Date: 20040209
Docket: T-525-02
Toronto, Ontario, February 9th, 2004
Present: Roger R. Lafrenière, Esquire
Prothonotary
BETWEEN:
1340232 ONTARIO INC. carrying on business as
TNT EXERCISE & LEISURE OUTLET INC.
Plaintiff
and
ST. LAWRENCE SEAWAY MANAGEMENT CORPORATION
Defendant
REASONS FOR ORDER AND ORDER
[1] The Plaintiff commenced an action to recover damages for business losses incurred as a result of the closure of the Allanburg Bridge on the Welland Canal between August 11, 2001 and November 16, 2001, allegedly caused by the Defendant's negligence. The Defendant moves for an Order striking out the Statement of Claim on the grounds that it does not disclose or plead a cause of action, and that the Defendant did not owe a duty of care to the Plaintiff on the facts as pleaded.
[2] The Plaintiff opposes the relief requested by the Defendant. It also brought a motion for leave to amend its Statement of Claim to add new allegations of negligence against the Defendant in its operation of the bridge, and to plead that the Defendant had a duty to warn and that its conduct amounted to gross negligence and nuisance. These reasons apply to both the Statement of Claim as originally issued and the proposed amended pleading (hereinafter the "Statement of Claim").
[3] The central issues in the two motions before me is whether, in accordance with the test propounded in Anns v. Merton London Borough, [1978] A.C. 728 (H.L.(E.)) ("Anns"), there is a duty of care recognized in law giving rise to liability of the Defendant for the Plaintiff's losses, or whether there are policy reasons precluding the Plaintiff from recovering against the Defendant.
Background facts
[4] On a motion to strike, the material facts in a statement of claim must be taken as true. The allegations contained in the Statement of Claim may be briefly stated as follows.
[5] The Plaintiff is a merchant conducting business as TNT Exercise & Leisure Outlet Inc. in the Town of Pelham, in the Province of Ontario. The Defendant, St. Lawrence Seaway Management Corporation, is the operator of the Allanburg Bridge, a mechanical lift bridge on the Welland Canal. The bridge provides access to the population of Niagara Falls of over 80,000 people to the Plaintiff's business.
[6] The incident giving rise to the closure of travel over the Allanburg Bridge occurred on August 11, 2001 when the ship "Windoc" collided with the Allanburg Bridge, rendering the bridge inoperable. The Plaintiff's claim relates to the negligent operation of the bridge by an employee of the Defendant who was allegedly impaired and who lowered the bridge suddenly and unexpectedly onto the "Windoc", resulting in damage to the bridge and causing a fire on the ship.
[7] It is alleged that as a result of the gross negligence of the Defendant or its employees, travel over the bridge was not possible for a period of three months, which gave rise to the Plaintiff's business losses. The Plaintiff alleges that the distance from the bridge to its business is between one quarter to half a mile and, as such, "the Plaintiff's business is proximate and is dependent upon traffic being able to cross the bridge to conduct business." The claim, as amended, alleges that it was reasonably foreseeable by the Defendant that the Plaintiff would suffer business losses as a result of decreased accessibility.
Applicable legal principles
[8] On a motion, the Court may, at any time, order that a pleading, or anything contained therein, be struck out, with or without leave to amend, on the ground that it discloses no reasonable cause of action, and may order the action be dismissed: Federal Court Rules, 1998, Rule 221(1)(a).
[9] The test for striking a pleading on the ground that it fails to disclose a reasonable cause of action is: "assuming that the facts as stated in the Statement of Claim can be proved, is it 'plain and obvious' that the plaintiff's statement of claim discloses no reasonable cause of action?": Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959.
[10] This does not mean, however, that complicated questions of law are unsuited to resolution on a motion to strike out a pleading. The issue raised by such applications is "whether there is a question fit to be tried, regardless of the complexity, or novelty, of that question" and that issue must be decided on the basis of the pleadings as they stand or as they might be amended: Kripps v. Touche Ross & Co., [1992] B.C.J. No. 1550 (B.C.C.A.).
[11] With respect to requests to amend a pleading, the Court is required to take a generous approach. As a general rule, an amendment should be allowed at any stage of an action for the purpose of determining the real questions in controversy between the parties, provided that such amendment will not result in injustice to the other party, which cannot be compensated by an award of costs: Almecon Industries Ltd. v. Anchortek Ltd. (1999), 85 C.P.R. (3d) 216 (F.C.T.D.).
