Cases to Know

Question 1

What is Donoghue vs. Stevenson (1932) an example of?

hint: decomposed snail

Answer 1

Example of TORT (Product Liability and Duty of Care)

• plaintiff (Donoghue) was given a ginger beer by a friend and became ill (found it was because there was a decomposed snail in the bottle)
• manufacturer (Stevenson) had a duty to inspect bottle filling and provide clean bottles for inspection

Question 2

What was the result of Donoghue vs. Stevenson?

Answer 2

House of Lords determined that the manufacturer had a legal duty to the ultimate consumer to ensure the ginger beer was free from any defect likely to cause injury or harm.

• defendant appealed but it was rejected
• no contract b/w the plaintiff and manufacturer therefore it is considered tort
• the contract (from the purchase) was b/w the friend and the store owner, but harm was done to Donoghue

Question 3

What is Hedley Bryne vs. Heller (1963) an example of?

hint: ad agents and credit ratings

Answer 3

Example of TORT and negligent misrepresentation

• plaintiff (Hedley Bryne) were advertising agents and asked their bank to inquire about a credit rating of a company they had business with
• Heller & partners (defendants) negligently said they had a good credit rating, when in fact they did not
• plaintiff eventually lost 17,000 pounds after company went into liquidation
• plaintiff sued Heller for negligently supplying financial advice

Question 4

What was the result of the Hedley Bryne vs. Heller case?

Answer 4

Heller (defendant) won

• when one person is relying on a special skill or judgement of another, and the other is aware of this reliance then they have a duty to take reasonable care in exercising that skill
• there was a disclaimer on the services provided by the bank, so there were NOT LIABLE to provide compensation to the plaintiff for their financial loss
• significant b/c it expanded the scope of damages that may be recovered in a tort action and focused attention on services performed by professionals who possessed special skills

Question 5

What is the case of Lambert vs. Lastoplex Chemicals (1971) an example of?
(hint: fire and explosion using sealant)

Answer 5

Example of TORT and Duty to Warn

• Lambert (plaintiff) was a consulting engineer who owned a home with his wife. Lambert was doing repairs on the home and so he bought fast drying lacquer manufactured by Lastoplex Chemicals
• plaintiff used it to seal a parquet floor in the rec room of his house (room separated from the furnace and utility room)
• Cans of lacquer had caution notices on the labels and he read them carefully before applying the sealer
• fumes from the lacquer came into contact with the pilot lights in the furnace and utility room. This caused an explosion and consequent damage when fire reached the half full cans

Question 6

What was the result from the case of Lambert vs. Lastoplax Chemicals?

Answer 6

• plaintiff won
• standard of care (did not meet the high standard of care) and duty to warn
• product liability

Question 7

What is the case of Dutton vs. Bongor Regis United Building Co. (1972) and example of?
(hint: building foundation)

Answer 7

Example of TORT and Vicarious Liability

• foundation laid by the builder of a house was found to be inadequate to carry the load of the building –> led to damage
• foundation should have been deeper and approved by a local building inspector, but he failed to make the proper inspections before giving approval

Question 8

What was the result from the Dutton vs. Bongor Regis United Building Co. case?

Answer 8

• inspector was held liable to a subsequent purchaser of the house due to negligence
• he should have known that him being negligent would have caused harm
• the inspector (employee) committed a tort in the course of employment, thus the employer was vicariously liable for the damage caused (VICARIOUS LIABILITY)

Question 9

What is the Rivtow Marine vs. Washington Iron Works et al. (1973) case an example of?
(hint: cranes)

Answer 9

Example of TORT and Economic Loss

• plaintiff charted a logging barge fitted with a crane from Washington Iron Works (defendant)
• Washington Iron Works made a 2nd crane (virtually identical) and was installed on a similar barge but it collapsed, killing the crane operator
• Washington Iron Works et al. were aware of structural defects in the crane for some time due to negligence in the design
• Defendants failed to warn the plaintiff or advise repairs as soon as they became aware of the defects

Question 10

What was the result of the Rivtow Marine vs. Washington Iron Works et al. case?

