E. The triumph of compensation and loss distribution policies

Throughout most of the twentieth century, the conventional wisdom was that the central and largely equal functions of tort law were the compensation of harm and the deterrence of wrongful conduct. It is now apparent that there is a substantial imbalance between these functions. The prevalence of liability insurance, the popularity of loss distribution policies, and the pro-plaintiff bias of the judiciary, particularly in personal injury cases, has led to a much greater emphasis on compensation as the predominant function of tort law. The capacity of tort law to influence personal conduct has diminished and the primary responsibility for public safety has shifted to statutory regulation and the criminal law. Tort law has some residual deterrent power but it is haphazard and uneven in its impact.

This evolution has wrought a fundamental change in the tort system. It has evolved from a fault system that was designed to burden the defendant with the consequences of his own wrongdoing to a fault/ insurance system that burdens the public, or a segment of the public, with the consequences of the defendant's wrongdoing. This transformation has occurred without any conscious decision of any judge, legislator, or policy maker. Nevertheless, the reality is inescapable. In general, tort law no longer deals (other than as a formality) with the question of whether the defendant should pay. It deals with the question of whether the public should pay. In practice, there are two ultimate outcomes of almost all tort actions for damages. The loss is allocated to the public or to the plaintiff.

This reality has not, however, penetrated formal tort rules, which continue to be premised on the assumption that defendants pay awards of damages out of their own pockets. This profound schizophrenia between loss-shifting rules and loss-spreading realities presents a fundamental challenge to the judiciary in the twenty-first century. There are a number of possible approaches to the conundrum.

First, the tort system may continue as it has in the past, supported by a belief that while it may not perform any one of its functions well, it is, nevertheless, a beneficial legal institution, and by a conviction that neither socialized universal no-fault schemes nor systems requiring citizens to protect themselves from accidental losses with first-party insurance offer better alternatives. The loss-shifting system backed by extensive liability insurance will remain substantially intact and the twenty-first century will witness an incremental expansion of tort liability fuelled by late twentieth-century judicial policies.

Second, the courts may resile from their current expansionary tendencies, with their emphasis on compensation and loss distribution policies, and, in their place, they may emphasize tort law as a system of personal responsibility for wrongdoing. This would demand both a greater fidelity to concepts such as reasonable care, cause-in-fact, and reasonable foreseeability and a greater emphasis on the innate morality of the other functions of tort law, such as accountability, corrective justice, deterrence, and punishment. The tort system may be brought under tighter control and some of the consequences of late twentieth- century judicial activism may be reversed. There may be some contraction in the scope of duties of affirmative action, in governmental liability, in the extent of secondary liability of deep pocket third persons for the wrongdoing of others, and in the extent of the intrusion of tort law into the traditional areas of contract law. Defences may be reinvigorated to reflect more closely the comparative responsibility of the litigants. Greater use may be made of punitive damages. Defendants would, of course, continue to protect themselves with liability insurance but there might be less emphasis on loss distribution policies in the development of tort doctrine and judicial decision making.

Third, courts may recognize and embrace fully the integration of tort liability rules and liability insurance systems into a symbiotic fault/ insurance system. They may more self-consciously model tort rules with reference to the patterns of insurance (both liability and first-party insurance), to the capacity of defendants as a class to distribute loss, and to the power of plaintiffs as a class to protect themselves with first- party insurance and other mechanisms. The courts may undertake a more open examination of tort rules to determine how they should operate in the twenty-first century given all we know about the operation of the tort system. This may include not only an evaluation of the kinds of losses that should be borne by various activities but also the basis (fault or strict liability) on which that allocation should be made. This would usher in a more radical change to the tort process but it would not be entirely inconsistent with modern trends. The narrow scope of recovery in negligence for relational economic loss and for economic loss caused by auditors to non-privity third persons who rely on their work has been influenced by a more open discussion of how those losses should ultimately be allocated. The restriction of the defence of voluntary assumption of risk and the many other changes to tort rules to facilitate the compensation for personal injuries have been driven by considerations of loss distribution. The narrowing of the defence of statutory authority in private nuisance indicates a preference for public institutions and ultimately the public to bear most of the losses generated by their activities. Greater emphasis on these sorts of questions may lead to an expansion or a contraction of the current scope of tort liability. In the absence of sufficient alternative accident compensation schemes, personal injury losses might continue to be spread by the tort/insurance system. Indeed, liability may be expanded in some areas. Products liability may evolve into a tort of strict liability allocating the full cost of defective products to manufacturers and ultimately to the purchasers of their products. Courts may also be willing to impose a more stringent fault liability on health-care professionals to facilitate the broader compensation of victims of medical accidents. Courts may be less eager to follow these kinds of policies in the area of property damage. A contraction of liability leaving greater scope for the operation of first-party insurance may be favoured. The recent decision of the Newfoundland Court of Appeal [Note 8: Hammond v. Wabana (Town of) (1998), [1999] 170 Nfld. & P.E.I.R. 97 (Nfld. C.A.).] to relax the standard of care on volunteer firefighters indicates a preference to allocate more of the risk of fire damage to property owners and their insurers. Victims of relational economic loss may continue to be encouraged to protect themselves. These kinds of considerations may also be useful in determining how losses arising from defective biotechnology, toxic products, pollution, and informational deficits should be allocated in the twenty-first century.

