Torts and negligence

A tort is a civil wrong, other than a breach of contract, for which the law gives a remedy, usually damages. Contract duties arise from agreement; tort duties are imposed by law on everyone. A business can commit torts through its employees and products, and it can be the victim of torts committed by competitors, customers and others. Tort claims are among the largest legal risks most businesses face: a single serious injury on business premises or caused by a delivery vehicle can produce a claim worth millions. This lesson covers intentional torts, the tort of negligence, liability for premises, professional negligence and vicarious liability. Lesson 7 covers torts aimed at business interests and product liability.

Intentional torts

Intentional torts involve deliberate conduct, although the defendant need not intend harm. Several arise in everyday business. Battery is intentional, harmful or offensive physical contact without consent; assault is causing someone to fear imminent contact. False imprisonment is intentionally confining a person without lawful authority, which is a real risk when store staff detain suspected shoplifters. Trespass to land is entering or placing things on land without permission. Conversion is wrongfully dealing with another's goods, such as refusing to return them or selling them. Nuisance is an unreasonable interference with a neighbour's use and enjoyment of land, such as noise, odours, vibration or dust from a business operation.

Retail staff in Canada may arrest a person they find committing a criminal offence on or in relation to the property, or within a reasonable time afterward if they believe on reasonable grounds that the person committed it, under section 494 of the Criminal Code, but they must then promptly hand the person to the police and use no more force than necessary. A mistaken or unreasonable detention exposes the store to damages for false imprisonment and possibly assault, and damage to reputation can far exceed the value of the goods. Many retailers therefore train staff to observe and report rather than detain.

The tort of negligence

Negligence is the most important tort for business. It covers careless, rather than deliberate, conduct that causes harm. The modern law of negligence grew from Donoghue v. Stevenson (1932), in which a woman became ill after drinking ginger beer from an opaque bottle that allegedly contained the remains of a decomposed snail. She had no contract with the manufacturer, because her friend bought the drink. The House of Lords held that the manufacturer owed her a duty of care, because Lord Atkin's neighbour principle requires people to take reasonable care to avoid acts or omissions that they can reasonably foresee would be likely to injure persons so closely and directly affected that they ought to have them in contemplation.

A plaintiff in a Canadian negligence action must prove five elements on a balance of probabilities: the defendant owed a duty of care, the defendant breached the standard of care, the plaintiff suffered damage, the breach caused the damage in fact, and the damage was not too remote. The Supreme Court restated the framework in Mustapha v. Culligan of Canada Ltd., 2008 SCC 27.

Duty of care. For recognized relationships, such as drivers and other road users, manufacturers and consumers, or occupiers and visitors, a duty is established. For new situations, Canadian courts apply the Anns/Cooper test from Cooper v. Hobart, 2001 SCC 79: was the harm a reasonably foreseeable consequence of the defendant's conduct, and was there sufficient proximity between the parties that it would be fair and just to impose a duty? If both are shown, a prima facie duty exists unless residual policy considerations, such as the risk of indeterminate liability, negate it.

Standard of care. The defendant must act as a reasonable person would in the circumstances. Courts consider the likelihood of harm, the severity of potential harm, the cost of precautions and the social value of the activity. Industry customs and regulatory standards are evidence of reasonable care but not conclusive: complying with a safety regulation does not automatically show the defendant was careful, and breaching a statute is evidence of negligence. Professionals are held to the standard of a reasonably competent member of the profession, and people who hold themselves out as having special skills must meet that higher standard.

One way to think about the standard is the Hand formula, from Judge Learned Hand's opinion in United States v. Carroll Towing Co. (1947): a defendant is negligent if the burden of a precaution (B) is less than the probability of the harm (P) multiplied by the gravity of the loss (L). Canadian and American courts do not apply the formula mechanically, and it is hard to quantify human injury, but it captures how courts weigh risk against the cost of avoiding it, and it is a useful tool for business risk decisions.

Causation. The plaintiff must usually show that the injury would not have occurred but for the defendant's negligence (Clements v. Clements, 2012 SCC 32). Where several defendants each may have caused the harm and the but-for test cannot identify which, a material contribution to risk approach may apply in rare cases. Remoteness. Even where the breach caused the harm, damages are recoverable only if the type of harm was reasonably foreseeable. In Mustapha, Mr. Mustapha saw dead flies in a bottle of water he was about to install in his home and developed a serious psychiatric illness. The Supreme Court held that the supplier breached its duty but that psychiatric injury of this severity was not reasonably foreseeable in a person of ordinary fortitude, so the damage was too remote.

