Babstock et al. v. Atlantic Lottery Corp. Inc., (2014) 356 Nfld. & P.E.I.R. 293 (NLTD(G))

• Judge: Faour, J.
• Court: Supreme Court of Newfoundland and Labrador (Canada)
• Case Date: October 01, 2014
• Jurisdiction: Newfoundland and Labrador
• Citations: (2014), 356 Nfld. & P.E.I.R. 293 (NLTD(G))

Babstock v. Atlantic Lottery (2014), 356 Nfld. & P.E.I.R. 293 (NLTD(G));

    1108 A.P.R. 293

MLB headnote and full text

Temp. Cite: [2014] Nfld. & P.E.I.R. TBEd. OC.009

Douglas Babstock and Fred Small (plaintiff) v. Atlantic Lottery Corporation Inc./Société de loteries de l'Atlantique (defendant) and VLC, Inc. (first third party), IGT-Canada Inc. (second third party), International Game Technology (third third party), Spielo International Canada ULC (fourth third party), GTECH Corporation (fifth third party), Tech Link International Entertainment Limited (sixth third party) and HI-TECH Gaming.com Ltd. (seventh third party)

(201201G2257; 2014 NLTD(G) 114)

Indexed As: Babstock et al. v. Atlantic Lottery Corp. Inc.

Newfoundland and Labrador Supreme Court

Trial Division (General)

Faour, J.

October 1, 2014.

Summary:

The two individual plaintiffs sought to bring a class action against Atlantic Lottery Corp. (defendant), on behalf of a class of persons harmed by video lottery terminals (VLTs). They alleged a number of different causes of action. The defendant joined a number of third party suppliers. The defendant applied to strike significant portions of the statement of claim as disclosing no cause of action. The third parties filed briefs supporting the position of the defendant.

The Newfoundland and Labrador Supreme Court, Trial Division (General), dismissed the application to strike.

Actions - Topic 1581

Cause of action - Contracts - General - [See eighth and ninth Practice - Topic 2230 ].

Actions - Topic 1622

Cause of action - Torts - What constitutes - [See tenth Practice - Topic 2230 ].

Contracts - Topic 9641

Contracts for work, materials and services - Implied terms - General - [See seventh Practice - Topic 2230 ].

Courts - Topic 167

Reception of English law - Newfoundland - [See sixth Practice - Topic 2230 ].

Criminal Law - Topic 996

Gaming and betting - Betting, pooling and book-making - Games of chance (incl. three-card monte) - [See first Practice - Topic 2230 ].

Practice - Topic 221

Persons who can sue and be sued - Individuals and corporations - Status or standing - Public interest standing - The plaintiffs sued Atlantic Lottery Corp. (defendant) on behalf of persons harmed by video lottery terminals (VLTs) - The plaintiffs pleaded that VLTs were prohibited by the Criminal Code, entitling them to damages - The defendant applied to strike the pleading because the plaintiffs lacked standing to raise this question - The Newfoundland and Labrador Supreme Court, Trial Division (General), refused to strike - Where public interest standing was raised on a striking application, consideration of the issue could be deferred to be decided on a full and complete examination of the issue - Here, however, the plaintiffs alleged that the Code breach affected private rights - It was not plain and obvious that they could not succeed - See paragraphs 33 to 42.

Practice - Topic 2200

Pleadings - Striking out pleadings - General principles - The Newfoundland and Labrador Supreme Court, Trial Division (General), discussed the test to be applied on application to strike pleadings - See paragraphs 12 to 17.

Practice - Topic 2226

Pleadings - Striking out pleadings - Grounds - General - [See Practice - Topic 221 ].

Practice - Topic 2230

Pleadings - Striking out pleadings - General - Failure to disclose a cause of action - The plaintiffs sued Atlantic Lottery Corp. (defendant) on behalf of persons harmed by video lottery terminals (VLTs) - The plaintiffs pleaded that VLTs were akin to "three-card monte", which was prohibited by the Criminal Code, entitling them to damages - The defendant applied to strike the pleading, arguing that the pleading disclosed no reasonable cause of action because VLTs used video screens not cards - The Newfoundland and Labrador Supreme Court, Trial Division (General), refused to strike - The court held that the fact that one game was electronic and the other used physical cards was not determinative given the broad definition of "three-card monte" in the Code - At this stage it was not plain and obvious that the claim could not succeed - See paragraphs 18 to 32 and 42.

