Simon's Megalomaniacal Legal Resources

Torts - Contracting Out

. Singh v Trump

In Singh v Trump (Ont CA, 2016) the Court of Appeal discussed when an 'all agreement' clause in a contract precludes a tort claim for behaviour in relation to the contract:

[110] Unless inapplicable, unenforceable, or otherwise invalid, contractual provisions such as entire agreement clauses may limit a party’s right to sue in tort: BG Checo International Ltd. v. British Colombia Hydro & Power Authority, 1993 CanLII 145 (SCC), [1993] 1 S.C.R. 12, at p. 30. That is because duties based in tort “must yield to the parties’ superior right to arrange their rights and duties in a different way”: BG Checo, at p. 27.

[111] In Tercon Contractors Ltd v. British Colombia (Transportation and Highways), 2010 SCC 4 (CanLII), [2010] 1 S.C.R. 69, Binnie J. (dissenting but supported by a unanimous court on this point) set out the following analytic approach to be used in deciding whether to enforce such clauses, at paras. 122-23:

The first issue, of course, is whether as a matter of interpretation the exclusion clause even applies to the circumstances established in evidence. This will depend on the Court’s assessment of the intention of the parties as expressed in the contract. If the exclusion clause does not apply, there is obviously no need to proceed further with this analysis. If the exclusion clause applies, the second issue is whether the exclusion clause was unconscionable at the time the contract was made, “as might arise from situations of unequal bargaining power between the parties” (Hunter, at p. 462). This second issue has to do with contract formation, not breach.

If the exclusion clause is held to be valid and applicable, the Court may undertake a third enquiry, namely whether the Court should nevertheless refuse to enforce the valid exclusion clause because of the existence of an overriding public policy, proof of which lies on the party seeking to avoid enforcement of the clause, that outweighs the very strong public interest in the enforcement of contracts.

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[112] In his reasons the motions judge referenced Tercon and the analytical approach described therein. His analysis and application to the facts of this case, however, are contained in their entirety in para. 239 of his reasons:

[T]he entire agreement and other exculpatory provisions included in the Disclosure Documents or Statements apply and stands in the way of the success of the Plaintiffs’ misrepresentation claims. As a matter of interpretation the clauses apply, and there is no unconscionability or public policy reason to justify not enforcing the exculpatory provisions.

[113] In my view, the motions judge erred in concluding, without analysis, that it was not unconscionable to enforce the exculpatory provisions. Unconscionability provides that despite the general principle that parties should be held to the bargains that they have made, there are some parties that must be protected and some bargains that should not be enforced: see A. Swan and J. Adamski, Canadian Contract Law, 3d ed. (Markham, Ont.: Lexis Nexis, 2012) at para. 9.99.

[114] In ABB Inc. v. Domtar Inc., 2007 SCC 50 (CanLII), [2007] 3 S.C.R. 461, at para. 82, LeBel and Deschamps JJ. described the doctrine of unconscionability in the context of limitation clauses, a type of clause similar in nature to exclusion or entire agreement clauses:

Under the doctrine of unconscionability, a limitation of liability clause will be unenforceable where one party to the contract has abused its negotiating power to take undue advantage of the other. This doctrine is generally applied in the context of a consumer contract or contract of adhesion.

[115] In Zippy Print Enterprises Ltd. v. Pawliuk (1994), 100 B.C.L.R. (3d) 55, the British Columbia Court of Appeal declined to enforce an entire agreement clause to preclude a claim based on a misrepresentation made to a franchisee. The franchisor had made misleading statements about estimated gross sales, expenses, and profits to induce the franchisee to enter an agreement. In rejecting the enforcement of these clauses, Lambert J.A. expressed the following view, at para. 45:

A general exclusion clause will not override a specific representation on a point of substance which was intended to induce the making of the agreement unless the intended effect of the exclusion clause can be shown to have been brought home to the party to whom the representation was made by being specifically drawn to the attention of that party, or by being specifically acknowledged by that party, or in some other way.

. Lam v. University of Western Ontario

In Lam v. University of Western Ontario (Ont CA, 2019) the Court of Appeal reversed a ruling that would not allow tort claims to be advanced over a student's failure to advance to a PhD, even though such issues were central to the university's 'academic' function:

[29] In my view, the result in this case is controlled by this court’s decisions in Gauthier and Jaffer. In both of those cases, which involved claims of breach of contract by students against universities, this court held that if a plaintiff alleges the constituent elements of a cause of action based in tort or breach of contract, while claiming damages, the court will have jurisdiction even if the dispute stems from the scholastic or academic activities of the university in question. The question to be addressed was therefore whether the factual issues the motion judge found to exist could, if resolved in the appellant’s favour at trial, make out a cause of action for breach of contract. Because they could, the University’s motion ought to have been dismissed.

[30] The perceived advantages of the University’s internal complaint processes were not germane to the issue.