It is not clear how the courts will respond to the challenges posed by the triumph of compensation and loss distribution policies but the coherence, integrity, and, possibly, the survival of the tort system may depend upon it.

CHAPTER 9, CONCLUSION: THE CANADIAN LAW OF TORTS IN THE TWENTY-FIRST CENTURY

F. THE MARGINALIZATION OF TORT LAW

At the dawn of a new millennium, two competing visions of the future of the Canadian law of torts present themselves. Many of the trends that have been identified in this chapter promise a modern and robust tort system ready to face the challenges of the twenty-first century. Nevertheless, there is a darker vision that anticipates the growing marginalization of tort law and a diminution in both its vitality and the role it plays in Canadian society. Two phenomena threaten the significance of tort law, namely, the inaccessibility of tort remedies and the growth of alternative compensatory and accident prevention mechanisms.

The first phenomenon is a practical issue of access to justice. The expense of civil litigation, the rules relating to court costs, the complexities of civil procedure, the uncertainties of tort doctrine, the unpredictability of judicial decision making in many situations, the slow pace of civil process, the absence of legal aid for the middle class, and the emotional toll exacted on litigants by the adversary process all conspire to cause severe accessibility problems. There have been some initiatives that have provided some relief, such as procedural reform, the increased use of mediation, the increased availability of class actions, and the greater use of contingency fee arrangements in those provinces where it is permitted, but many viable tort claims are not litigated. This presents a significant challenge to Canadian tort law and if solutions are not found, Canadian tort law will become increasingly remote from the citizens it is designed to serve.

The second phenomenon threatening the vitality of tort law is the increasing number of cheaper and more efficient compensatory and accident prevention mechanisms that have supplemented or replaced the tort process. When the functions of tort law are achieved by superior alternatives, tort law is diminished.

The trend is most evident in the field of personal injury compensation. The important role of governmental no-fault plans, social welfare, and first-party life and disability insurance in compensating accident victims was alluded to in chapter 1. Tort law has been ousted from the workplace and its role in respect of automobile accidents has been diminished. The injuries arising from criminal violence are more likely to be compensated by criminal injury compensation schemes than by tort law. It has been estimated that only about 10 percent of accidental injury is now actionable under the tort system. [Note 9: 1 B. Feldthusen, "If This Is Torts, Negligence Must Be Dead" in K.D. Cooper- Stephenson & E. Gibson, eds., Tort Theory (North York, Ont.: Captus Press, 1993) at 394 and 401.] This trend is likely to continue. A no-fault plan has been recommended for the victims of medical accidents. [Note 10: Conference of Deputy Ministers of Health, Liability and Compensation in Health Care (Toronto: University of Toronto Press, 1990) (Chair: J. Robert S. Pritchard).] The diminution of tort law as a compensatory mechanism is matched by its loss of vitality in accident prevention. This task has been largely assumed by government and is achieved by a wealth of quasi-criminal rules and regulations controlling most activities that carry a risk of personal or property damage.

