiduciary duty can include misuse of confidential information professional uses the clients
confidential information for their own benefit/profit ex. real estate agent buys land to resell to their
client at a huge profit - secret commissions or profits, kickbacks client not told of
-p. 155 Strother lawyer acted for competing firms and had an interest in one and never disclosed it
Tax Fraud Rules
-p. 156 Beware - if an accountant assists a client to commit a tax fraud or tax evasion; accountants can be
charged criminally and be 100% liable for the gross amount of the fraud
- if an accountant prepares documents to support a false claim (ex. 2 sets of books) the accountant can
be liable for up to 50% of the amount awarded in civil courts
- 2011-2012 - 137 convictions for tax evasion or fraud in Can., 35 people jailed, fines $6.4 million