Defences to negligence

Contributory negligence is the most common defence. If the plaintiff failed to take reasonable care for their own safety, such as not wearing a seat belt or ignoring a warning sign, provincial apportionment statutes, such as Ontario's Negligence Act, reduce damages in proportion to the plaintiff's share of fault. Where several defendants are at fault, they are generally jointly and severally liable to the plaintiff, meaning the plaintiff can recover all its damages from any one of them, and the defendants then share the burden among themselves by contribution. Voluntary assumption of risk (volenti non fit injuria) is a complete defence, but courts apply it narrowly: the plaintiff must have agreed, expressly or by clear implication, to accept both the physical and the legal risk. Waivers signed by participants in risky activities can be effective if they are clear, brought to the participant's attention and cover the negligence alleged, though consumer protection law limits them in some provinces.

Occupiers' liability

Occupiers, the people or businesses with physical control over premises, owe duties to those who enter. In most common law provinces, statutes such as Ontario's Occupiers' Liability Act, the British Columbia Occupiers Liability Act and the Alberta Occupiers' Liability Act replace older common law categories with a general duty to take such care as in all the circumstances is reasonable to see that persons entering the premises, and their property, are reasonably safe. The duty can be modified by notice or agreement in some cases, and lower duties apply to trespassers and to people engaged in certain recreational activities. Both a landlord and a tenant can be occupiers, and contracts such as leases and snow-clearing agreements often allocate responsibility. A business with customers on its premises must inspect regularly, fix hazards promptly, warn of hazards it cannot fix and keep records that prove its system of inspection.

Professional negligence and negligent misstatement

Professionals such as accountants, engineers, lawyers, architects and financial advisors owe their clients duties in both contract and tort. They can also be liable to third parties for negligent misstatement, careless statements that cause purely economic loss, following the English case Hedley Byrne & Co. v. Heller & Partners (1964). In Queen v. Cognos Inc. (1993), the Supreme Court held an employer liable for negligently misrepresenting the nature and security of a job during an interview. The court set out five requirements: a duty of care based on a special relationship, an untrue, inaccurate or misleading representation, made negligently, reasonable reliance by the plaintiff and resulting damage. To prevent indeterminate liability, courts limit the duty to cases where the defendant should reasonably foresee that the plaintiff will rely on the statement for a particular purpose. In Hercules Managements Ltd. v. Ernst & Young (1997), auditors who prepared statutory audit reports were held not liable to shareholders who used them to make investment decisions, because the reports were prepared to help shareholders oversee management as a group, not to guide individual investment. In Deloitte & Touche v. Livent Inc., 2017 SCC 63, the court applied these principles and held auditors liable to the audited company for part of its losses.

Vicarious liability

An employer is vicariously liable for torts committed by employees in the course of their employment, even if the employer itself was not at fault. The rationale is that the employer created the risk, profits from the enterprise and is best placed to spread losses through insurance and prices. In Bazley v. Curry (1999), the Supreme Court held that an employer is liable where there is a strong connection between the risk the employer's enterprise created or enhanced and the wrong that occurred, including some intentional wrongs. Employers are not generally vicariously liable for independent contractors, which is one reason the employee-or-contractor question (lesson 10) matters. An employer may also be directly liable for its own negligence, for example in hiring, training or supervising staff.

Damages in tort

Tort damages aim to restore the plaintiff to the position it would have been in had the tort not occurred. Pecuniary damages cover measurable losses: past and future lost income, medical and care costs and property damage. Non-pecuniary damages compensate for pain, suffering and loss of enjoyment of life. In a 1978 trilogy of cases, beginning with Andrews v. Grand & Toy Alberta Ltd., the Supreme Court capped non-pecuniary damages for personal injury at $100,000 in 1978 dollars, adjusted for inflation; the cap was a little under $470,000 in 2025. Punitive damages are rare and reserved for high-handed, malicious conduct. Provincial automobile insurance schemes significantly modify these rules for road accidents, with no-fault benefits and thresholds and deductibles on pain and suffering claims in several provinces, and pure no-fault schemes in Quebec and, since 2021, British Columbia. Workers' compensation statutes generally bar injured workers from suing their employer or co-workers, in exchange for no-fault benefits.