Practice - Topic 2230

Pleadings - Striking out pleadings - General - Failure to disclose a cause of action - The plaintiffs sued Atlantic Lottery Corp. (defendant) on behalf of persons harmed by video lottery terminals (VLTs) - The plaintiffs pleaded that the defendant made representations to the public about VLTs which were contrary to s. 52 of the Competition Act (Can.), thereby entitling them to damages (s. 36) - The defendant applied to strike the pleading, arguing that as an agent of the Crown the Act was inapplicable (s. 2.1) - The Newfoundland and Labrador Supreme Court, Trial Division (General), refused to strike - It was impossible at this stage for the court to make a blanket determination that because the defendant was an agent of the Crown it was not subject to the Act - It was not plain and obvious that the plaintiff could not succeed - See paragraphs 43 to 51, 72 and 73.

Practice - Topic 2230

Pleadings - Striking out pleadings - General - Failure to disclose a cause of action - The plaintiffs sued Atlantic Lottery Corp. (defendant) on behalf of persons harmed by video lottery terminals (VLTs) - The plaintiffs pleaded that the defendant made representations about VLTs contrary to s. 52 of the Competition Act (Can.), thereby entitling them to damages - The defendant applied to strike the pleading, arguing that it had a statutory monopoly on VLTs, and therefore the Competition Act could not apply as it was not in competition with any other persons - The Newfoundland and Labrador Supreme Court, Trial Division (General), refused to strike - Evidence was required to determine this issue and it was not a basis for striking out the impugned pleadings - It was not plain and obvious that the plaintiffs could not succeed - See paragraphs 43 to 45, 52 to 57, 72 and 73.

Practice - Topic 2230

Pleadings - Striking out pleadings - General - Failure to disclose a cause of action - The plaintiffs sued Atlantic Lottery Corp. (defendant) on behalf of persons harmed by video lottery terminals (VLTs) - The plaintiffs pleaded that the defendant violated the Competition Act, thereby entitling them to damages (s. 36) - The defendant applied to strike the pleading, arguing that the Competition Act was a complete code and the remedies under it were limited to proof of actual loss - Therefore, the plaintiffs' claim for unjust enrichment and injunctive relief was not available under the Act - The Newfoundland and Labrador Supreme Court, Trial Division (General), refused to strike - It was not plain and obvious that this element of the cause of action should be struck out at this stage - See paragraphs 43 to 45, 58 to 66, 72 and 73.

Practice - Topic 2230

Pleadings - Striking out pleadings - General - Failure to disclose a cause of action - The plaintiffs sued Atlantic Lottery Corp. (defendant) on behalf of persons harmed by video lottery terminals (VLTs) - The plaintiffs pleaded that the defendant made representations to the public about VLTs which were contrary to s. 52 of the Competition Act (Can.), thereby entitling them to damages (s. 36) - The defendant applied to strike the pleading, arguing that as a regulated monopoly, the defendant's activities were legally authorized, and as such were not subject to scrutiny - That is, the defendant argued that the federal statute could not override the provisions of a lawful regulatory scheme established by the province - The Newfoundland and Labrador Supreme Court, Trial Division (General), refused to strike - It was not plain and obvious that the plaintiffs could not succeed - See paragraphs 43 to 45, 67 to 72 and 73.

Practice - Topic 2230

Pleadings - Striking out pleadings - General - Failure to disclose a cause of action - The plaintiffs sued Atlantic Lottery Corp. (defendant) on behalf of persons harmed by video lottery terminals (VLTs), claiming that the Statute of Anne, 1710, allowed a civil suit to recover gaming losses - The defendants applied to strike the pleading, claiming that the Statute was not part of the law of the province, and even if it was, it was not binding on the Crown - The Newfoundland and Labrador Supreme Court, Trial Division (General), refused to strike - The Statute was received into the law of the province on July 26, 1832, the date of establishment of the local legislature - There was no express provision cited that replaced or repealed the Statute - The court was not prepared to state, at this stage, that the Act did not apply to the Crown - Therefore, it was not plain and obvious that the plaintiffs' claim under the Statute could not succeed - See paragraphs 74 to 95.

