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Newsletters
> March 2004
Contents
1. Federal Court Strikes Out Claim for Pure Economic Loss
2. Canadian Marine Liability Act, Part 4 (Compulsory Insurance)
3. PIPEDA ? The New Privacy Regime
Federal Court Strikes Out Claim for Pure Economic
Loss
The St. Lawrence Seaway Management Corporation successfully
brought a motion to strike out the claim of a business owner seeking
damages for pure economic losses resulting from damage to the Allanburg
Bridge. On August 11, 2001, the Allanburg bridge was closed to traffic
for 3 months following a collision with the vessel "Windoc".
The plaintiff owned a retail store alleged to be within a half mile
from the bridge. The plaintiff claimed that it depended on the public
being able to cross the bridge to conduct business, and that the
closure of the bridge resulted in business losses.
The defendant moved to strike out the Statement of
Claim for failing to disclose or plead a cause of action. Historically,
courts have refused to find liability against persons alleged to
have caused damage to a public highway or bridge in similar circumstances,
on the ground that no duty of care is owed by such persons to the
businesses whose earnings were affected by the closure of the bridge,
in the absence of any property damage suffered by such businesses.
These have been referred to as claims for "pure economic loss"
where plaintiff has suffered economic losses without any property
damage or bodily injury.
The plaintiff sought to amend the claim so as to plead
gross negligence and nuisance, and argued that because of the proposed
amendments, it was not plain and obvious that the claim disclosed
no cause of action.
The Federal Court took note of the well-established
principle laid out in Norsk Pacific Steamship Company Limited
v. Canadian National Railway Company, [1992] 1 S.C.R. 1021,
that persons in the position of the plaintiff cannot recover for
pure economic losses arising from damage to a public bridge:
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. . . . To impose such indeterminate
liability on tortfeasors is almost unthinkable as the cases make
clear.
Where Canadian courts have not recognized a duty of
care in the facts of the case, the question is 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 so-called Anns test. The proximity analysis involved at the
first stage of the Anns test focuses on factors arising from the
relationship between the plaintiff and the defendant. These factors
include questions of policy. Mere foreseeability is insufficient
to establish a prima facie duty of care.
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. Sufficiently
proximate relationships are identified through the use of categories.
The categories are not closed.
Citing decisions in similar "bridge cases",
the Court found that the mere fact that the plaintiff's business
was geographically close to the Allanburg Bridge and was dependent
upon traffic being able to cross the bridge to conduct its business
was not sufficient to meet the proximity requirements of the Anns
test.
Even if there were to be found a relationship of proximity,
the Court agreed with the Defendant that the most serious problem
in the case is that of indeterminate liability for any alleged duty
of care. 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. The Court also cited a previous case
also involving a bridge operated by the Defendant, wherein the Quebec
Court of Appeal held, as a general policy restricting liability
of the Defendant, that users of a public highway use it because
of a privilege and not as of right. According to the Court, these
are well-established and compelling grounds under the second part
of the Anns test for the court not to extend the law of negligence
to this claim.
The Federal Court struck out the claim without leave
to amend the claim. Ramon Andal of Fernandes Hearn LLP was counsel
for St. Lawrence Seaway Management Corporation.
1340232 Ontario Inc. v. St. Lawrence Seaway Management
Corporation 2004 FC 209 (Proth.)
Ramon Andal
Notes From Parliament Hill
Canadian Marine Liability Act, Part 4 (Compulsory Insurance)
Last January (2003) the Canadian Department of Transport
released the Mariport Report and its recommendations which included
an immediate application for all vessels except those involved in
the adventure tourism business. Mariport suggested a graded implementation
for the adventure tourism industry and also additional consultations
with US operators. The Canadian Department of Transport is currently
developing the regulations for the proposed compulsory insurance
scheme. These proposed regulations are expected to appear in the
Canada Gazette later this year (2004).
