Date: Thu, 15 Feb 2007 12:43:45 -0500

From: Neil Guthrie

Subject: Waiver of tort: Heward v. Eli Lilly & Co.

It's not so much the judgment itself that I object to (Cullity does a pretty good job of laying out the alternatives, without deciding in favour of any of them -- as is appropriate on a certification motion) as the unlikelihood that the substantive issues will be resolved at an actual trial on the merits or on appeal of certification. In the mean time, plaintiffs can make claims based on waiver of tort without much risk, and defendants (my clients, typically) have no guidance on the viability of those claims.

Neil

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-----Original Message-----
From: Lionel Smith
Sent: Thursday, February 15, 2007 12:20 PM
Subject: ODG: Waiver of tort: Heward v. Eli Lilly & Co.

This case is now on canlii.

At [25] we find this:

"In attempting to formulate coherent principles that would explain and rationalise past decisions to accommodate the relatively recent recognition of a general law of restitution, there is no doubt that the learned commentators have greatly contributed to, and will quite properly continue to influence, its development. However, as the reasons of Epstein J. indicate, their views have not been uniform despite the enviable degree of confidence with which they have sometimes been asserted."

But it is not only the academics who get sideswiped:

[14]: "The case for certifying the proceeding was very strongly, and comprehensibly, contested by counsel for the defendants on the basis of the evidence and the authorities. They left no stone unturned and, in my opinion, turned over quite a few that were extraneous to the case presented on behalf of the plaintiffs."

Overall there is a good review of different road maps of restitution but because this is only a certification application, the judge does not need to pick one, only deciding that it is arguable that a claim in negligence might lead to a gain-based remedy, and [38] that "it is not plain and obvious that a claim based on waiver of tort must satisfy the three-part test for unjust enrichment". While he concludes that it is arguable that unjust enrichment can be established without showing any deprivation, he decides that in a case where the only facts pleaded involve negligence, there is no room for a separate claim in unjust enrichment.

Unfortunately these class actions rarely go trial in Canada -- they tend to settle after certification -- so we may never get actual decisions on the points that he decided were arguable.

Neil, what did you find objectionable in the judgment? Is it that you agreed with the BCSC in Reid, that there can be no gain-based claim for negligence?

That may well be right, but Reid seems much less thorough than this judgment; Gerow J simply assumed there that all gain-based claims are claims in unjust enrichment (which in my view is inconsistent with Soulos v Korkontzilas). In the earlier discussion on the RDG of Cullity J's other judgments, some people read him as saying that waiver of tort is an independent cause of action; I don't think this new judgment is open to that criticism. He is not deciding whether waiver of tort is (a) a gain-based claim for a wrong or (b) part of unjust enrichment, but I don't think he can be read as saying that it is neither one.

I do think that in [64] Cullity J. may have misunderstood Peter Birks' position.

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