[12] However, in determining whether an amendment to a pleading should be allowed, the Court should also consider whether the amendment, if it was already part of the proposed pleading, would be capable of being struck out under Rule 221. Proposed amendments to pleadings in circumstances where no cause of action is disclosed will be refused: Visx Inc. v. Nidek Co. (1996), 72 C.P.R. (3d) 19 at 24 (F.C.A.); Chrysler Canada Ltd. v. The Queen, [1978] 1 F.C. 137 at 138 (T.D.); Johnson & Johnson Inc. v. Boston Scientific Ltd. (2001), 14 C.P.R. (4th) 512 at 516 (F.C.T.D.).
Analysis
[13] A cause of action is simply a factual situation, the existence of which entitles a party to obtain a remedy against another party. However, generally, without the existence of a duty of care, no cause of action in negligence, gross negligence or public nuisance, or based on a duty to warn, can exist against the Defendant. In addition to the factual component, there is a legal one pertaining to entitlement to a judicial remedy. Where an alleged breach gives rise to no remedy in a civil action, there can be no cause of action: Merck & Co. v. Nu-Pharm Inc. (1999), 179 F.T.R. 87 (Proth.).
[14] The Plaintiff has not alleged any damage to its property, and does not claim to have a proprietary interest in the bridge. The Plaintiff submits, however, that it is not plain and obvious, at this stage, that there could not be a duty of care owed to it by the Defendant. According to the Plaintiff, pure economic loss may be recovered where the loss was foreseeable and there was sufficient proximity between the negligent act and the loss. The issues raised by the parties entail both policy and legal considerations.
Policy considerations negating a duty of care
[15] The common law did not traditionally allow recovery of economic loss where the plaintiff suffered neither physical harm nor property damage. In limited circumstances, however, damages for economic loss, absent physical or proprietary harm, could be recovered. This caution derives from the same policy rationale that supported the traditional approach not to recognize the claim at all.
[16] First, economic interests are viewed as less compelling of protection than bodily security or proprietary interests. Second, an unbridled recognition of economic loss raises the spectre of indeterminate liability. Third, economic losses often arise in a commercial context, where they are often an inherent business risk best guarded against by the party on whom they fall through such means as insurance. Finally, allowing the recovery of economic loss through tort has been seen to encourage a multiplicity of inappropriate lawsuits: Martel Building Ltd. v. Canada, [2000] 2 S.C.R. 860; D'Amato v. Badger [1996] 2 S.C.R. 1071 ("D'Amato"); Bow Valley Husky (Bermuda) Ltd. v. Saint John Shipbuilding Ltd., [1997] 3 S.C.R. 1210.
[17] The courts have accordingly been very reluctant to allow a claim for pure economic loss to proceed for public policy reasons. This cautionary approach was reaffirmed by the Supreme Court of Canada in D'Amato, supra, at par.18:
The second, and perhaps main reason for limiting recovery is that expressed by Cardozo J., in Ultramares Corp. v. Touche, 174 N.E. 441 (N.Y. 1931), who feared "liability in an indeterminate amount for an indeterminate time to an indeterminate class" (p. 444). A negligent act or omission can have a ripple effect, causing economic loss to a potentially wide circle of individuals. . . . This view reflects the reluctance of courts to burden business and other activity with the indeterminate expense of all potential economic losses.
Recovery for pure economic loss
[18] It is well-established that a party in the position of the Plaintiff cannot, as a general rule, recover for pure economic losses arising from damage to a public bridge. As held by LaForest J. in Norsk Pacific Steamship Company Limited v. Canadian National Railway Company, [1992] 1 S.C.R. 1021 ("Norsk"), at pp. 1049 - 1050:
If the property is publicly owned, users may not be required to contract for its use. Thus persons who regularly use an ordinary bridge or other publicly maintained facility have no contractual right to do so but may nevertheless suffer damages by having to find alternative routes for themselves or their goods, and their suppliers or customers may also suffer damage. Those suffering such damage will ordinarily not recover: see Bethlehem Steel Corp. v. St. Lawrence Seaway Authority, [1978] 1 F.C. 464, (claims for loss of profits owing to ships being held up after a bridge destroyed and a canal obstructed were refused, as was a claim for extra shipping costs arising out of the same accident); Star Village Tavern v. Nield (1976), 71 D.L.R. (3d) 439 (Man. Q.B.), (recovery by tavern owner suffering losses owing to bridge closure refused). To impose such indeterminate liability on tortfeasors is almost unthinkable as the cases make clear.