Practice - Topic 2230

Pleadings - Striking out pleadings - General - Failure to disclose a cause of action - The plaintiffs sued Atlantic Lottery Corp. (defendant) on behalf of persons harmed by video lottery terminals (VLTs) - The plaintiffs pleaded that there was a contract between the parties based on an offer to the public, and the acceptance of that offer by players, and that the contract was breached - Since there was no written agreement, the plaintiffs asked the court to imply certain terms (warranties) sufficient to ground a cause of action - The defendants applied to strike the plaintiffs' pleading - The Newfoundland and Labrador Supreme Court, Trial Division (General), refused to strike - The court accepted that terms could be implied and enforced in a contract for the use of VLTs as gambling entertainment - However, the plaintiffs would have to make out this aspect of their case at trial - See paragraphs 98 to 105.

Practice - Topic 2230

Pleadings - Striking out pleadings - General - Failure to disclose a cause of action - The plaintiffs sued Atlantic Lottery Corp. (defendant) on behalf of persons harmed by video lottery terminals (VLTs) - The plaintiffs pleaded that there was a contract between the parties based on an offer to the public, and the acceptance of that offer by players, and that the contract was breached - The defendant applied to strike the pleading, arguing that since the defendant's duties arose under a regulatory scheme, they could not be said to create private obligations to the plaintiffs or any member of the public - The Newfoundland and Labrador Supreme Court, Trial Division (General), refused to strike - The court could not say that it was plain and obvious that the plaintiffs' argument would fail at trial - See paragraphs 106 to 115.

Practice - Topic 2230

Pleadings - Striking out pleadings - General - Failure to disclose a cause of action - The plaintiffs sought to pursue a class action for breach of contract against Atlantic Lottery Corp. (defendant) on behalf of persons harmed by video lottery terminals (VLTs) - The defendant applied to strike the pleading relating to breach of contract, arguing that since the plaintiffs denied any personal loss, there was no cause of action - The plaintiffs argued that a claim for restitutionary damages was sufficient to ground a claim in contract - The Newfoundland and Labrador Supreme Court, Trial Division (General), refused to strike - The court was not persuaded that restitutionary damages were not sufficient for the purposes of maintaining this cause of action - It could not be said that it was plain and obvious that the plaintiffs' arguments would not succeed - See paragraphs 116 to 120.

Practice - Topic 2230

Pleadings - Striking out pleadings - General - Failure to disclose a cause of action - The plaintiffs sued Atlantic Lottery Corp. (defendant) on behalf of persons harmed by video lottery terminals (VLTs) - The plaintiffs alleged that the defendant was negligent by its failure to warn of the inherent dangers of addiction by use of the machines - The defendant applied to strike the pleading, raising the immunity of a regulator, the "regulated industries defence" and the failure of the plaintiffs to claim any pecuniary loss as part of the tort action - The Newfoundland and Labrador Supreme Court, Trial Division (General), held that the plaintiffs had made allegations which, if proven at trial, could form the basis of an action in negligence - After considering the issues raised by the defendant, the court could not say at this stage that it was plain and obvious that the plaintiffs could not succeed - See paragraphs 125 to 158.

Practice - Topic 2230

Pleadings - Striking out pleadings - General - Failure to disclose a cause of action - The plaintiffs sued Atlantic Lottery Corp. (defendant) on behalf of persons harmed by video lottery terminals (VLTs), claiming damages for unjust enrichment - The defendant applied to strike the pleading, arguing that there was no wrongdoing on its part (i.e., there was no breach of the Criminal Code, Statute of Anne, 1710, the Competition Act, or contract or tort law) - The Newfoundland and Labrador Supreme Court, Trial Division (General), refused to strike - The court was unable to say at this stage of the proceeding that the allegations made by the plaintiffs could not prevail - See paragraphs 159 to 185.

