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Torts - Negligence - Proximity (2). Robertson v. Ontario
In Robertson v. Ontario (Ont CA, 2023) the Court of Appeal considered proximity in negligence, here in a class action addressing multiple COVID deaths in long-term care homes. Here the court examines (and approves) the motion judges denial of negligence claims against various government agencies:(2) The Motion Judge Did Not Err in Striking the Negligence Claim Against the MOH and the CMOH
(a) Governing Principles
[31] It is well established that a public authority is liable in negligence only where the authority owes a “duty of care” to the person harmed: Odhavji Estate v. Woodhouse, 2003 SCC 69, [2003] 3 S.C.R. 263, at paras. 22-23. If the negligence claim against the public authority does not fall within a pre-existing category of cases in which a duty of care has previously been recognized, the plaintiff must satisfy the following three requirements: (i) the harm suffered by the plaintiff must have been reasonably foreseeable; (ii) there must have been sufficient “proximity” between the plaintiff and the public authority such that it would be “fair and just” to impose a duty of care on the public authority ; and (iii) there must be no residual policy reasons for declining to impose such a duty: Aylmer Meat Packers Inc. v. Ontario, 2022 ONCA 579, 162 O.R. (3d) 532, at para. 22.
[32] A relationship of “proximity” can be established either through “specific interactions” between the government and the claimant, or where the relevant legislation gives rise to a duty of care expressly or by necessary implication: Imperial Tobacco Ltd. at paras. 43-46. However, where the statutory scheme grants discretionary power to a public authority to act in the “public interest”, this will generally preclude the existence of a private law duty of care in relation to a particular group of affected individuals. This is because such powers are to be exercised in the general public interest and are not aimed at the protection of the private interests of specific individuals: Eliopoulos (Litigation Trustees of) v. Ontario (Minister of Health and Long-term Care) (2006), 2006 CanLII 37121 (ON CA), 82 O. R. (3d) 321 (C.A.), at para. 17 (discretionary powers conferred on the MOH under the HPPA are not capable of creating a private law duty of care.); Williams v. Ontario, 2009 ONCA 378, 95 O.R. (3d) 401, at para. 25 (directives issued by the CMOH to combat SARS were aimed at the interests of the public at large and therefore could not give rise to a private law duty of care.)
(b) No Duty of Care Arising from “Specific Interactions”
[33] The appellants argue that the motion judge erred in finding that the Claim failed to adequately plead any “specific interactions” between the Crown Officers and the residents of the LTC homes that could give rise to a duty of care. The appellants rely, in particular, on Directive #3 for Long-Term Care Homes under the Long-Term Care Homes Act, 2007, first issued on March 22, 2020 by the CMOH pursuant to s. 77.7 of the HPPA (“Directive #3”). This Directive sets out a number of precautions and procedures that LTC homes were required to implement immediately to limit the spread of COVID-19, including tightened procedures to be followed in the admission of new residents to LTC homes.
[34] The appellants argue that the motion judge adopted a “narrow and rigid approach” by insisting that a stand-alone claim in tort must be pled against each government officer and employee implicated in Ontario’s response to COVID-19 in LTC homes. According to the appellants, the motion judge’s analysis represents a “radical and improper departure from appellate jurisprudence” and would unjustifiably expand the scope of Crown immunity. They submit that the statement of claim properly pleads a tenable cause of action in negligence against Ontario for the “collective tortious acts and omissions” of the three identified Crown Officers and employees who led and implemented Ontario’s response to COVID-19 in LTC homes.
[35] I am not persuaded by the appellants’ submissions.
[36] The difficulty with the appellants’ negligence claim was not that it failed to identify specific government officers and employees whose acts or omissions might have engaged the vicarious liability of Ontario. Rather, as the motion judge pointed out, the shortcoming in the appellants’ pleading was that it failed to identify any “specific interactions” between the Crown Officers (or, indeed, any other Crown employees), which could give rise to a duty of care in favour of the residents of the LTC homes.
[37] For example, Directive #3, upon which the appellants particularly rely, was directed to the independent operators of the LTC homes, rather than the LTC residents themselves. Moreover, Directive #3 was one of dozens of directives issued by the CMOH during the course of the COVID-19 pandemic, pursuant to the CMOH’s general authority under the HPPA, to take action in the public interest where there is “an immediate risk to the health of persons anywhere in Ontario”. Those directives mandated necessary precautions and procedures to limit the spread of COVD-19 amongst the entire Ontario population.