This diminution of the role of tort law in the field of personal injury may also create pressure for fundamental legislative reform of all public schemes of compensation. There are at least two models of reform. First, all public compensation vehicles, including tort law, might be replaced with a universal no-fault accident compensation scheme similar to that operating in New Zealand. No-fault schemes promise greater efficiency, a broader range of persons compensated, and accident prevention initiatives that may be as effective as tort law. The second possibility is the abolition of all public mechanisms of compensation, including tort law, leaving citizens to secure their own private life and disability insurance to protect themselves from accidents. Those accident victims who failed to do so would fall under the social welfare system and would be treated in the same way as victims of illness, congenital disability, and other misfortune.

The marginalization of tort law is also evident in respect of the damage, theft, or destruction of property. The insurance of property on a first-party basis is so prevalent, particularly in respect of theft of chattels and fire losses, that little reliance is placed on the tort system. Furthermore, the trespassory remedies of damages and injunctions are seldom used for the wrongful entry onto land. It is more often dealt with by calling the police, by self-help, or by laying a charge under Petty Trespasses legislation. The importance of private nuisance has diminished. Many land-use disputes are resolved under municipal by-laws, land-use regulations, and environmental controls, or under specialized legislation, such as farm practices legislation, which replace the tort of nuisance with administrative dispute resolution procedures. Other problems such as rowdy parties and loud music are frequently resolved by the police. Public nuisances are often resolved by governmental action.

The business torts have been supplemented by a wealth of legislation controlling improper practices in the marketplace, and consumers probably rely more on consumer protection and business practices legislation than tort law for remedies for defective products and services. The importance of passing-off has been diminished by the system of registration of trademarks. Injurious falsehood has a statutory twin that sweeps away the limiting concept of malice. [Note 11: 1 See Trade-marks Act, R.S.C. 1985, c. T-13, s. 7, which states that "no person shall . . . make a false or misleading statement tending to discredit the business, wares or services of a competitor." There is some doubt about the constitutionality of the provision.]

Tort law has also been marginalized in respect of the protection of dignitary interests. The initiative has been seized by the legislatures in dealing with privacy and equality. The one tort that does strongly protect the dignitary interest of reputation (defamation) is so complex and so expensive to litigate that it has little significance for ordinary Canadians. Defendants in defamation cases are often media outlets and plaintiffs are often lawyers, politicians, and celebrities, many of whom have other ways of clearing their names.

The marginalization of tort law has, in some fields, been supported by the Supreme Court. In Seneca College of Applied Arts & Technology v. Bhadauria [Note 12: [1981] 2 S.C.R. 181.] the Court held that no tort action was available in respect of disputes that fall within the jurisdiction of human rights codes. In Weber v. Ontario Hydro [Note 13: [1995] 2 S.C.R. 929.] the Court declined to entertain tort claims arising from employment disputes where the parties are governed by a collective bargaining agreement. The parties must resolve their dispute under the labour arbitration process. Workers'Compensation legislation has been interpreted in a way that bars workers from suing physicians in respect of medical treatment of their work-related injuries, [Note 14: 1 Kovach v. British Columbia (Workers' Compensation Board), [2000] S.C.J. No. 3 (QL); and Lindsay v. Saskatchewan (Workers' Compensation Board), [2000] S.C.J. No. 4 (QL).] and tort remedies have been limited in the field of family breakdown and custody disputes. [Note 15: Frame v. Smith, [1987] 2 S.C.R. 99.]

This supplementation and replacement of tort law is not a new phenomenon. Tort law has never operated in splendid isolation from other institutions that have similar aspirations as tort law. Nor is it suggested that tort law is in imminent danger of disappearing. Nevertheless, there are signs that tort law is in decline.

The Canadian law of torts has been likened to a Gothic cathedral dedicated to "individual autonomy, individual dignity, individual responsibility and individual worth." [Note 16: A.M. Linden, Canadian Tort Law, 6th ed. (Toronto: Butterworths, 1997) at 32.] It is, indeed a marvellous structure that has been built with the intellectual and emotional energy of lawyers and judges on a foundation of personal responsibility for one's wrongdoing. This structure has, however, been adulterated by the triumph of loss distribution policies. It has been diminished by accessibility problems. It has been marginalized by alternative compensatory and accident prevention mechanisms. It remains to be seen if the twenty- first century witnesses a spiritual revival in the cathedral or whether its congregation continues to dwindle and its utility continues to diminish.

CHAPTER 9, CONCLUSION: THE CANADIAN LAW OF TORTS IN THE TWENTY-FIRST CENTURY