Practice - Topic 2230

Pleadings - Striking out pleadings - General - Failure to disclose a cause of action - The plaintiffs sought to pursue a class action against Atlantic Lottery Corp. (defendant) on behalf of persons harmed by video lottery terminals (VLTs) - The plaintiffs pleaded the doctrine of "waiver of tort" - The defendant applied to strike the pleading, arguing waiver of tort was merely an election of remedies not a cause of action - The Newfoundland and Labrador Supreme Court, Trial Division (General), held that the question raised by the defendant remained open - However, whichever interpretation of waiver of tort was finally determined, the plaintiffs had to allege, and prove at trial, some wrongdoing on the part of the defendant - Given the uncertainty in the law, the court was unable to determine that the plaintiffs could not prevail at trial on this alleged cause of action - See paragraphs 186 to 205.

Practice - Topic 2230

Pleadings - Striking out pleadings - General - Failure to disclose a cause of action - [See Practice - Topic 2200 ].

Restitution - Topic 124

Unjust enrichment - Remedies - Damages - [See eleventh Practice - Topic 2230 ].

Restitution - Topic 128

Unjust enrichment - Remedies - Waiver of tort - The Newfoundland and Labrador Supreme Court, Trial Division (General), explained that as a cause of action, waiver of tort was an equitable doctrine which could permit a restitutionary remedy where there was wrongdoing without proof of loss - The court discussed the doctrine and held that the issue of whether waiver of tort was actually a cause of action or an election of remedies was still an open one - See paragraphs 189 to 205.

Restitution - Topic 128

Unjust enrichment - Remedies - Waiver of tort - [See twelfth Practice - Topic 2230 ].

Torts - Topic 9167

Duty of care - Particular relationships - Claims against public officials, authorities or boards - Regulators - [See tenth Practice - Topic 2230 ].

Trade Regulation - Topic 506

Competition - General - Civil remedy (Competition Act, s. 36) - [See fourth Practice - Topic 2230 ].

Trade Regulation - Topic 508

Competition - General - Application of legislation - Provincially regulated undertakings - [See second, third, fourth and fifth Practice - Topic 2230 ].

Cases Noticed:

Piercey Estate et al. v. Atlantic Lottery Corp. (2008), 282 Nfld. & P.E.I.R. 217; 868 A.P.R. 217; 2008 NLTD 202, refd to. [para. 5].

Rice v. Atlantic Lottery Corp. (2012), 321 Nfld. & P.E.I.R. 122; 996 A.P.R. 122; 2012 NLTD(G) 58, refd to. [para. 6].

Hopkins v. Kay, 2014 ONSC 321, refd to. [para. 13].

Hunt v. T & N plc et al., [1990] 2 S.C.R. 959; 117 N.R. 321, refd to. [para. 14].

Hunt v. Carey Canada Inc. - see Hunt v. T & N plc et al.

R. v. Andrews, [1976] 1 W.W.R. 376; 1975 CarswellSask 80 (C.A.), refd to. [para. 28].

Finlay v. Canada, [1986] 2 S.C.R. 607; 71 N.R. 338; 1986 CarswellNat 104, refd to. [para. 34].

Bodnar et al. v. Cash Store Inc. et al. (2006), 227 B.C.A.C. 109; 374 W.A.C. 109; 2006 BCCA 260, refd to. [para. 37].

Carota v. Jamieson and Lessard, [1977] 1 F.C. 19; 13 N.R. 390; 1976 CarswellNat 65 (T.D.), refd to. [para. 38].

947101 Ontario Ltd. v. Barrhaven Town Centre Inc. (1995), 121 D.L.R.(4th) 748; 1995 CarswellOnt 322 (C.J.), refd to. [para. 60].

Garford Pty. Ltd. v. Dywidag Systems International Canada Ltd. et al. (2010), 375 F.T.R. 57; 2010 FC 997, dist. [para. 62].

Jabour v. Law Society of British Columbia et al., [1982] 2 S.C.R. 307; 43 N.R. 451, refd to. [para. 67].

Buyer's Furniture Ltd. v. Barney's Sales and Transport Ltd. and Downey (1983), 43 Nfld. & P.E.I.R. 158; 127 A.P.R. 158; 1983 CarswellNfld 68 (C.A.), refd to. [para. 80].

Velensky v. Hache (1981), 33 N.B.R.(2d) 700; 80 A.P.R. 700; 121 D.L.R.(3d) 747; 1981 CarswellNB 293 (Q.B.), refd to. [para. 81].