[38] Far from representing a “radical and improper departure from appellate jurisprudence”, the motion judge correctly applied the governing jurisprudence, particularly Eliopoulos and Williams. As noted above, these cases clearly establish that directives issued by the CMOH to combat a threat to public health in Ontario are issued pursuant to the CMOH’s duty to act in the general public interest and for that reason cannot give rise to a private law duty of care.
[39] In fact, the circumstances in the present case are directly analogous to those in Eliopoulos, where a government plan to respond to West Nile Virus was directed to local boards of health and therefore could not give rise to a duty of care in favour of persons infected with the virus: Eliopoulos, at para. 17. Likewise, in this case, Directive #3 was directed to the operators of LTC homes and therefore could not amount to a “specific interaction” with the residents of the homes.
[40] Conversely, the circumstances here are clearly distinguishable from cases relied upon by the appellants, including Fullowka v. Pinkerton’s of Canada Ltd., 2010 SCC 5, [2015] 1 S.C.R. 132 or Taylor, where there were specific actions or representations that were directed at an identifiable class of persons, thereby providing a basis for a private law duty of care in favour of that class of persons.[1]
[41] Therefore, I am of the view that the motion judge did not err in finding that the Claim failed to plead any “specific interactions” between the Crown Officers and the residents of the LTC homes that could give rise to a private law duty of care.
(c) Neither the CMOH Nor the MOH Owe a Duty of Care to LTC Residents Arising from Statute
[42] As noted above, binding authority from this court clearly establishes that the exercise of statutory powers by the MOH and the CMOH under the HPPA cannot give rise to a private law duty of care because these powers are to be exercised in the general public interest. The motion judge relied upon this binding authority and found that there was no statutory basis to found a negligence claim against the CMOH and the MOH.
[43] The appellants nevertheless maintained that the motion judge erred in striking the negligence claim against the MOH and the CMOH on two grounds:(i) he failed to take account of the fact that the preamble to the LTCHA recognizes a responsibility on the part of “the government” to take action to protect residents of LTC homes, which arguably imposes a duty on the MOH and the CMOH, in addition to the MLTC, to take action to protect the residents of the LTC homes; and
(ii) although the former Ministry of Health and Long-Term Care was in the process of being divided into two separate ministries commencing in 2019, this process was still ongoing with the onset of the COVID-19 pandemic in March 2020. Therefore, the appellants say, the motion judge erred in failing to find that the MOH continued to be responsible for the administration of the LTCHA through at least the early stages of the COVID-19 pandemic. [44] I would not give effect to either of these objections.
[45] While it is true that the preamble to the LTCHA provides that “the government” recognizes the responsibility to take action on behalf of the residents of LTC homes, the LTCHA itself makes no mention whatsoever of either the CMOH or the MOH. Moreover, Orders in Council 1110/2019 and 1111/2019, approved on August 8, 2019 (collectively, the “2019 Orders in Council”), provide that the MLTC (and not the MOH) is to perform the duties, functions and responsibilities in respect of LTC that had previously been assigned to the former Minister of Health and Long-Term Care.
[46] The appellants say that the 2019 Orders in Council are ambiguous in this regard, since the appendices to both Orders (which list the statutes to be administered by each minister) include the LTCHA. According to the appellants, this suggests that both the MLTC and the MOH were granted continuing authority to administer the LTCHA, despite the August 8, 2019 appointment of a new minister being specifically assigned that responsibility.
[47] In my view, the appellants’ interpretation of the 2019 Orders in Council cannot be correct. Both Orders expressly assign responsibility to administer the LTCHA to the MLTC, while simultaneously excluding such responsibility on the part of the MOH. It may well be, as the respondent argues, that the inclusion of the LTCHA in the appendix to the Order assigning responsibility to the MOH was due to an oversight. Regardless, whatever significance is to be attached to the inclusion of the LTCHA in the appendix to the Order assigning ministerial responsibility to the MOH, it cannot have the effect of rendering nugatory the express terms or the intended purpose of both 2019 Orders in Council, which assigned responsibility for the administration of the LTCHA to the MLTC and not the MOH: Rizzo & Rizzo Shoes Ltd., (Re), 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27, at para. 21. The fact that the MOH no longer had ministerial responsibility in respect of the LTCHA after August 8, 2019 is confirmed by the fact that after that date all such powers were in fact exercised by the MLTC and not the MOH.
