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
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Precedent Cases in Common Law
Outline
This talk focuses on case studies which have shaped
Canada’s common law
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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
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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
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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
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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”
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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”
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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
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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
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Precedent Cases in Common Law
Fundamental Breach
Next, we will look at the concept of a fundamental
breach of a contract
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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
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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
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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
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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
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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
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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
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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
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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
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Precedent Cases in Common Law
Equitability
We look at some questions of equitability in contracts
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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
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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
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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
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Precedent Cases in Common Law
Implied Terms
Finally, we conclude two cases which define the implied
terms of a contract
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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.”
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Precedent Cases in Common Law
Implied Terms
TBC
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Precedent Cases in Common Law
Outline
This talk reviewed cases from five aspects relevant to
professional engineers
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–
–
–
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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
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COMPUTER ENGINEERING
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Precedent Cases in Common Law
References
[1] D.L. Marston, Law for Professional Engineers, 4th Ed., McGraw Hill
Ryerson, 2008.
[2] LexUM, Judgements of the Supreme Court of Canada,
http://csc.lexum.umontreal.ca/en/, Faculty of Law, University of Montreal,
2010.
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Precedent Cases in Common Law
Copyright and Disclaimer
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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,
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Douglas Wilhelm Harder, MMath
dwharder@alumni.uwaterloo.ca
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