BG Checo International Ltd. v. British Columbia Hydro and Power Authority,

• Jurisdiction: Federal Jurisdiction (Canada)
• Judge: La Forest, L'Heureux-Dubé, Sopinka, Gonthier, McLachlin, Stevenson and Iacobucci, JJ.
• Citation: (1993), 147 N.R. 81 (SCC),147 NR 81,5 CLR (2d) 173,[1993] CarswellBC 10,[1993] 2 WWR 321,20 BCAC 241,75 BCLR (2d) 145,[1993] ACS no 1,1993 CanLII 145 (SCC),[1993] SCJ No 1 (QL),14 CCLT (2d) 233,JE 93-271,37 ACWS (3d) 1202,35 WAC 241,99 DLR (4th) 577,[1993] 1 SCR 12
• Court: Supreme Court (Canada)
• Date: 28 January 1992

BG Checo Intl. Ltd. v. B.C. Hydro (1993), 147 N.R. 81 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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British Columbia Hydro and Power Authority (appellant) v. BG Checo International Limited (respondent)

(No. 21939)

BG Checo International Limited (appellant) v. British Columbia Hydro and Power Authority (respondent)

(No. 21955)

Indexed As: BG Checo International Ltd. v. British Columbia Hydro and Power Authority

Supreme Court of Canada

La Forest, L'Heureux-Dubé, Sopinka, Gonthier, McLachlin, Stevenson and Iacobucci, JJ.

January 21, 1993.

Summary:

B.C. Hydro called tenders for erection of transmission towers and stringing lines. Checo inspected the area by helicopter and saw a partially cleared right of way. Assum­ing the right of way clearing would be finished, Checo bid on the project. B.C. Hydro accepted Checo's tender and the parties entered a contract, whereby Checo would construct 130 towers and install insulators, hardware and conductors over 42 kilometres of right of way. In fact, no fur­ther clearing of the right of way ever took place and the "dirty" condition of the right of way caused Checo numerous difficulties in completing the project. Checo sued B.C. Hydro seeking damages for negligent mis­representation, or in the alternative, for breach of contract. At trial it became appar­ent that B.C. Hydro had hired another com­pany to do the clearing, and that to B.C. Hydro's knowledge the work was not done adequately. Checo then amended its plead­ings to include a fraud claim.

The British Columbia Supreme Court, per Cohen, J., in a decision reported [1988] B.C.D. Civ. 971-01; 10 A.C.W.S.(3d) 312, allowed the action and awarded Checo damages for fraudulently being induced into the contract. B.C. Hydro appealed. Checo cross-appealed respecting damages and costs.

The British Columbia Court of Appeal, Southin, J.A., dissenting, in a decision re­ported [1990] 3 W.W.R. 690; 44 B.C.L.R.(2d) 145; 4 C.C.L.T.(2d) 161; 41 C.L.R. 1, allowed the appeal in part and dismissed the cross-appeal. The court held that B.C. Hydro was not liable for fraudulent misrepresentation, but awarded damages for negligent misrepresentation. The Court of Appeal referred to the Supreme Court the question of breach of contract and damages flowing therefrom. B.C. Hydro appealed and Checo cross-appealed. The issue on appeal was whether Checo could sue in tort where the duty relied on was expressly made a contractual duty by the terms of the contract, and if so, what was the measure of damages.

The Supreme Court of Canada, Iacobucci and Sopinka, JJ., dissenting in part, dis­missed the appeal and allowed the cross-appeal in part. The court held that B.C. Hydro breached the contract and Checo's tort action was not precluded. The court referred the question of damages in tort and contract to the trial court to be reassessed in accor­dance with the principles set forth by the court.

Contracts - Topic 3523

Performance or breach - Breach - What constitutes - Checo contractually agreed to construct towers on a right of way for B.C. Hydro - Contract clause 6.01.03 specifi­cally stated that clearing the right of way was to be done by others and was not part of the contract - Two other general provi­sions placed on Checo responsibility for any misunderstandings respecting condi­tions of the work (Clause 2.03) and for satisfying itself respecting site conditions etc. before bidding (Clause 4.40) - The Supreme Court of Canada held that the contract required B.C. Hydro to clear the right of way as specified in clause 6.01.03 and that duty was not negated by the more general clauses 2.03 and 4.40 - The court held further that B.C. Hydro breached the contract by failing to clear the right of way - See paragraphs 6 to 12.

Contracts - Topic 4005

Remedies for breach - Negligent breach - Availability of tort action - B.C. Hydro called tenders for tower construction on a right of way - Checo inspected the area and saw clearing in progress - Checo's bid was accepted - A contract was executed, specifically providing that the clearing was to be done by others and was not part of the contract - B.C. Hydro failed to tell Checo that the clearing was not completed, causing numerous problems for Checo - The Supreme Court of Canada held that B.C. Hydro breached the contract - Fur­ther, Checo was not precluded from pursu­ing a tort (misrepresentation) action against B.C. Hydro merely because the matter was dealt with by an express term of the con­tract - The contract did not limit the duty of care owed by B.C. Hydro to Checo, nor did Checo waive, its common law right to sue in tort - See paragraphs 13 to 38.