Answer 10

Supreme court said the defendants were liable

• manufacturers liable to plaintiff in economic losses attributable to failure to warn
• liable for the economic losses while the crane was out for service for repair

Question 11

What is the case of Northwestern Insurance vs. O’Bryan Co. (1974) an example of?
(Hint: deletion of risk)

Answer 11

Example of TORT and Vicarious Liabililty

• Northwestern asked an agent (employee) to delete specified risk from document
• employee negligently assured northwestern that risk was deleted which insurance company relied upon
• due to an accident, O’Bryan and Co thought they were covered and northwestern refused to pay

Question 12

What was the result of the Northwestern Insurance vs. O’Bryan & Co. case?

Answer 12

BC Court of Appeal held both the employer (Northwestern) and employee (agent) personally liable for the tort committed by the employee
- to protect engineering employees, corporations providing engineering services should ensure professional liability insurance policy for both the corporation and the employees

Question 13

What is the George Ho Lem vs. Barotto Sports and Ponsness Warren (1976) an example of?
(hint: shotgun shell & explosion)

Answer 13

Example of TORT and Duty to Warn

• George Ho Lem bought a shotgun shell packer, put too much powder in it and it blew up and injured him
• Lem claimed there was not enough instruction in the manual

Question 14

What was the result of the George Ho Lem vs. Baroto Sports and Ponsness Warren case?

Answer 14

• Plaintiff (Hem) lost because there was enough instruction in the manual, he just did not follow them (did not read it)
• there was nothing wrong with the shotgun shell
• duty to warn didn’t apply b/c the manual had sufficient, detailed instructions

Question 15

What is the MacMillan Bloedel vs. Foundation Co. (1977) case an example of?
(Hint: electrical wire hit and power failure)

Answer 15

Example of TORT and Economic Loss

• Foundation Co. was doing work outside of MacMillan’s office, hit an electrical wire and power went out
• Foundation Co. sent staff home due to power outage
• defendant was negligent and should have known that the work could potentially affect MacMillan
• MacMillan tried to sue for economic loss since they had to send workers home

Question 16

What was the result from the MacMillan Bloedel vs. Foundation Co. case?

Answer 16

• Court said that salaries are not an economic loss because they were going to make that money
• no other source of economic loss from the negligence could be proven by MacMillan so the case was dismissed (court was willing to award damages if they could have provided evidence of economic loss)

Question 17

What is the Belle River Community Arena vs. WJC Kauffman Co et al. (1977) case an example of?
(hint: bidding)

Answer 17

Example of Mistakes in Contract

• defendant (WJC Kauffman) accidentally transferred a figure from excel sheet for a bid ($70,000 lower than the bid was intended)
• defendant tried to withdraw the bid after noticing the error, informed the plaintiff
• plaintiff took the position that the bid had been accepted prior to revocation
• plaintiff sued for the difference in price from the first tender

Question 18

What was the result from the Belle River Community Arena vs. WJC Kauffman Co et al. case?

Answer 18

Plaintiff knew about the mistake but still accepted it anyways which is why they lost

• appealed but decision was held by Ontario Court of Appeal
• offeree (WJC Kauffman) could not accept an offer that they knew to have been made under a mistake affecting a fundamental term of the contract

Question 19

What is the Corp. District of Surrey vs. Carrol-Hatch (1979) an example of?
(hint: architect and engineer building design)

Answer 19

Example of TORT and Concurrent Tortfeasors

• architect designed a police station and engaged engineering firm to perform structural design service
• engineer examined two shallow pits and recommended to architect that deep soil tests be taken but the architect disagreed.
• engineer submitted a “soils test report” to the owner on the basis of superficial examination of shallow pits only
• building underwent extensive structural changes due to settlement problems

Question 20

What was the result of the Corp. Dist. of Surrey vs. Carrol-Hatch case?