Yonge v. Blaikie (1822), 2 Nfld. L.R. 277, refd to. [para. 82].

Sullivan v. McGillis, [1949] S.C.R. 201; 1949 CarswellOnt 112, refd to. [para. 88].

Doucette v. Eastern Regional Integrated Health Authority (2007), 271 Nfld. & P.E.I.R. 39; 826 A.P.R. 39; 2007 NLTD 138, refd to. [para. 100].

Rideout v. Health Labrador Corp., [2005] Nfld. & P.E.I.R. Uned. 54; 2005 NLTD 116, refd to. [para. 101].

Griffin v. Dell Canada Inc., [2009] O.T.C. Uned. 249; 72 C.P.C.(6th) 158; 2009 CarswellOnt 560 (Sup. Ct.), refd to. [para. 102].

Neuzen v. Korn, [1995] 3 S.C.R. 674; 188 N.R. 161; 64 B.C.A.C. 241; 105 W.A.C. 241; 1995 CarswellBC 593, refd to. [para. 103].

Allan v. Bushnell T.V. Co. et al., [1969] 1 O.R. 107; 1968 CarswellOnt 282 (H.C.), refd to. [para. 103].

de la Giroday et al. v. Brough (1997), 92 B.C.A.C. 81; 150 W.A.C. 81; 33 B.C.L.R.(3d) 171; 1997 CarswellBC 1132 (C.A.), refd to. [para. 103].

Collette v. Great Pacific Management Co. et al. (2004), 195 B.C.A.C. 79; 319 W.A.C. 79; 2004 BCCA 110, refd to. [para. 103].

McKinlay Motors Ltd. v. Honda Canada Inc. (1989), 80 Nfld. & P.E.I.R. 200; 249 A.P.R. 200; 1989 CarswellNfld 9 (T.D.), refd to. [para. 103].

Health Care Developers Inc. v. Newfoundland (1996), 141 Nfld. & P.E.I.R. 34; 443 A.P.R. 34; 1996 CarswellNfld 352 (C.A.), refd to. [para. 104].

Glovertown Cable TV Ltd. v. Canadian Satellite Communications Inc. (1998), 159 Nfld. & P.E.I.R. 45; 492 A.P.R. 45; 1998 CarswellNfld 4 (T.D.), refd to. [para. 107].

Cassano et al. v. Toronto-Dominion Bank (2007), 230 O.A.C. 224; 2007 ONCA 781, refd to. [para. 118].

Donoghue v. Stevenson, [1932] A.C. 562 (H.L.), refd to. [para. 125].

Hollis v. Dow Corning Corp. et al., [1995] 4 S.C.R. 634; 190 N.R. 241; 67 B.C.A.C. 1; 111 W.A.C. 1; 1995 CarswellBC 967, refd to. [para. 125].

Hollis v. Birch - see Hollis v. Dow Corning Corp. et al.

Rivtow Marine Ltd. v. Washington Iron Works, [1974] S.C.R. 1189; 1973 CarswellBC 191, refd to. [para. 126].

Moreira et al. v. Ontario Lottery and Gaming Corp. et al. (2013), 302 O.A.C. 244; 2013 ONCA 121, dist. [para. 130].

Cooper v. Registrar of Mortgage Brokers (B.C.) et al., [2001] 3 S.C.R. 537; 277 N.R. 113; 160 B.C.A.C. 268; 261 W.A.C. 268; 2001 SCC 79, dist. [para. 131].

Cooper v. Hobart - see Cooper v. Registrar of Mortgage Brokers (B.C.) et al.

Burrell v. Metropolitan Entertainment Group et al. (2011), 309 N.S.R.(2d) 375; 979 A.P.R. 375; 2011 NSCA 108, dist. [para. 133].

Edwards et al. v. Law Society of Upper Canada et al., [2001] 3 S.C.R. 562; 277 N.R. 145; 153 O.A.C. 388; 2001 SCC 80, dist. [para. 135].

Attis et al. v. Canada (Minister of Health) et al. (2008), 254 O.A.C. 91; 2008 ONCA 660, dist. [para. 135].