[19] In the Bethlehem Steel Corp. v. St. Lawrence Seaway Authority, [1978] 1 F.C. 464 (T.D.), claims similar that of the Plaintiff were made against the St. Lawrence Seaway Authority for pure economic losses suffered by merchants whose commercial activities were held up by reason of the obstruction of the Welland Canal by a damaged bridge. Addy J. disallowed the claims and held that damage for economic loss is generally not recoverable "even where it might have been foreseeable and where the proper causal relationship between the tortious act and the damage exists...".
[20] Similar claims of business owners for pure economic losses because of the negligent damage to a bridge have been consistently rejected; Gypsum Carrier Inc. v. The Queen, [1978] 1 F.C. 147 (T.D.) ("Gypsum Carrier"); Star Village Tavern v. Nield (1976), 71 D.L.R. (3d) 439 (Man. Q.B.); Frawley v. New Brunswick, [1996] N.B.J. No. 414. In cases of loss or damage to an ordinary bridge, parties that suffer resulting economic losses, without physical damage, ordinarily cannot recover against the person who damaged the bridge, even if those losses were foreseeable. In law, such claimants do not have a sufficiently proximate relationship to the defendant to create a duty of care.
[21] Unlike the plaintiff in the Norsk case, which had a licence agreement with the owner of the damaged bridge and was the predominant user thereof, the Plaintiff in the present case has not pleaded a special relationship with the Defendant, nor does it claim to be the predominant user of the Allanburg Bridge. In Gypsum Carrier, even the claims of railway companies which had licence agreements in respect of the bridge were disallowed because there was no sufficient relationship of proximity.
[22] I conclude that the material facts of the present case, as pleaded, are indistinguishable from the facts of the cases cited above that hold that business owners cannot recover for this type of pure economic loss from damage to a public bridge.
Application of the Anns test
[23] Where Canadian courts have not recognized a duty of care in the facts of the case, the question then turns to whether the law of negligence should be extended to reach this situation. Recognition of a duty of care must be justified on the basis of a sufficiently close and direct relationship between the parties to satisfy the foreseeability and proximity requirements of the first branch of the Anns test.
[24] If foreseeability and proximity are established at the first stage, a prima facie duty of care arises. At the second stage of the Anns test, the question still remains whether there are residual policy considerations outside the relationship of the parties that may negative the imposition of a duty of care.
[25] The Defendant does not argue that the Plaintiff's losses could not have been reasonably foreseeable. However, mere foreseeability is insufficient to establish a prima facie duty of care. The first branch of the Anns test also requires the demonstration of proximity.
[26] The proximity analysis focuses on factors arising from the relationship between the parties. Sufficiently proximate relationships are identified through the use of categories: Cooper v. Hobart, [2001] 3 S.C.R. 537. These categories are not closed. This provides certainty to the law of negligence while still permitting it to evolve to meet the needs of new circumstances.
[27] The Plaintiff claims that the proximity requirement is satisfied because its business is geographically close to the Defendant's bridge and is dependent upon traffic being able to cross the bridge to conduct business. In my view, those facts do not meet the proximity requirements of the Anns test. The Defendant's alleged duty of care, as framed by the Plaintiff, is simply cast too widely.
[28] The label "proximity" as used in the Anns case was intended to connote that the circumstances of the relationship that exists between the parties are of such a nature that the defendant may be said to be under an obligation to be mindful of the plaintiff's legitimate interests in conducting his affairs.
[29] In the "bridge cases", the Courts have held that there is no relationship of proximity between a business owner who depends on traffic on a bridge, and the operator of the bridge. Applying the foreseeability test to the case before me, I conclude the Plaintiff does not fall within the category of "neighbour" to the Defendant. On the basis of the facts, as pleaded, it would not reasonably have been within the contemplation of the Defendant that it would assume responsibility for any damage caused to the Plaintiff. This particular merchant (the Plaintiff) was not sufficiently close to the Defendant, or its alleged acts of negligence, to be within its reasonable contemplation, either as a neighbour to whom a duty was owed, or as one who ought reasonably to be compensated.
[30] Even if there were to be found a relationship of proximity, the Plaintiff would also have to meet the second part of the Anns test. Recognizing that proximity is itself concerned with policy, the second branch of Anns requires the Court to consider the purposes served by permitting recovery, as well as whether there are any residual policy considerations which call for a limitation on liability. This permits courts to reject liability for pure economic loss where indicated by policy reasons not taken into account in the proximity analysis, such as (a) the scope of the prima facie duty of care; (b) the class of persons to whom it is owed; or (c) the damages to which a breach of it may give rise.