Answer 20

Both engineer and architect held liable at a ratio of 40-60, respectively (both parties were concurrent tortfeasors)

• wrong for the architect to try and tell the engineer how to do his job
• also wrong that the engineer failed to conduct proper soil testing and assumed that shallow pit testing was sufficient

Question 21

What is the R vs. Ron Engineering (1981) case an example of?

hint: bidding

Answer 21

Example of MISTAKES IN CONTRACT

• made a bid of $150K deposit (data was not entered correctly, off by $750K)
• Ron Engineering could not reach owner before the bids closed and owner accepted the offer
• Ron Engineering tried to inform owner about the change but it was refused
• contract was given to another bidder and owner kept Ron Engineering’s deposit

Question 22

What was the result of the R vs. Ron Engineering case?

Answer 22

• Ron Engineering sued to get their deposit back
• owner counter-claimed for costs incurred as a result of having to go with a different bidder
• decision went all the way to the Supreme Court of Canada where the decision was overturned (again) and favoured the owner
• owner retained the deposit because of the Contract A, Contract B scenario

Question 23

What is the Canama Contracting vs. Huffman (1983) case an example of?
(hint: building barn over manure pit)

Answer 23

Example of TORT, negligence, disclaimer and concurrent tortfeasor

• Contractor engaged by owner to build a barn over a manure pit.
• contractor sought help from the engineer (Huffman) who was employed by the government to help farmers and contractors work on their plans
• plans of design were left on engineer’s desk but failed to make note of deficiencies (duty of care)
• engineer also negligent by saying they were “good plans” (making contractor believe they were adequate)

Question 24

What was the result of the Canama Contracting vs. Huffman case?

Answer 24

Portions of the manure tank walls failed

• contractor blamed for not upholding a reasonable standard of care of a designer and builder in the circumstances (should have made it clear to the engineer that he was seeking advice)
• found 50/50 liable
• contractor appealed to the Ontario Court of Appeal and the engineer became 75% liable and the contractor 25%
• engineer could have avoided responsibility had the engineer clearly disclaimed responsibility (similar to Hedley Bryne vs. Heller & Partners)

Question 25

What is the Central Trust vs. Rafuse (1986) case an example of?
(hint: mortgage and solicitors)

Answer 25

Example of Concurrent Tort and Contract Liability

• Rafuse et al were solicitors hired by a company who needed to take out a mortgage on a property (solicitors were retained to complete the mortgage transaction)
• creditor for the mortgage (Central Trust) initiated foreclosure of the mortgage but the company who took out the mortgage on the property claimed the mortgage was invalid.

Question 26

What was the result of the Central Trust vs. Rafuse case?

Answer 26

• mortgage was invalidated so Central Trust brought action against the lawyers for negligence and breach of contract
• Supreme Court of Canada held that the lawyers were negligent and that lawyers could be concurrently liable in contract and tort for negligence in the performance of professional services for which they were retained
• tort liability exposed the solicitors to the tort limitation period of 6 years from “discoverability” (took more than 6 years to discover the invalidity of the mortgage)
• lawyers had to pay extra damages for tort

Question 27

What is the Micron vs. Hong Kong Bank of Canada (2000) case an example of?
(hint: major project financing)

Answer 27

Example of TORT and disclaimers

• During the tendering phase for a major project, the plaintiff contractor (“Micron”) sought information from the defendant bank (“HSBC”) concerning the financing of the project
• HSBC provided a letter to Micron saying that a loan had been authorized on a secure basis to finance the work
• Micron thought they were being funded, but they weren’t
• Disclaimer from HSBC was superficial and general
• Micron brought a claim against the bank for negligent misrepresentation after the project collapsed

Question 28

What was the result of the Micron vs. HSBC case?

Answer 28

Bank lost (HSBC)