Waiver of tort: the mystical parasite

  • Subtitle: Trials & Tribulations
Written by  Posted Date: December 10, 2012
b_150_0_16777215_00___images_stories_01-CANADIANLawyer_Columnists_margaret-waddell.jpgIn June 2012, the first modern trial decision meant to address the mysterious question — what exactly is waiver of tort, and do I want one? — was released. After a grueling 138-day trial, unwinding over the course of a little over a year, Justice Joan Lax delivered an equally exhausting 260-page judgment — complete with indexes, footnotes, glossary of medical terms, and schedules — in the case of Andersen v. St. Jude Medical, Inc.

The decision, which dealt with allegations that a heart valve was defective, had been eagerly awaited by legal academics and class action practitioners and was expected to put to rest the debate over whether waiver of tort was a remedy, an independent cause of action, or just wishful thinking on the part of class counsel. Appetites had been whetted and the legal community was salivating at the thought of finally digging in to the answer to the question that had been getting passed around like a hot potato.

Unfortunately, the debate still is unresolved. Lax concluded the defendant manufacturer was not negligent, therefore the issue of waiver of tort was moot. But, in kindness to the substantial audience that had been collectively waiting in anticipation of this judgment, she did take a few moments to articulate the nature of the controversy :

“[579]    … the primary debate about waiver of tort has been whether the doctrine exists as an independent cause of action in restitution (the independence theory) or is parasitic of an underlying tort (the parasitic theory). Under the parasitic theory, waiver of tort may only be invoked where all of the elements of the underlying tort have been proven, including damage to the plaintiff if that is an element of the tort. If, however, waiver of tort exists as an independent cause of action, by invoking the doctrine, a plaintiff can claim the benefits that accrued to the defendant as a result of the defendant’s wrongful conduct, even if the plaintiff suffered no harm. It is also noteworthy that the independence theory of waiver of tort is not the same as an action for unjust enrichment, as the plaintiff does not have to demonstrate a deprivation that corresponds to the defendant’s enrichment.”

Lax expressed frustration the prior courts that had been faced with deciding the conflict had deferred on the grounds that a full factual record would be required to determine “the questions the defendants raise about the consequences of identifying waiver of tort as an independent cause of action [since it] involves matters of policy that should not be determined at the pleadings stage.”

She observed that at the end of 138 days of evidence no illumination had been cast over the pall surrounding these policy concerns, particularly in the context of a product liability action. In the end, Lax, too, left for another day and another court or the legislature the answer to whether waiver of tort can be asserted as an independent cause of action, or whether it will be limited to a form of restitution.

While the obiter in St. Jude may have been a litigator’s equivalent to lunchbag letdown, at least one class action judge in Ontario has signalled he will be up for the challenge. In Arora v. Whirlpool Canada LP, Justice Paul Perell denied certification of a product liability action that sought only damages for pure economic loss. Among the causes of action pleaded was a claim based upon waiver of tort.

Perell rejected the notion that complex and important issues should only be decided on a full record after trial, calling the argument “problematic and an invitation to shirk the court’s obligation under s. 5(1)(a) of the Class Proceedings Act, 1992.” As Lax had noted, so too Perell pointed out the seminal case of Donoghue v. Stevenson had been decided on a pleadings motion. Taking up the challenge laid down by Lax, Perell concluded the plaintiff had failed to make out any reasonable cause of action and dismissed the motion for certification.

But he, too, left the bar in suspense regarding the answer to the overarching debate — is waiver of tort an independent cause of action or a remedy? Perell intimated that his opinion leans towards the latter, noting that, traditionally, waiver of tort was a remedy and not a cause of action: “Historically, the doctrine of waiver of tort provided the victim of certain types of tortious wrongdoing with the option of foregoing (waiving) tort compensation measured by the damages suffered by the victim and claim instead disgorgement of the tortfeasor’s ill-gotten gains. The traditional view was that waiver of tort was a remedy available for certain torts.”

But, like Lax in St. Jude, he was saved by the facts and found there was no factual support for the allegations of wrongdoing. “Whether a remedy or a cause of action, for waiver of tort to be available, the defendant must have done something wrong.” Absent a predicate wrongdoing, there could be no sustainable plea of waiver of tort. For the expectant legal geeks it was PB&J for lunch, again.

The menu remains the same on the West Coast as well. In Koubi v. Mazda Canada Inc., waiver of tort came before the British Columbia Court of Appeal. It, too, was able to dispose of the plaintiff’s claim without ending the debate. In Koubi, the plaintiff’s claim was based upon statutory breaches. The relevant legislation provided statutory remedies and did not leave open the door to claim restitutionary relief as well. Hence, a claim for disgorgement of the defendant’s profits was not a remedy available to the plaintiff for breach of the subject acts.

While a case has not yet come back before the courts for adjudication of the issue of whether waiver of tort is an independent cause of action or merely remedial, it is apparent from the recent decisions in both B.C. and Ontario that the time is now ripe. Having seen that a full factual record ultimately added no value to weighing the important policy issues underlying the debate, one can only hope the next judge faced with deciding the debate will take up the challenge, and make the tough call.

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Margaret L. Waddell

Margaret L. Waddell is a senior partner at Paliare Roland Rosenberg Rothstein LLP in Toronto.  She has a varied advocacy practice including a broad range of complex commercial and shareholder litigation, professional liability cases, class actions and appellate advocacy.  She can be reached at marg.waddell@paliareroland.com.

Column: Trials & Tribulations

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