Williams v. Canada (Attorney General) et al. (2009), 249 O.A.C. 150; 2009 ONCA 378, dist. [para. 135].

Wellington et al. v. Ontario et al. (2011), 277 O.A.C. 318; 2011 ONCA 274, dist. [para. 135].

Kakavas v. Crown Melbourne Ltd., [2013] HCA 25, dist. [para. 137].

Walsh v. Atlantic Lottery Corp. et al. (2013), 338 N.S.R.(2d) 248; 1071 A.P.R. 248; 2013 NSSC 409, dist. [para. 139].

Nielsen v. Kamloops (City) and Hughes, [1984] 2 S.C.R. 2; 54 N.R. 1; 1984 CarswellBC 476, refd to. [para. 141].

Just v. British Columbia, [1989] 2 S.C.R. 1228; 103 N.R. 1; 1989 CarswellBC 234, refd to. [para. 148].

Hill et al. v. Hamilton-Wentworth Regional Police Services Board et al., [2007] 3 S.C.R. 129; 368 N.R. 1; 230 O.A.C. 260; 2007 SCC 41, refd to. [para. 152].

Garland v. Consumers' Gas Co., [2004] 1 S.C.R. 629; 319 N.R. 38; 186 O.A.C. 128; 2004 SCC 25, refd to. [para. 161].

Pacific National Investments Ltd. v. Victoria (City), [2004] 3 S.C.R. 575; 327 N.R. 100; 206 B.C.A.C. 99; 338 W.A.C. 99; 2004 SCC 75, refd to. [para. 170].

Koubi v. Mazda Canada Inc. et al. (2012), 325 B.C.A.C. 172; 553 W.A.C. 172; 2012 BCCA 310, refd to. [para. 189].

Club 7 Ltd. et al. v. E.P.K. Holdings Ltd. et al. (1993), 115 Nfld. & P.E.I.R. 271; 360 A.P.R. 271; 1993 CarswellNfld 49 (T.D.), refd to. [para. 192].

Hurley v. Slate Ventures Inc. et al. (1998), 167 Nfld. & P.E.I.R. 1; 513 A.P.R. 1; 1998 CarswellNfld 195 (C.A.), refd to. [para. 192].

Serhan et al. v. Johnson & Johnson et al. (2006), 213 O.A.C. 298; 85 O.R.(3d) 665; 2006 CarswellOnt 3705 (Div. Ct.), refd to. [para. 196].

Andersen Estate et al. v. St. Jude Medical Inc. et al., [2012] O.T.C. Uned. 3660; 2012 ONSC 3660, refd to. [para. 199].

Statutes Noticed:

Class Actions Act, S.N.L. 2001, c. C-18.1, sect. 5(1)(a) [para. 4].

Competition Act, R.S.C. 1985, c. C-34, sect. 2.1 [para. 46]; sect. 36 [para. 44]; sect. 52(1), sect. 52(1.1) [para. 43].

Criminal Code, R.S.C. 1985, c. C-46, sect. 206(1)(g) [para. 19]; sect. 206(2) [para. 20]; sect. 207(1) [para. 21]; sect. 207(4) [para. 23].

Interpretation Act, R.S.C. 1985, c. I-21, sect. 17 [para. 47].

Interpretation Act, R.S.N.L. 1990, c. I-19, sect. 12 [para. 48].

Lotteries Act, S.N.L. 1991, c. 53, generally [para. 9].

Lotteries Act Regulations (N.L.), Video Lottery Regulations, C.N.L.R. 760/96, generally [para. 9].

Statute of Anne, 1709 (Imp.), 8 Anne, c. 18, sect. II [para. 77]; sect. IX [para. 78].

Video Lottery Regulations - see Lotteries Act Regulations (N.L.).

Counsel:

Chesley F. Crosbie, Q.C., and Jessica A. Dellow, for the plaintiffs;

Daniel W. Simmons, Q.C., for the defendant;

Ian F. Kelly, Q.C., for the first, second and third third parties;

Daniel M. Boone, Q.C., for the fourth third party;

Jorge P. Segovia, for the sixth third party.

This application was heard in St. John's, N.L., before Faour, J., of the Newfoundland and Labrador Supreme Court, Trial Division (General), who delivered the following decision on October 1, 2014.