Current indications are that operators engaged in
the domestic carriage of passengers will be required to maintain
insurance against their maximum liability under the Act which in
the case of death or personal injury to a passenger will be $350,000.00
per person per carriage. For example, a vessel certified to carry
20 passengers will be required to maintain $7 million in insurance
coverage, 20 x $350,000.00. However, there is talk that the regulations
will contain a threshold which once again will be 15 GRT. Vessels
below that threshold will not be expected to maintain full insurance
cover and the reduced limits will be dependant upon whether the
vessel carries 12 or more passengers. Indications are that these
reduced limits may be as little as $1 million per vessel where the
passenger complement is less then 12. Fleet operators with more
than one vessel will be required to maintain sufficient coverage
to accommodate the largest vessel in the fleet and each vessel will
be deemed to be separately insured.
The proposed regulations will not apply to non-motorized
and/or inflatable vessels such as zodiacs nor will they apply to
vessels engaged in international carriage such as ferry services
between Canada and the US. The Canadian Department of Transport
has indicated that compulsory insurance for international carriage
of passengers will be considered in the future together with the
Athens Protocol of 2002 which introduced the subject internationally
for the first time.
Canadian Marine Liability Act, Part 3 (Limitation
of Liability for Maritime Claims)
Canada is a State Party to the Convention on Limitation
of Liability for Maritime Claims 1976 and its Protocol of 1996.
Both have the force of law in Canada by virtue of Part 3 of the
Canadian Marine Liability Act. The International Maritime Organization
based in London, England announced earlier this month that the 1996
Protocol to the Convention will at last come into force internationally
on May 13, 2004, 90 days after the island State of Malta deposited
its accession to the Protocol.
Canada Shipping Act Reform
Of interest to those of you following the subject
of Shipping Act reform here in Canada is the news out of Ottawa
in December 2003 to the effect that the policy component of the
Canadian Coast Guard is returning to the Canadian Department of
Transport and that the operational components of the organization
will become a special operating agency, which for the time being
will remain at the Canadian Department of Fisheries & Oceans.
What that all means for the fate of the new Canada Shipping Act
2001 is not known at this time, but some have opined recently that
amendments to the new legislation may now be necessary, that is
before the new legislation is even proclaimed!
Simon P. Barker
PIPEDA ? The New Privacy Regime
The Personal Information Protection and Electronic
Documents Act, is federal legislation that applied to federally
regulated employers for the past three years. Its scope has now
broadened. PIPEDA prescribes the collection, use and disclosure
of "personal information" about employees, clients and
customers in the course of the employer's business. Effective January
1, 2004, the PIPEDA applies to Ontario businesses. This will continue
until such time as "substantially similar" provincial
legislation is proclaimed. Presently, Ontario has a draft privacy
bill undergoing the consultation process.
The policy basis for the PIPEDA has been the need
to address consumer concerns about privacy as well as the ability
of Canadian businesses to compete globally. The European Union recognizes
PIPEDA as providing adequate privacy protection, which is key because
the European Union prohibits transmission of personal information
to countries that do not have such legislation. Other countries,
such as the US, do not have a federal version of PIPEDA but do regulate
privacy at the state level and through regulatory regimes.
PIPEDA applies to "personal information"
PIPEDA prescribes what has been referred to as the
"life-cycle of information", which has six stages- collection,
use, disclosure, retention, security and disposal. Personal information
is defined by PIPEDA as any factual information, recorded or not,
about an "identifiable individual". This includes age,
income, employee files, medial records, but does not include basic
pieces of information such as an employee's name or business address
and business phone number.
Personal information does not include your job title,
telephone number or address, anything that might appear on your
business card, or can be found through publicly available information
such as the telephone book.
What is not covered by the Personal Information Protection
and Electronic Documents Act?
* The Collection, use or disclosure of personal information by federal
government organizations listed in the Privacy Act;
* Provincial or territorial governments and their agents;
* An employee's name, title, business address or telephone number;
* An individual's collection, use or disclosure of personal information
strictly for personal purposes (e.g. personal greeting card list);
and,
* The collection, use or disclosure of personal information solely
for journalistic, artistic or literary purposes.