[48] I would therefore find that the motion judge did not err in finding that there can be no private law duty of care claim against either the CMOH or the MOH on the basis of the statutory language of the LTCHA. Because he had already found that no such private law duty of care could arise on the basis of “specific interactions” between these officers and the residents of the LTC homes, the motion judge correctly struck the negligence claim against the CMOH and the MOH. . McDonald v. Toronto-Dominion Bank
In McDonald v. Toronto-Dominion Bank (Ont CA, 2022) the Court of Appeal considered at length the negligence principle of proximity:[39] In Livent, the court acknowledged that in the past it had on occasion defined established categories of proximity in broad terms but warned that “[p]roximate relationships will not always … be identified so generally”: at para. 27. Depending on the nature of the relationship, a relationship of proximity may only inhere for “particular purposes or in relation to particular actions”: Livent, at para. 27; Maple Leaf, at para. 30.
[40] Indeed, courts are cautioned to “avoid identifying established categories in an overly broad manner because … residual policy considerations are not considered where proximity is found on the basis of an established category”: Livent, at para. 28. Accordingly, courts are advised to “be attentive to the particular factors which justified recognizing that prior category in order to determine whether the relationship at issue is, in fact, truly the same as or analogous to that which was previously recognized”: Livent, at para. 28; Maple Leaf, at para. 65. Similarly, courts are advised, at para. 28 of Livent, to look beyond the mere identity of the parties:… [A] finding of proximity based on a previously established or analogous category must be grounded not merely on the identity of the parties but upon examination of the particular relationship at issue in each case. [41] Considering whether a relationship fits within an established or analogous category also involves considering “the scope of activity in respect of which proximity was previously recognized”: Livent, at para. 52. The reason that the scope of activity is significant is that “the proximity analysis not only determines the existence of a relationship of proximity, but also delineates the scope of the rights and duties which flow from that relationship”: Livent, at para. 31 (emphasis in original).
[42] The Supreme Court affirmed these principles in Maple Leaf, reiterating at para. 65, that “[m]erely because particular factors will support a finding of proximity and recognition of a duty within one aspect of a relationship and for one purpose to compensate for one kind of loss does not mean a duty will apply to all aspects of that relationship and for all purposes and to compensate for all forms of loss.” Thus, “to ground an analogous duty, the case authorities relied upon by the [plaintiff] must be shown to arise from an analogous relationship and analogous circumstances” (emphasis added).
[43] Thus, Livent and Maple Leaf signal that broad categories based merely on the identity of the parties are insufficient. Rather, to find a relationship of proximity, a more particularized approach is required, especially where it comes to cases of pure economic loss.
[44] Turning to this case, the trial judge correctly recognized that the mere fact that proximity has been recognized as existing in a bank-customer relationship for one purpose is insufficient to conclude that proximity exists between the same parties for all purposes. She detailed prior cases in which banks had been found to owe duties to customers with respect to the opening and ongoing operation of bank accounts and explained why they were distinguishable. She found that the Joint Liquidators were seeking to impose a novel duty of care and so a full proximity analysis was required:At its essence, the Joint Liquidators are seeking to impose a duty of care to protect the bank's customer from insider abuse. They submit that at some point, the risk of insider abuse increased to such a level that the bank had a duty to review the relationship, shut down the account, and cease providing services to the customer.
The Joint Liquidators have not presented the court with any case that establishes a duty of this nature. As noted above, all of the cases that have imposed a duty of care on a bank relate to basic procedures on account opening and operational matters during the course of the banking relationship.
What the Joint Liquidators are proposing is a novel duty of care and one that requires a full proximity analysis under the Livent framework. [45] The Joint Liquidators take issue with the trial judge’s conclusion that the proximate relationship in this case is novel, and her discussion of proximity in terms of a duty “to protect the bank’s customer from insider abuse”, which they say amounts to conflating duty and standard of care. In their submission, the relationship between TD Bank and SIB is at the very least analogous to prior cases recognizing a proximate relationship between a bank and its customer: Toronto-Dominion Bank v. 1633092 Ontario Ltd., 2019 ONSC 1473, at para. 80; Dr. Robert Grossman v. The Toronto-Dominion Bank, 2014 ONSC 3578, at para. 31; Toronto Dominion Bank v. Whitford, 2020 ABQB 802, at para. 133.
[46] I recognize, as did the trial judge, that there are a number of cases, including the three cited by the Joint Liquidators, where banks have been found to owe duties to their customers: Lee v. Canadian Imperial Bank of Commerce, 2001 CarswellOnt 3019 (S.C.), at para. 25; Good Mechanical v. Canadian Imperial Bank of Commerce (2005), 49 C.L.R. (3d) 183 (Ont. S.C.), at para. 34; Don Bodkin Ltd. v. Toronto Dominion Bank (1993), 1993 CanLII 8512 (ON SC), 14 O.R. (3d) 571 (Gen Div.), aff’d (1998) 1998 CanLII 1101 (ON CA), 40 O.R. (3d) 262 (C.A.), at para. 24; Oak Incentives Group Inc. v. Toronto Dominion Bank, 2011 ONSC 3245, at para. 80, aff’d 2012 ONCA 726.
