Canada: Waiver Of Tort : The Saga Continues

Last Updated: May 11 2007
Reid v. Ford Motor Co., 2006 BCSC 712 Heward v. Eli Lilly & Co., 2007 CanLII 2651 (Ont. S.C.J.)
The ripples caused by the 2004 decision of Mr. Justice Cullity of the Ontario Superior Court in Serhan v. Johnson & Johnson (2004), 72 O.R. (3d) 396 (S.C.J.), aff'd [2006] O.J. No. 2421 (Div. Ct.), have not dispersed. In fact, two recent judgments - one from British Columbia and another by Cullity J. in Ontario - are a clear indication that the issues raised by the Serhan case remain unresolved and are in danger of yielding different results in different provinces.

Ontario leaves door open

By Douglas Harrison and Neil Guthrie

Serhan is notable because it brought the somewhat obscure doctrine of "'waiver of tort" to the forefront for practitioners. Very briefly stated, and at the risk of over-simplification, the doctrine permits a plaintiff to forego tort damages in order to pursue a restitutionary remedy. The range of torts for which waiver is available and the types of remedies which may be obtained have been the subject of intense and inconclusive debate in the academic literature and the case law. It is also unclear whether waiver of tort is dependent on underlying tortious acts or constitutes a free-standing cause of action. If it is the latter, the advantage for a plaintiff (particularly in a class action) is obvious: proof of actual damages may not be a prerequisite to recovery, as long as there was wrongful conduct. Serhan concluded that it was premature, at the certification stage, to strike pleadings premised on waiver of tort, given the uncertain state of the law on these issues. The two cases that are the subject of this Update clearly illustrate - indeed compound - that uncertainty. The earlier of these, Reid v. Ford Motor Company, is discussed in greater detail in the article which appears below. Briefly stated, Madam Justice Gerow of the British Columbia Supreme Court was concerned in Reid that a claim founded on waiver of tort raised the possibility of recovery that bore no relation to actual losses. She also concluded that negligence is not a tort to which the waiver doctrine extends, being an "anti-harm" wrong that is adequately and properly addressed by compensatory damages. Restitutionary claims, in her view, depend on unjust enrichment of the defendant that (crucially) corresponds to a deprivation of the plaintiff, without juristic reason (as set out in Pettkus v. Becker, [1980] 2 S.C.R. 834).

In reasons released in early February in Heward v. Eli Lilly & Co., Mr Justice Cullity has revisited the issues raised by Serhan and also commented on the decision in Reid. Heward is a proposed class action arising from the alleged negligence of the defendants in manufacturing anti-psychotic drugs. Waiver of tort was also raised as a cause of action, in reliance on Serhan. Given what he regarded as developments in the law since (or, perhaps, as a result of) his earlier decision, Justice Cullity observed that it is probably unhelpful to dwell too much on whether waiver of tort is a separate cause of action, when the real issue is the nature of the remedy available to a claimant - specifically, whether disgorgement of profits from wrongdoing may be obtained, independent of any deprivation corresponding to the defendant's enrichment. Eli Lilly's counsel argued, on the basis of Reid, that negligence (as an "anti-harm," not an "anti-enrichment" tort) did not give rise to a restitutionary remedy and would, even if it did, require proof of the enrichment of the defendant at the expense of the plaintiff. Justice Cullity (correctly) noted the divergence of academic and judicial opinion on these issues, concluding that it was open to a trial judge to find, on the facts of Heward, that Eli Lilly had breached a duty of care in concealing the harmful side-effects of the drug at issue, intended to profit from this concealment, and had obtained profits that would not have been earned but for the breach of duty. As in Serhan, it was therefore premature to strike pleadings founded in waiver of tort at the certification stage. With respect to the claim in unjust enrichment, Justice Cullity found that the pleadings did not disclose a cause of action distinct from a claim based on waiver of tort, which would necessarily be predicated on the narrower view of restitution requiring deprivation of the plaintiff. Subject to some modifications to the statement of claim, the judge was satisfied that the other requirements for certification of the proceeding had been met.

In related news, the Supreme Court of Canada is now considering submissions in an application by Johnson & Johnson for leave to appeal the refusal of the Ontario Court of Appeal to hear the appeal in Serhan. It may be some time before any disposition of the matter, but it is to be hoped that the Court will provide some guidance on the thorny issues raised by Serhan and other recent Canadian cases on waiver of tort. In light of the divergence of opinion between trial-level judges in British Columbia and Ontario, and the important consequences for defendants and plaintiffs alike, further direction from an appellate court is urgently required.

B.C. Supreme Court shuts out "waiver of tort" manoeuvre

By Jonathan S. Mclean

For now, the door has been closed in British Columbia to plaintiffs attempting to plead "waiver of tort" in class action negligence or failure to warn cases, so as to avoid proof of individual damages. On May 3, 2006 Madam Justice Gerow of the B.C. Supreme Court issued reasons in the Reid case denying an application to amend the Statement of Claim to plead waiver of tort and unjust enrichment.

The case had been certified nearly three years earlier: 2003 BCSC 1632. The original claim was for damages for repairing an ignition switch on Ford, Lincoln or Mercury motor vehicles with a distributor mounted "TFI module." The cost of repairs to each individual claimant was modest.

