A. Introduction

Tort law does not operate in a legal vacuum. There are other important areas of private and public law which control the relationship of persons to one another and to private and public institutions. The conventional divisions and classifications of the legal system inevitably give rise to interrelationships and overlap between discrete areas of the law which need to be resolved. These difficulties are exacerbated by the fact that there are often no sharp and distinct boundaries between the various regimes of responsibility. At the margins they tend to shade the one into the other, each using similar concepts to resolve conflicts that arise between litigants. In this chapter the reader is alerted in a summary way to some of the relational issues arising in the field of tort law and the general principles that bear on those issues. In particular, consideration is given to the private law regimes of contract law, fiduciary law, and the law of restitution and the public law constitutional principles found in the Canadian Charter of Rights and Freedoms.

CHAPTER 8, RELATIONSHIPS

B. PRIVATE LAW

Many civil obligations arise from the relationships between people. Tortious obligations of reasonable care arise from the relationships of proximity, of reasonable reliance, and of assumption of responsibility. Contractual obligations arise from exchange transactions, promissory reliance, and the receipt of promised benefits. Fiduciary obligations arise from relationships of trust, confidence, and dependence. Restitutionary obligations arise where one person has secured an unjust enrichment at the expense of another. It is not uncommon, however, for a relationship to satisfy the definition of more than one of these legal constructs. Each legal characterization of the relationship may or may not generate similar obligations. A good example is found in the relationship of solicitor and client. The relationship may be characterized as a relationship of proximity, as a contractual relationship, or as a fiduciary relationship. Each of these characterizations is sufficient to establish a uniform obligation of care and prudence on the part of the solicitor. Each characterization of the relationship may, however, generate different legal consequences for a breach of that common duty of care because the rules relating to procedures and remedies in tort, contract, and fiduciary law are not uniform. A further complication arises where the obligations on the solicitor generated by the characterization of the relationship differ. The obligations of a solicitor as a fiduciary are more extensive than her duty of care in negligence. It is, therefore, necessary to have some mechanism to determine which set of rules should govern the parties.

1) Contract Law and Tort Law

There are many relationships in which a duty to use reasonable care arises from both the proximate and the contractual nature of the relationship between the parties. The situation arises commonly in relationships between professionals and their clients, but it may also arise in other situations. The content of the duty of care, whether it is ana- lysed as tortious care or as contractual care flowing from an implied term of the contract, is normally the same and the choice of one cause of action or the other is normally of no practical significance. In a few situations, however, the choice between tort and contract does make a difference. The rules relating to the measure of damages, limitation periods, remoteness of damage, conflict of laws, and punitive damages are not the same in contract and tort. One or other may be more advantageous to the plaintiff.

There was in the 1970s a great deal of debate as to how cases such as these ought to be resolved. There were two competing views. The theory of mutual exclusivity proposed that, since the parties had chosen to enter a contractual relationship, the action must be brought in contract and the dispute must be resolved exclusively by the application of contractual rules. The alternative theory of concurrence of actions permitted the plaintiff to make a full and free choice among the alternative causes of action in contract and tort and to select the cause of action that was most advantageous to her. After some initial hesitation, the Supreme Court adopted the theory of concurrence of actions. In Central Trust Co. v. Rafuse [Note 1: [1986] 2 S.C.R. 147.] the Court held that, in circumstances where the facts supported a cause of action for negligence against a solicitor in both tort and contract, the plaintiff enjoyed an unfettered choice of causes of action or could sue concurrently in both causes of action and ultimately choose the remedy that was most advantageous to her. The rule of concurrence of actions is, however, subject to an important qualification. If the contract between the parties contains a term, normally an exemption clause, which limits or negates the obligation of care that would normally arise between the parties, that contract governs the relationship and it cannot be evaded by the subterfuge of suing in tort.

In most situations, the choice of actions is between an implied contractual duty of care arising out of a contract of services and the mirror- image duty of care arising from the proximity of the parties. The issue of interrelationship has, however, also arisen frequently in respect of negligent misrepresentations made between the parties to a contract. The misrepresentations may be pre-contractual, made in the negotiations leading up to the contract, or they may be post-contractual, made after the contract is made and before or during the performance of the contract. The principles of contract law relating to misrepresentations have long been settled and for a period of time it was unclear how the liability for negligent misrepresentations arising from Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [Note 2: [1964] A.C. 465 (H.L.).] would operate in a contractual context. It is now clear that the rule of concurrence also applies to negligent misrepresentations, and if the elements necessary for tort liability for a negligent misrepresentation are established, the plaintiff may choose that remedy so long as it is not limited or negated by the terms of the contract. [Note 3: Queen v. Cognos Inc., [1993] 1 S.C.R. 87.]

The Supreme Court's strong commitment to the theory of concurrence of actions is further evidenced by its decision in BG Checo International Ltd. v. British Columbia Hydro & Power Authority. [Note 4: [1993] 1 S.C.R. 12.] The Court dealt with an unusual situation arising from a construction contract. The owner had assured the contractor that certain land had been cleared in order to facilitate the construction work. The Court found that the statement was not only a pre-contractual negligent misrepresentation but it was also an express term of the construction contract. It was argued by the defendant that an express term of the contract could give rise only to a claim for breach of contract, and the plaintiff had no right to formulate a claim in tort in order to take advantage of the tort rules relating to the assessment of damages. The Court rejected that argument, holding that the principle in Rafuse was not restricted to a concurrence between duties of care in negligence and duties of care arising from implied contractual obligations. It was open to the plaintiff to frame its action in negligence.