[31] I agree with the Defendant that the most serious problem in the present case is that of indeterminate liability for any alleged duty of care, including a duty to warn, or resulting nuisance claims. The number of potential claimants who have been inconvenienced or have incurred expenses or loss of revenues from the closure of the bridge is indeterminate. As pleaded in paragraph 8 of the amended Statement of Claim, the bridge provides access to the Niagara Falls market in excess of 80,000 people, just to name one possible class of potential claimants.
[32] In CSL Group v. St. Lawrence Seaway Authority, [1996] A.Q. no 3965 (Que. C.A.), leave to appeal to S.C.C. refused, [1997] S.C.C.A No. 52, the plaintiffs shipowners claimed damages against the St. Lawrence Seaway Authority for pure economic losses resulting from delays to its vessels because of the obstruction of navigation caused by the negligence of the defendant in the maintenance and operation of its lift bridge. The Quebec Court of Appeal dismissed the claims. citing the possibility of "une avalanche de poursuites" that could face the defendant. The Court also held, as a general policy restricting liability of the St. Lawrence Seaway Authority, that users of a public highway use it because of a privilege and not as of right.
[33] These are well-established and compelling grounds under the second part of the Anns test for not extending the law of negligence to this claim. In my view, this case does not give rise to a new category of economic loss, and is therefore bound by the established principles set out in the case law.
[34] In conclusion, I consider it appropriate to adopt the following approach taken in Kripps v Touche Ross & Co. [1992] B.C.J. No. 1550 (B.C.C.A.), at p. 20:
A court might be tempted, at the present point in the development of the Canadian law of negligence, to permit every negligence claim to proceed to trial. But that would lead to a long and costly period of uncertainty, one particularly costly in the commercial world where certainty in the law is of considerable importance. It seems to me that the courts would fail in their duty to the community were they to decline to exercise jurisdiction under Rule 19(24) simply because of the current state of the jurisprudence in this area of the law. It is, I think, important in some cases that the court make a decision at this stage concerning the extent to which recovery in negligence can be enlarged, and I believe this to be such a case.
[35] Even if a prima facie duty of care had been established under the first branch of the Anns test, such a duty has been negated at the second stage for the overriding policy reasons identified above. Consequently, where the claim for pure economic loss does not meet the Anns test, the Court should strike out the pleadings as disclosing no cause of action: Hughes v. Sunbeam Corp. (Canada), [2002] O.J. 3457 (C.A.).
[36] For the sake of completeness, my decision to strike the Statement of Claim is not impacted by the proposed amendments to the pleading. I am substantially in agreement with the Defendant's submissions that the amendments fail to disclose a reasonable cause of action.
[37] Although costs would normally follow the event, the parties may address me in writing on this issue within fourteen days, if unable to agree.
ORDER
THIS COURT ORDERS that
1. The Plaintiff's motion to amend the Statement of Claim is dismissed.
2. The Statement of Claim is struck out without leave to amend.
"Roger R. Lafrenière"
Prothonotary
FEDERAL COURT
Names of Counsel and Solicitors of Record
DOCKET: T-525-02
STYLE OF CAUSE: 1340232 ONTARIO INC. carrying on business as
TNT EXERCISE & LEISURE OUTLET INC.
Plaintiff
and
ST. LAWRENCE SEAWAY MANAGEMENT CORPORATION
Defendant
DATE OF HEARING: AUGUST 7, 2003
PLACE OF HEARING: TORONTO, ONTARIO
DATED: FEBRUARY 9, 2004
REASONS FOR ORDER
AND ORDER BY: LAFRENIÈRE P.
APPEARANCES:
Ms. Margaret A. Hoy
FOR PLAINTIFF
Mr. Ramon Andal
FOR DEFENDANT
SOLICITORS OF RECORD:
Margaret A. Hoy
Barrister and Solicitor
Niagara Falls, Ontario
FOR PLAINTIFF
Fernandes Hearn LLP
Toronto, Ontario
FOR DEFENDANT
FEDERAL COURT
TRIAL DIVISION
Date: 20040209
Docket: T-525-02
BETWEEN:
1340232 ONTARIO INC. carrying on business as
TNT EXERCISE & LEISURE OUTLET INC.
Plaintiff
and
ST. LAWRENCE SEAWAY MANAGEMENT CORPORATION
Defendant
REASONS FOR ORDER
AND ORDER