[47] However, like the trial judge, I disagree with the Joint Liquidators that there is an all-encompassing category of proximity between banks and their customers in relation to “banking services”. This broad characterization is at odds with the Supreme Court’s admonition in Livent and Maple Leaf to look beyond the mere identity of the parties.
[48] To accept such a broad category would be to ignore that banks undertake an extremely broad range of different activities for very different purposes: banks cash cheques, transfer funds, prepare bank drafts and issue certified cheques, offer bank accounts, issue credit cards, underwrite mortgages, exchange currency, offer investment products and advice, provide safety deposit services, and a host of other “banking services”. Therefore, to define the relationship of proximity as simply that of a “bank-customer” relationship is to ignore the reality that banks and their customers are not engaged in a one-size-fits-all relationship.
[49] Furthermore, I agree with the trial judge that this case is unlike prior cases where banks have been held to owe duties to their customers in carrying out a range of different activities for different purposes, for example, securing loans (1633092 Ontario Ltd., at para. 80), executing bank drafts (Good Mechanical, at para. 34), responding to customer inquiries (Oak Incentives, at para. 80), following customer instructions (Don Bodkin, at para. 24) and cashing cheques (Dr. Robert Grossman, at para. 31). None of these cases establish that a bank has a proximate relationship with a client that extends to monitoring the client for the purpose of detecting internal fraud.
[50] This case is different than prior authorities that suggest that a bank may be liable to a customer where the bank fails to question suspicious banking transactions: see, for example, Groves-Raffin Construction Ltd. v. Canadian Imperial Bank of Commerce (1975), 1975 CanLII 912 (BC CA), 64 D.L.R. (3d) 78 (B.C.C.A.). Here there was no allegation there were any suspicious banking transactions. Rather, it was alleged that there were other “facts and circumstances” that ought to have put TD Bank, which was responsible for transfers between SIB and its customers, on notice of the risk of internal fraud by SIB insiders. Yet, the trial judge found, despite such allegations, that there was no reason to suspect fraud:Mr. Stanford’s fraudulent scheme was elaborate, highly sophisticated, and tightly concealed. Only four insiders participated in it. They hid the scheme from the approximately 100 employees at SIB, including the most senior ones, who thought they were working at a legitimate financial institution. Mr. Osborne, testified that he did not believe it when he heard the news that his employer was involved in a fraudulent scheme. Indeed, it was not until 2009 that a regulator, the SEC, took any action with respect to the Stanford Group.
…
Eight former and two current employees of TD Bank testified at trial. They all testified that they did not know that Mr. Stanford was operating a Ponzi scheme nor did they have any reason to suspect it. They felt shocked, distressed and betrayed to learn that their long-time customer was involved in a fraudulent scheme. As Mr. Muzaffar explained, it was similar to the feeling he had on learning the news of 9/11.
I accept their evidence. I find that the TD employees had no reason to believe that Mr. Stanford and the insiders were operating a Ponzi scheme or engaging in fraudulent behaviour. There is nothing in the evidence to suggest that the TD Bank employees had any indication that insider abuse was occurring at SIB. I also find that there were no transactional or operational matters that raised any issues on the part of TD Bank employees. They all testified, credibly, that they had no concerns about SIB or its accounts and that the relationship worked well. [Emphasis added.] [51] As for the Joint Liquidators’ submission about conflation of duty and standard of care, I recognize that in distinguishing prior case law, the trial judge could be read as talking about the content of the duty of care (i.e., the standard of care). For instance, the trial judge says, at para. 153, that: “the nature of the duty relates to the operation of the account or the use of the bank’s facilities. That includes carrying out the customer’s instructions properly or questioning suspicious transactions involving transfers in or out of the account.”
[52] As this court has recognized, a duty of care “is not a duty to do anything specific; it is a duty to take reasonable care to avoid causing foreseeable harm”: Rausch v. Pickering City, 2013 ONCA 740, at para. 37. What “conduct is required to satisfy the duty is a question of the appropriate standard of care”: Rausch, at para. 38.
[53] That said, despite some of her language, I read the trial judge as recognizing that adopting an overly broad characterization of an established category of proximity – one that fails to consider the scope of the activity in respect of which proximity was previously recognized – may result in a premature imposition of a prima facie duty of care: Livent, at para. 52.
[54] In any event, at the end of the day, the trial judge was correct in concluding that the relationship between TD Bank and SIB did not fall within an established or analogous category and so a full proximity analysis was required.
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