Note that PIPEDA requirements will apply to personal
information collected prior to January 1, 2004. The PIPEDA does
not have a grandfathering provision, which is problematic when one
considers that much of the information collected by a firm or company
prior to this year was done in a manner not in strict compliance
with PIPEDA.
Another issue for lawyers is that the PIPEDA contains
an exception to access to information for solicitor-client privilege
and the Schedule to the statute contains a broader exception to
access for solicitor-client and litigation privilege. Thus, an individual
seeking access to personal information can be denied access on these
grounds.
PIPEDA Principles
The PIPEDA requirements are based upon ten principles
that organizations must follow:
1. Accountability
2. Identifying purposes
3. Consent
4. Limiting collection
5. Limiting use, disclosure, and retention
6. Accuracy
7. Safeguards
8. Openness
9. Individual access
10. Challenging compliance
The law requires organizations to:
* obtain your consent when they collect, use or disclose
your personal information;
* supply you with a product or a service even if you refuse consent
for the collection, use or disclosure of your personal information
unless the information is essential to the transaction;
* collect information by fair and lawful means; and,
* provide personal information policies that are clear, understandable
and readily available.
There are three forms of consent appropriate under
PIPEDA, including express, implied and negative option consent.
Consent can be given orally as well as in writing. The form of consent
will depend upon the sensitivity of the personal information and
the individual's reasonable expectations. Note that if an organization
intends to use personal information already collected for a new
purpose not disclosed when the information was originally gathered,
the new purpose must be disclosed before the information can be
used.
In terms of consent, there are exceptions to these
principles. For example: an organization may not need to obtain
your consent if collecting the information clearly benefits you
and your consent cannot be obtained in a timely way; or if the information
is needed by a law enforcement agency for an investigation, and
getting consent might compromise the information's accuracy.
In limiting collection, the organization must collect
only information that is necessary for the purposes identified by
the organization. By limiting use, disclosure and retention, the
organization must ensure that personal information not be used or
disclosed for purposes other than those for which it was collected.
Note that personal information cannot be kept indefinitely and may
be retained for as long as necessary to fulfil purposes "as
required by law." Thus, organizations should destroy, erase
or make anonymous personal information about you that it no longer
needs in order to fulfil the purpose for which it was collected.
Obviously, security is a key PIPEDA principle and
companies should ensure the security of their existing information
management systems as well as upgrading and maintaining current
modes of protecting electronic information, including the use of
firewalls and other monitoring systems.
Further, when data is disclosed, companies must protect
the privacy of the information. Thus, there is an obligation to
ensure that third parties who receive or process personal information
ensure the protection of that information and will not disclose
it. This requires that contracts with such third parties incorporate
these obligations.
In addition to these requirements, organizations must
develop a privacy policy, which includes dealing with complaints,
and appointing a privacy officer to implement policies and procedures.
While implementing PIPEDA policy within a company may seem relatively
straight forward, it requires a lot of preparatory work. Organizations
should audit the information flow within their infrastructure to
identify what information is collected, how it is collected, stored,
disclosed and discarded. Based upon this, an organizations privacy
policy will address each of these elements and inform customers
and clients how information is treated at each stage of its handling.
The PIPEDA does not impose privacy requirements on
workplaces, but grants privacy rights only to employees in federally
regulated places of employment. Nonetheless, given various pieces
of provincial legislation, organizations should protect employee
information, including personnel files. Beyond that, employees should
be informed on how their privacy is protected as well as how they
are to implement their employer's privacy policy when it comes to
the flow of customers information from intake to discarding.
Apart from the Privacy Commissioner's powers such
as investigating complaints and auditing personal information management
practices, breaching PIPEDA entails a number of potential consequences.
It is an offence to:
* Destroy personal information that an individual
has requested;
* Retaliate against an employee who has complained to the Privacy
Commissioner, or who refuses to contravene Sections 5 to 10 of PIPEDA;
* Obstruct a complaint investigation or an audit by the Privacy
Commissioner.
Upon summary conviction, the fine imposed is $10,000.
A person is liable up to $100,000 for an indictable offence.
Tina Margellis
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