At the time of certification, the action was framed in negligent design, negligent manufacture, failure to warn and the statutory cause of action of deceptive act or practice giving rise to damages, pursuant to the Trade Practice Act, R.S.B.C. 1996, c. 457, which has since been replaced by the Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2.

At the certification hearing it was decided that the issue of whether a particular class member suffered a loss as a result of a TFI module defect was an individual issue to be determined at the individual issues trial.

The plaintiff applied to amend her Statement of Claim to plead waiver of tort. The proposed pleading claimed entitlement to a restitutionary award of benefits that accrued to the defendants as a result of their negligence and/or failure to warn with respect to the TFI modules. The benefits were said to include:

  • the costs saved by not recalling the class vehicles;
  • the costs saved by not replacing TFI modules in the class vehicles;
  • the costs saved by not re-designing the ignition system in the class vehicles to overcome the defect; and
  • revenues from the sale of replacement TFI modules.

The proposed pleading also claimed that the benefits that accrued to the defendants were unjust and that there was no juristic reason for such benefits, and sought a declaration of unjust enrichment. Madam Justice Gerow applied the usual amendment test that it must be "plain and obvious" that the pleading discloses no reasonable claim or defence before it will be disallowed.

Justice Gerow described the doctrine of waiver of tort as a restitutionary remedy based on the proposition that a wrongdoer should not be permitted to keep the gains acquired through wrongful conduct. The wrongdoer must account for the "ill-gotten gains" to the person impacted by the tort, even if the person has lost nothing or suffered no damage. This remedy has usually been applied in cases of intentional tort where the defendant has acquired a benefit through a wrongful act, for example, by misappropriation and sale of the plaintiff's goods.

Justice Gerow then turned to consider the essential elements in a case of negligence or failure to warn. One of those essential elements is loss or damage suffered by the plaintiff as a result of the defendant's negligence or failure to warn. If the pleading of waiver of tort was allowed to stand on the plaintiff's theory, it would eliminate the essential element of proving damages. This is of course one of the reasons why plaintiff's counsel wanted to amend the pleading: it would eliminate the need for an individual issues trial.

Madam Justice Gerow raised two concerns regarding this theory. The first was that the effect of a proposed plea of waiver of tort introduces strict liability for an alleged defective product. With respect, that analysis confuses the issue of damages with consideration of the appropriate standard of care. Concepts of strict liability arise in the context of considering whether the defendant acted reasonably or with due diligence.

Second, Justice Gerow raised the risk of indeterminate damages as discussed by the Supreme Court of Canada in Winnipeg Condominium Corporation No. 36 v. Bird Construction Co., [1995] 1 S.C.R. 85. Her concern was that the amount that the class members would recover would bear no relationship to any losses or damages they incurred. That may be a correct statement, but it does not arise because of the indeterminate nature of the damages. In the context of waiver of tort, the focus is on the benefit obtained by the defendant. If such a claim were to proceed, the defendant would be obliged to disclose documents and the court would be provided with evidence as to the amount of the "ill-gotten gains." In that way the amount available for recovery can be determined.

However, such a measure of recovery in a case like Reid may have no quantifiable relationship to the individual losses of the members of the class, and its application could lead to a windfall for plaintiffs who are participating in a single-jurisdiction class action. For instance, the alleged defect in Reid would be found in many different jurisdictions and it would be inappropriate to overcompensate plaintiffs in one jurisdiction to the potential detriment of other potential plaintiffs in other jurisdictions. Whether that risk could be alleviated under s. 34(5) of the Class Proceedings Act, which provides for the return of any overpayment, remains to be seen.

The discussion of indeterminate damages brings into focus the question of how much compensation should each individual plaintiff receive in the context of a waiver of tort remedy, where there has been no proof of individual loss or damage. Madam Justice Gerow's concern over the elimination of proof of individual damages is a valid one in this respect.

Justice Gerow then went on to consider waiver of tort and the "underpinning" of unjust enrichment of the defendant. The three necessary elements of an unjust enrichment claim, from the Supreme Court of Canada decision in Pettkus v. Becker, [1980] 2 S.C.R. 834, are:

  1. an enrichment;
  2. a corresponding deprivation; and
  3. no juristic reason for the enrichment.

Although the proposed pleading in Reid claimed unjust enrichment, there was no allegation of deprivation of the plaintiff. Hence, there could be no finding of unjust enrichment consistent with Pettkus v. Becker.

Two earlier B.C. cases, Networth Industries Ltd. v. Cape Flattery (The), [1997] B.C.J. No. 3174 (S.C.) and Capilano Fishing Ltd. v. Quallicum Producer (The), 2001 BCCA 244, were also cited for the proposition that unjust enrichment claims do not arise in the context of negligence and nuisance claims.

In the result, Madame Justice Gerow concluded that the claim for waiver of tort could not be sustained on the facts as pleaded. It was plain and obvious to Justice Gerow that such a claim was bound to fail. The amendment was not allowed.

As a consequence of this decision, plaintiffs' counsel in B.C. cannot avoid the requirement to prove damages in negligence or failure-to-warn cases through the convenience of pleading waiver of tort as a remedy. The decision of Madam Justice Gerow will not be appealed and is currently the law in this province. Several months after this decision, the Reid case was settled, and the settlement approved by Madam Justice Gerow: 2006 BCSC 1454.

For further information, please contact your Stikeman Elliott representative or any of the authors listed above on

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.

In association with
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
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

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