Canada: Waiver Of Torts As A New Cause Of Action

Last Updated: January 18 2012
Article by Brian P.F. Moher

This article was originally edited and first published on

The Ontario Divisional Court heard an appeal of the decision in Serhan Estate v Johnson and Johnson1 to certify a product liability class action. The motions judge held that the material facts pleaded could sustain an action based on the equitable doctrine of waiver of tort. Significantly, the motions judge found that proof of loss would not be required in such a claim. The Divisional Court upheld the appeal by a 2-1 margin, and both the Ontario Court of Appeal and the Supreme Court of Canada denied leave to appeal.


The claim in Serhan relates to defective blood glucose meters and testing strips used by diabetics to monitor their blood glucose levels. These were manufactured by LifeScan Inc, a wholly owned subsidiary of Johnson and Johnson. The defective meters failed to indicate high blood glucose levels, but instead indicated that an error had occurred. The defective strips resulted in erroneously low readings if they were incompletely inserted by one 15,000th of an inch or more. These problems were resolved by LifeScan in 1997 and 1998.

By the late 1990s a number of US federal agencies, including the Food and Drug Administration and the Department of Justice, had commenced investigations into LifeScan with respect to these products. In December 2000 LifeScan entered into a plea agreement with the prosecution and admitted knowledge of the defects dating back to 1993. Pursuant to the plea agreement, LifeScan paid a fine of US$29.4 million.

The Ontario plaintiff in this case sought damages for:

  • negligence;
  • negligent and fraudulent misrepresentation;
  • breach of Section 52(1) of the Competition Act; and
  • conspiracy to manufacture, sell and distribute defective products in Canada.

The plaintiff sought to have all the revenue generated from the sale of the defective products held in a constructive trust for the benefit of the class. It also asked for an accounting order and an order for the disgorgement of all such revenue.

Absence of Evidence of Loss

Critical to any action in tort is proof of damages. One of the primary issues in Serhan was whether a cause of action could be recognized in the absence of evidence of injury or damages. As stated by the motions judge: "[t]here is... virtually no evidence that either of the representative plaintiffs, or any other members of the putative class, suffered any injurious effects to their health by using the meter or the strips other than the pain involved in obtaining additional blood samples".2 Moreover, as a function of Canada's public healthcare system, there was "no evidence that any other member of the putative class actually paid for either the meters or the strips".3

Waiver of Tort

Waiver of tort, as it was described by the motions judge when citing a US decision, is a cause of action that is said to turn on whether the defendant:

"unjustly enriched itself by doing a wrong to [the] plaintiff in such manner and in such circumstances that in equity and good conscience [the] defendant should not be permitted to retain that by which it has been enriched."4

Justice Cullity conceded that the existence of such a tort in Canada was debatable. However, he noted that the standard for striking out a pleading is high. He observed that emerging causes of action should not be struck out before they are factually developed. A successful plaintiff claiming waiver or tort would obtain the financial benefit that accrued to the defendant as a result of the defendant's wrongful actions. Despite waiver of tort not being specifically pleaded, he found in the statement of claim allegations of material fact "that, if proven, could entitle the plaintiff to remedy on the basis of the doctrine".5

The availability of waiver of tort as a cause of action would significantly alter the legal landscape of product liability actions in Canada. Damages are an essential component for traditional tort claims. If the decision of the motions judge is upheld, a plaintiff who is unable to prove damages would nevertheless be able to proceed with his or her claim on the basis of this doctrine. Moreover, a successful claim could result in an award that is disproportionately large in comparison to the actual loss, thereby creating a windfall for the plaintiff. Finally, in the context of class actions, proof of loss is typically tried as an individual issue. Significantly different individual damage claims can derail a class action. The right to proceed without proving damages would enlarge the potential for class actions. If this cause of action is ultimately accepted, a waiver of tort would broaden the availability of class actions and significantly reduce the expense of litigating a class action for plaintiffs.

Ontario Court of Appeal Granted Leave to Appeal

The defendant sought and obtained leave to appeal the motions judge's decision. In the Ontario Court of Appeal Justice Ground granted the motion for leave to the Divisional Court. He formulated the issue as whether:

"waiver for tort constitutes a cause of action in its own right or is a principle which is applied to the choice of a plaintiff, having established an actionable wrong, to seek a remedy by way of restitution, disgorgement or an accounting rather than by way of damages to compensate the plaintiff for his or her loss."6

He conducted a review of case law from Canada and the United Kingdom, as well as various scholarly authorities. He found that Cullity's decision was in conflict with other decisions that have held that the waiver of tort is "a choice of remedies after an actionable wrong has been established."7

Divisional Court Upheld Motions Judge's Decision

The appeal was subsequently heard by the Divisional Court. Justice Epstein, writing for the 2-1 majority decision, found that Justice Cullity had not erred:

"Cullity J. was therefore correct in concluding that the issue of whether waiver of tort is an independent cause of action should be resolved in the context of a factual background of a more fully developed record."8

Justice Chapnik, dissenting, agreed on the point:

"As observed in detail by Epstein J., given the present unsettled nature of the jurisprudence in this area, there appears to be no reason why waiver of tort could not be recognized as an independent restitutionary cause of action in Canadian jurisprudence." 9

Both the Ontario Court of Appeal and the Supreme Court of Canada denied leave to appeal the Divisional Court's decision. The proceedings have thus far left open the possibility that waiver of tort may constitute an independent cause of action.


1 (2004) 72 OR (3d) 296 (SCJ).

2 Ibid, para 12.

3 Ibid, para 16.

4 Ibid, paras 34 and 35, quoting Maddaugh and McCamus, The Law of Restitution (2nd edition, 2004), at page 739.

5 Ibid, para 34.

6 Serhan Estate v Johnson and Johnson [2004] Careswell Ont 4511 (Div Ct) at para 4.

7 Ibid, para 7.

8 2006 CanLII 20322 (ON S.C.D.C.), para. 69

9 Ibid, para. 195.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions