Laurentide Motels Ltd. v. Beauport (City)

Roberge J. first concluded that the person who set the fire, Gérard Tremblay, was liable for part of the damage suffered by the appellants. Tremblay did not file an appeal and so far as he is concerned the matter is now res judicata. The liability of the city of Beauport for the remainder of the damage, on the question of law before the Court at this stage, was considered by the trial judge in light of the by‑law adopted by the city to create a fire department. He asked himself the following question (at p. 193):

[TRANSLATION] Because it exercised this power, can we say that Beauport can be held liable when there is a fire?

He answered this question as follows (at pp. 193-94):

[TRANSLATION] The courts have always given a categorically negative answer to this question, but happily a reversal of this trend is now well under way; the Court does not intend to review these old cases; it will confine itself to certain cases that take the new approach.

The shift would appear to have been made by the Court of Appeal in Magasin Continental (Québec) Ltée v. Rhéaume et Ville de Québec (Q.C.A. 8797 et al., August 30, 1973, unreported).

After discussing this case, and in particular the obiter dictum of Brossard J.A., the trial judge cited the judgment in Lanouette‑Perreault and the case of Cité de Pont-Viau, supra, including in particular the following passage from the opinion of Lamer J.A., as he then was (at p. 84):

[TRANSLATION] Bearing in mind the reservations I have just made, when the chief and his firefighters responded to the alarm and took charge of the situation, at that point if not before, they assumed on the city's behalf, an obligation to carry out their functions en bon père de famille and any fault in the performance of that obligation that might be alleged against them will make the city liable for the damage caused by such fault.

The trial judge then referred to the following passage from R. v. Corporation of the City of Sault Ste. Marie, [1978] 2 S.C.R. 1299, where Dickson J., as he then was, said (at p. 1329):

When the defendant is a municipality, it is of no avail to it in law that it had no duty to pick up the garbage, s. 354(1)(76) of The Municipal Act, R.S.O. 1970, c. 284, merely providing that it "may" do so. The law is replete with instances where a person has no duty to act, but where he is subject to certain duties if he does act.

Roberge J. concluded (at p. 196):

[TRANSLATION] This Court concludes, based chiefly on this Gauthier Mfg. case, that a municipal corporation which has a firefighting service may be held liable when certain types of fault, lack of care, negligence or recklessness, which are not simply errors of judgment, are proven against the corporation or its employees in the course of their duties.

Vallerand, Nichols and Chouinard JJ.A., who filed separate opinions, concurred in the result for different reasons and reversed the Superior Court judgment.

The Court of Appeal judgment held essentially that the establishment of a firefighting service by a municipal corporation, a matter within the exercise of a discretionary power, is governed by public law, which imposes no obligation to maintain such a service, in the absence of legislation or a by‑law to that effect. Where the city of Beauport has undertaken no such obligation, as it submits is the case here, Vallerand and Nichols JJ.A. concluded there was no duty to act, and so no liability beyond the damage which the fire, left to itself, would have caused; in this they agree with the approach of Professor Archambault. Chouinard J.A. differed on this point: once a municipal corporation chose to exercise its discretion and to provide a firefighting service, [TRANSLATION] "it voluntarily created obligations for itself which it had to carry out so as not to cause damage to third parties by a lack of care, by the use of improper methods by the city or its employees" (p. 1015). He would have applied the rules in arts. 1053 et seq. C.C.L.C. in assessing the fault, concurring in this respect with Vallerand J.A., who stated in general terms (at p. 1005):

[TRANSLATION] To determine . . . "if he owes (a) duty to them" . . . we must leave the civil law and move to public law.

In other words, the actions taken by public bodies in this area are a matter for public law, not the civil law.

. . .

Note, however, that once the public law problem has been resolved, we must return to the fold immediately without stopping to consider the legal effects on liability at common law or under the statutory law of other jurisdictions.

Vallerand and Chouinard JJ.A. both found, however, that s. 442 of the Cities and Towns Act was a bar to the appellants' action in the instant case. Nichols J.A. concluded, after a carefully documented analysis of the origins of art. 356 C.C.L.C. and the principles of public law, that [TRANSLATION] "the liability of municipalities arising out of the operation of fire and water services must be governed by public law" (p. 991), because he said water and fire services do not establish [TRANSLATION] "individual relations" with other members of society. He rejected the application of Anns and City of Kamloops, supra, to Quebec, as he considered that those cases applied the rules of English private law. In his opinion, [TRANSLATION] "private law is exclusively a matter for the provincial legislature in Quebec" (p. 1002) and since the codification [TRANSLATION] "neither Quebec private law nor English private law can be applied: the first because it contravenes art. 356 C.C.L.C. and the second because it is precluded by the Quebec Act" (p. 997). In any case, public law as it stood at the time of codification [TRANSLATION] "did not hold a municipality liable merely for inaction" (p. 1002), he added, a conclusion which he thought was in any event similar to that of Quebec civil law, in which [TRANSLATION] "omission, inaction, passivity or failure to act are only a fault to the extent that there is a duty to act" (p. 997).

None of the judges of the Court of Appeal accepted the trial judge's findings of fact on the causal faults, hence the dismissal of the appellants' action.

It can thus be seen that one of the fundamental differences in law between the Court of Appeal and the Superior Court, as well as between Nichols and Vallerand JJ.A. and Chouinard J.A., rests on the premise that by choosing to exercise its discretionary power and establish a firefighting service, in the absence of legislation imposing such a duty and responsibility on it, the city of Beauport did not, in the opinion of the former, assume the duty of maintaining that service and was therefore not liable for failing to maintain it. In the latter's opinion the duty of maintenance existed merely because the service had been established. This would result in liability in the event of causal fault, although in this case liability was excluded by the enabling legislation, according to the Court of Appeal.

C)Public Law Respecting the Exercise of a Discretionary Power by a Public Body

The Quebec Act of 1774 sealed the fate of the two major legal systems that would govern the law applicable in Quebec: French civil law as it stood before 1760 with its subsequent amendments in Quebec for everything relating to property and civil rights, and the common law as it stood in England at that time, and as subsequently amended, for what related to public law. Section VIII stated:

. . . and that in all Matters of Controversy relative to Property and Civil Rights, Resort shall be had to the Laws of Canada, as the Rule for the Decision of the same . . . until they shall be varied or altered by any Ordinances that shall, from Time to Time, be passed in the said Province.

Section 92(13) of the Constitution Act, 1867 incorporates this rule:

92. In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes of Subject next hereinafter enumerated; that is to say, --

. . .

13. Property and Civil Rights in the Province.

Louis‑Philippe Pigeon said the following (Drafting and Interpreting Legislation (1988), at pp. 65‑66):

This is why, for instance, English law is the basis of municipal and school law, and of administrative law generally. Our Court of Appeal rendered a very important decision on this point: Langelier v. Giroux, 52 B.R. 113 (Que.).

. . .

The judgment lays down an extremely important principle: in matters of public law in the Province of Québec, the basic law is English law. Why? Because in keeping with the rule that general law is not derogated from beyond what is expressed, application of common law extends to all that is not formally excluded.

. . .

In everything not related to property and civil rights, then, common law is the fundamental law in the Province of Québec. Moreover, "property and civil rights" must be interpreted according to the meaning given the expression in an Act of the British Parliament, passed in 1774, since the words must not be interpreted according to civil law. . . Indeed, when distinctions are to be drawn between systems of law, those distinctions must be drawn in accordance with a determined system. And as the Supreme Court decided with respect to interpretation of the Constitution Act, 1867 -- R. v. National Trust Co., [1933] S.C.R. 670 (S.C.C.) -- the legal system under which those distinctions must be drawn is common law.

Before going any further it is perhaps best to clarify which public law is involved. Some writers have claimed to see in Nichols J.A.'s opinion an assertion that the applicable public law is that which existed at the time of the codification. Garant, loc. cit., at p. 266:

[TRANSLATION] The position of two judges of the Court of Appeal, especially Nichols J.A., that the liability of public corporations is governed by English public law at the time of the 1866 codification leads them to conclude that this public law is the common law as it stood in 1866, not as it has developed since that time, through the decisions of the Supreme Court of Canada or the courts of other provinces in cases arising in other provinces. Quebec common law would thus be different from other common law.

L'Heureux, loc. cit., 47 R. du B., at p. 167:

[TRANSLATION] Seeking to determine English public law as it stood at the time of codification, he (Nichols J.A.) concluded that that law "did not hold a municipality liable merely for inaction".

In my opinion, this is an incorrect interpretation of the reference made by Nichols J.A. to the Quebec Act and to English public law as it stood in England at the time of the codification. The statement by Nichols J.A. was made in the context of the application of Anns and City of Kamloops, supra, in Quebec. In his view, those cases are not binding in Quebec because they apply the private law of England, which the Quebec Act provides does not apply in Quebec. If Quebec private law is also not applicable, it is because according to his interpretation of art. 356 C.C.L.C., the solution of the dispute rests with public law, which at common law has remained the same as that existing at that time, since only the private law in this area has subsequently been amended by the common law. This in my opinion is the context in which we should read the following observations, the fine points of which appear to have escaped certain commentators (at p. 1002):

[TRANSLATION] 8. While the English courts, and after them the Supreme Court of Canada for the common law provinces, have changed the state of the law so that municipalities are henceforth subject to private law in cases involving the implementation of discretionary policies, private law is exclusively a matter for the provincial legislature in Quebec, as the field of private civil liability is included in the expression "property and civil rights" in the Quebec Act and in s. 92(13) of the Constitution Act, 1867 ;

9. Anns and Nielsen are therefore not applicable in Quebec; [Emphasis added.]

No writer nor court of law has ever defended such an argument, since the common law which applies in Canada in the area of public law, in criminal as in administrative law, in the absence of legislation excluding it, is the common law as subsequently amended by statute and case‑law. When Louis-Philippe Pigeon, op. cit., referred back to the common law as it stood in 1774, this was solely in order to make it clear that the expression "property and civil rights" in the Quebec Act must be given the meaning it had at that time (at p. 66):

In everything not related to property and civil rights, then, common law is the fundamental law in the Province of Québec. Moreover, "property and civil rights" must be interpreted according to the meaning given the expression in an Act of the British Parliament, passed in 1774, since the words must not be interpreted according to civil law.

These principles are well established. However, it is not sufficient to say that public bodies, such as municipal corporations, are governed by public law: the content and limits of that law must still be defined. In the grey area resulting from statutory silence, now being considered by this Court, if a municipal corporation has a discretionary power regarding firefighting, where is the rule and what is it? I have already indicated in outline the major distinctions that must be made. I shall therefore only deal here with the limited aspect affecting the specific question to be addressed.

1. East Suffolk Rivers Catchment Board v. Kent

Until recently it appeared that both doctrine and case law, in Quebec as in the common law jurisdictions, by application of public law, were unanimous in concluding that public corporations were not liable if acting in the exercise of their discretionary powers. It is not clear, however, that the necessary distinctions have always been made between liability arising from the failure of a public corporation to exercise a discretionary power and that arising from the exercise of that discretionary power and the manner in which it was exercised. Similarly, it will be noted that there is no distinction made as to whether express legislation is required in the area of implementing the policies of public bodies. The implied obligation of implementation following the exercise of a discretionary power does not appear to have been closely examined in the legal literature, nor do the courts seem to have dealt with it at any length. These are precisely the aspects which are under consideration here and are at the very heart of the debate.

Public law has its origin in the common law, and common‑law decisions must thus be examined to determine the state of public law in the area applicable in Canada.

The nature and scope of the rules of public law and case law governing the liability of municipalities are particularly important here, where the dividing line between public and private law is crucial. This task is made all the more difficult as, at least initially, the common law courts made no clear distinction between public and private law, which are both derived from the same source, the common law. However, to place public law in its true context with regard to the liability of public corporations, and municipal corporations in particular, we need only go back to East Suffolk Rivers Catchment Board v. Kent, supra. In that case, a breach occurred in a sea retaining wall owing to an exceptionally high tide. In the exercise of its statutory powers, the Board decided to repair the wall but did the work so inefficiently that the flooding continued for 178 days, causing serious damage to Mr. Kent's land. According to the evidence repairs done with reasonable skill could have been complete in 14 days. Mr. Kent sued the Board. The House of Lords dismissed the action, Lord Atkin dissenting, on the ground that "the Act imposed upon the appellants no duty of repairing the wall. It merely gave them the power of doing so" (p. 98). Lord Romer added (at p. 102):

Where a statutory authority is entrusted with a mere power it cannot be made liable for any damage sustained by a member of the public by reason of a failure to exercise that power. If in the exercise of their discretion they embark upon an execution of the power, the only duty they owe to any member of the public is not thereby to add to the damages that he would have suffered had they done nothing. So long as they exercise their discretion honestly, it is for them to determine the method by which and the time within which and the time during which the power shall be exercised; and they cannot be made liable, except to the extent that I have just mentioned, for any damage that would have been avoided had they exercised their discretion in a more reasonable way.

This restrictive interpretation of the liability of public bodies in the exercise of their discretionary powers was the interpretation accepted in Canada as well as Quebec until Anns, supra, in 1978. (Mainwaring v. Nanaimo, [1951] 4 D.L.R. 519 (B.C.C.A.); Miller & Brown Ltd. v. City of Vancouver (1966), 59 D.L.R. (2d) 640 (B.C.C.A.); Barratt v. Corporation of the District of North Vancouver, [1980] 2 S.C.R. 418; McCrea v. City of White Rock (1974), 56 D.L.R. (3d) 525 (B.C.C.A.); Seguin v. Town of Hawkesbury, [1955] O.R. 956 (C.A.); Martel v. City of Montreal, [1943] C.S. 290.)

2. Anns v. Merton London Borough Council

This case significantly altered the rule as stated in East Suffolk. The issue raised in Anns was one of the liability of the local authority responsible for approving the plans to build a block of maisonettes without subsequently ensuring that the plans were observed. The walls and floors of these buildings had serious construction defects directly related to failure to observe the officially approved plans: hence the action against the Council. In his judgment, Lord Wilberforce set forth the principles that should govern the law in this area in the common law provinces.

Anns is important in both private law and public law. In the area of public law, it overturns the restrictive interpretation given in East Suffolk to the exercise of discretionary powers by a public body. In private law, it applies the law of negligence to the facts of the case. As the aspects of public and private law are nearly always discussed together, Anns must be carefully examined to distinguish the one from the other. These two aspects were adopted together, as was required, in the common law provinces. For the purposes of the case at bar, however, developments in the law of negligence are not relevant since they fall strictly within private law. We are only concerned here with what relates to public law. Lord Wilberforce indicated the dividing line between public and private law when he wrote (at p. 754):

. . . the local authority is a public body, discharging functions under statute: its powers and duties are definable in terms of public not private law. The problem which this type of action creates, is to define the circumstances in which the law should impose, over and above, or perhaps alongside, these public law powers and duties, a duty in private law towards individuals such that they may sue for damages in a civil court.

It is perhaps unfortunate that there is some confusion arising out of the use of the word "duty" by Lord Wilberforce in two different contexts. In speaking of "powers and duties", he refers to those devolving under the enabling legislation. In this formulation, the powers and duties of a municipality must be defined in terms of public law. However, when he later uses the word "duty" it can only refer to private law, to the duty of care in the law of negligence, which he says may exist "over and above . . . the duties" imposed by public law. There is therefore nothing to prevent the application of the rules of civil liability over and above, and alongside, statutory duties. Thus, for example, public law might impose a statutory duty to inspect or maintain certain equipment. In addition to this statutory duty, there would be a duty to act with due care. In Quebec civil law terms, this would be expressed as a duty to act "en bon père de famille".

Lord Wilberforce also introduced the "policy/operational" concepts into the area of public law. Enabling legislation, such as the Cities and Towns Act or the Municipal Code of Quebec, may confer wide discretionary powers on municipalities, such as the power to establish a firefighting service. The "operational" area is what ensures that public policy‑making decisions, discretionary or otherwise, will be implemented. Lord Wilberforce goes on to say (at p. 754):

Although this distinction between the policy area and the operational area is convenient, and illuminating, it is probably a distinction of degree; many "operational" powers or duties have in them some element of "discretion". It can safely be said that the more "operational" a power or duty may be, the easier it is to superimpose upon it a common law duty of care.

In so doing, Lord Wilberforce removes all ambiguity: the duty of care is clearly a matter for private law, and in Quebec, private law is the civil law. What I think is most significant in this passage is the statement that independent civil liability can coexist regardless of whether the enabling statute imposes a duty or only confers a power. I consider that Anns settles the state of the common law so far as English public law is concerned, public law which is applicable to municipal corporations in Quebec as elsewhere in Canada. Only the private law aspect, the law of negligence, dealt with in Anns would be irrelevant or inapplicable in Quebec, where private law is within the domain of the civil law.

This case, which dates from 1984, has much in common with Anns, supra. In City of Kamloops, the plans for building a house were approved by the city subject to certain conditions regarding the depth of the foundations. The builder did not comply with these requirements and a stop work order was issued. As no other steps were taken by the city, construction continued despite the injunction. The subsequent purchaser sued the city, holding it responsible for the deficiencies and damage related directly to the defective foundations. Wilson J., speaking for the majority, discussed the principles formulated in Anns, supra. She referred to the public law/private law distinction, citing Lord Wilberforce (at pp. 8‑9):

Lord Wilberforce pointed out that the local authority is a public body whose powers and duties are definable in terms of public rather than private law. However, in some circumstances the law could impose over and above, or perhaps alongside, these public law powers and duties a private law duty towards individuals enabling them to sue the authority for damages in a civil suit.

She later reiterated the private law test of the law of negligence and applied it.

It is therefore possible to distinguish the public law/private law aspects both in Anns and in City of Kamloops, supra. In its public law aspect, Anns and after it City of Kamloops, which adopted it, departed from some of the immunities of public bodies that had existed since East Suffolk, supra. These immunities were based on the concepts of duties and powers. Instead, Anns made a distinction between policy decisions, whether discretionary or not, and the operational area, in which those policies are implemented, superimposing in both cases the existence of civil liability.

The public law/private law distinction in Anns and City of Kamloops is not easy to detect and this may be why the Quebec Court of Appeal had some difficulty determining whether these cases were applicable to Quebec, and to what extent. Nichols J.A. refused to apply them, as he felt this was an application of English private law, which is excluded by the Quebec Act. However, as I believe I have already shown, these two cases are only concerned with private law to the extent that they superimpose it on the powers or obligations created by public law. In the Quebec context, this is consistent with art. 356 C.C.L.C., which provides that private law is applicable to political corporations "in their relations, in certain respects, to individual members of society".

The law rarely stands still for very long. Since Anns, a certain line of authority has appeared in the common law in England which seems to be trying to limit the scope of Anns (Yuen Kun Yeu v. Attorney-General of Hong Kong, [1988] A.C. 175 (P.C.), and Curran v. Northern Ireland Co‑ownership Housing Association Ltd., [1987] 2 All E.R. 13 (H.L.)) However, a careful reading of these decisions shows that the aim is not to minimize the principle that a public corporation is liable but rather to limit the breadth of the principles of liability in private law (torts principles) developed by Lord Wilberforce in Anns.

Historically, at common law, no action for damages could lie without a form of action defining its extent. The concept of negligence developed much later. In modern law, negligence is no longer regarded as a distinct head: rather, "negligence is a basis of liability, rather than a single nominate tort" (Fleming, The Law of Torts (6th ed. 1983), at p. 98). As such, negligence may cover a very wide field and this is why the courts of law have developed techniques such as the "duty of care" to limit the scope of liability in certain cases "in consonance with current notions of policy" (Fleming, op. cit. at p. 99). Yuen Kun Yen, supra, is a good illustration of this. Investors in a company registered with the Commissioner of Deposit‑taking Companies in Hong Kong sued the Commissioner when the company went into liquidation and they lost the money they had invested. They alleged that the Commissioner was liable either because he had certified a company whose affairs were conducted fraudulently or because he had not ensured that it complied with certain regulations. The Privy Council dismissed the action. The case was reported under the heading of a negligence action, and decided on the basis of the rules of negligence. The principle that a public body could be found liable was not questioned, nor was the potential for a coexistence of a duty of care alongside statutory obligations. The Court held instead that there was no duty of care in the circumstances.

Similarly, in Curran, supra, Lord Bridge clearly established that the scope of Anns was limited only in its private law aspect, when he wrote (at p. 17):

My Lords, Anns v Merton London Borough may be said to represent the high‑water mark of a trend in the development of the law of negligence . . .

In 1985 the High Court of Australia (Sutherland Shire Council v. Heyman (1985), 60 A.L.R. 1) unanimously reversed the Court of Appeal, which had held a local authority liable for damage caused by the defective foundations of a house. Gibbs C.J. described Anns as "a fundamental principle of the law of negligence" (at pp. 11-12), but Mason J. stated the following general principle (at p. 27):

It is now well settled that a public authority may be subject to a common law duty of care when it exercises a statutory power or performs a statutory duty. The principle that when statutory powers are conferred they must be exercised with reasonable care, so that if those who exercise them could by reasonable precaution have prevented an injury which has been occasioned, and was likely to be occasioned, by their exercise, damages for negligence may be recovered [citations omitted] has been applied mainly to private Acts. However, it has been frequently applied in Australia to public authorities . . . [I]t has been generally accepted that, unless the statute manifests a contrary intention, a public authority which enters upon an exercise of statutory power may place itself in a relationship to members of the public which imports a common law duty to take care. [Emphasis added.]

It seems clear that this case applies only to the private law aspect of Anns and does not in any way limit the authority of Anns in its public law aspect; quite the contrary, especially if we read the following passage from the opinion of Mason J. (at p. 26):

When a statute sets up a public authority, the statute prescribes its functions so as to arm it with appropriate powers for the attainment of certain objects in the public interest. The authority is thereby given a capacity which it would otherwise lack, rather than a legal immunity in relation to what it does . . . In framing such a statute it is inconvenient to describe the intended activities of the authority in terms of a series of positive duties. It is preferable to express those activities as functions or powers so that the authority is free to make policy‑making decisions and discretionary judgments with a view to attaining the statutory objects . . . Viewed in this light statutory powers are not in general mere powers which the authority has an option to exercise or not according to its unfettered choice. They are powers conferred for the purpose of attaining the statutory objects . . . There is, accordingly, no reason why a public authority should not be subject to a common law duty of care in appropriate circumstances . . .

In his review of the Commonwealth decisions following Anns, Professor Stephen Todd ("The Negligence Liability of Public Authorities: Divergence in the Common Law" (1986), 102 L.Q.R. 370) makes certain relevant observations in analysing the public law/private law aspects in Anns and City of Kamloops, supra, at pp. 396‑97:

Where, however, the local authority acts pursuant to a statutory power, it is not the statute which is the source of any duty. The point is that the authority may be in a position where a duty arises at common law. The statute provides the authority or reason for acting but no more than that. The source of the duty is in familiar common law principles of foreseeability, proximity, reliance and the like. Any supposed purpose of the statute should not debar recovery of damage which is of a foreseeable kind and is not otherwise irrecoverable for some good reason of policy.

It is interesting to note that the American case law is moving in the same direction, as indicated in a recent judgment of the United States Supreme Court (Berkovitz by Berkovitz v. United States, 108 S. Ct. 1954 (1988)) in which Marshall J., speaking for the unanimous Court, writes (at p. 1964):

In addition, if the policies and programs formulated by the Bureau allow room for implementing officials to make independent policy judgments, the discretionary function exception protects the acts taken by those officials in the exercise of this discretion. Cf. id., at p. 820, 104 S.Ct., at pp. 2767‑2768 (holding that discretionary function exception barred claim that employees charged with executing the FAA's spot‑checking program make negligent policy judgments respecting the proper inspection of airplanes). The discretionary function exception, however, does not apply if the acts complained of do not involve the permissible exercise of policy discretion. Thus, if the Bureau's policy leaves no room for an official to exercise policy judgment in performing a given act, or if the act simply does not involve the exercise of such judgment, the discretionary function exception does not bar a claim that the act was negligent or wrongful. Cf. Indian Towing Co. v. United States, 350 U.S., at p. 69, 76 St.Ct., at pp. 126‑127 (holding that a negligent failure to maintain a lighthouse in good working order subjected Government to suit under the FTCA even though the initial decision to undertake and maintain lighthouse service was a discretionary policy judgment). [Emphasis added.]