Contracts - Topic 4005

Remedies for breach - Negligent breach - Availability of tort action - The Supreme Court of Canada stated that "we conclude that neither principle, the authorities nor the needs of contracting parties support the conclusion that dealing with a matter by an express contract term will, in itself, cat­egorically exclude the right to sue in tort. The parties may by their contract limit the duty one owes to the other or waive the right to sue in tort. But subject to this, the right to sue concurrently in tort and con­tract remains." - See paragraph 37.

Contracts - Topic 4005

Remedies for breach - Negligent breach - Availability of tort action - The Supreme Court of Canada stated that "we conclude that actions in contract and tort may be concurrently pursued unless the parties by a valid contractual provision indicate that they intended otherwise. This excludes, of course, cases where the contractual limita­tion is invalid, as by fraud, mistake or unconscionability. Similarly, a contractual limitation may not apply where the tort is independent of the contract in the sense of falling outside the scope of the contract ..." - See paragraph 21.

Contracts - Topic 4005

Remedies for breach - Negligent breach - Availability of tort action - The Supreme Court of Canada stated that "rather than attempting to establish new barriers to tort liability in contractual contexts, the law should move towards the elimination of unjustified differences between remedial rules applicable to the two actions, thereby reducing the significance of the existence of the two different forms of action and allowing a person who has suffered a wrong full access to all relevant legal remedies." - See paragraph 1.

Contracts - Topic 4005

Remedies for breach - Negligent breach - Availability of tort action - The Supreme Court of Canada stated that "... the general rule emerging from this court's decision in Central Trust Co. v. Rafuse and Cordon ... is that where a given wrong prima facie supports an action in contract and in tort, the party may sue in either or both, except where the contract indicates that the parties intended to limit or negative the right to sue in tort. This limitation on the general rule of concurrency arises because it is always open to parties to limit or waive the duties which the common law would impose on them for negligence. This prin­ciple is of great importance in preserving a sphere of individual liberty and commer­cial flexibility." - See paragraph 15.

Contracts - Topic 4005

Remedies for breach - Negligent breach - Availability of tort action - The Supreme Court of Canada stated that "... the mere fact that the parties have dealt with a matter expressly in their contract does not mean that they intended to exclude the right to sue in tort. It all depends on how they have dealt with it." - See paragraph 15.

Contracts - Topic 4005

Remedies for breach - Negligent breach - Availability of tort action - The Supreme Court of Canada stated that "... the only limit on the right to choose one's action is the principle of primacy of private order­ing - the right of individuals to arrange their affairs and assume risks in a different way than would be done by the law of tort. It is only to the extent that this private ordering contradicts the tort duty that the tort duty is diminished. The rule is not that one cannot sue concurrently in contract and tort where the contract limits or con­tradicts the tort duty. It is rather that the tort duty, ... must yield to the parties' superior right to arrange their rights and duties in a different way. Insofar as the tort duty is not contradicted by the con­tract, it remains intact and may be sued upon." - See paragraph 16.

Contracts - Topic 7407

Interpretation - Whole contract to be considered - The Supreme Court of Canada stated that "it is a cardinal rule of the construction of contracts that the vari­ous parts of the contract are to be inter­preted in the context of the intentions of the parties as evident from the contract as a whole ... Where there are apparent in­consistencies between different terms of a contract, the court should attempt to find an interpretation which can reasonably give meaning to each of the terms in question. Only if an interpretation giving reasonable consistency to the terms in question cannot be found will the court rule one clause or the other ineffective ... In this process, the terms will, if reason­ably possible, be reconciled by construing one term as a qualification of the other term." - See paragraph 9.

Contracts - Topic 7410

Interpretation - Inconsistent clauses - General - [See Contracts - Topic 7407].

Contracts - Topic 7412

Interpretation - Inconsistent clauses - Specific v. general - The Supreme Court of Canada stated that "... where there is apparent conflict between a general term and a specific term, the terms may be reconciled by taking the parties to have intended the scope of the general term to not extend to the subject matter of the specific term." - See paragraph 9.

Contracts - Topic 7412

Interpretation - Inconsistent clauses - Specific v. general - [See Contracts - Topic 3523].

Damages - Topic 3630

Deceit and misrepresentation - Negligent misrepresentation - B.C. Hydro called for tenders for tower construction on a right of way - Checo inspected the area and saw clearing underway - Checo's bid was accepted - A contract was executed which specifically provided that the clearing was to be done by others and was not part of the contract - B.C. Hydro failed to tell Checo that the clearing was not completed - This caused numerous problems for Checo - The Supreme Court of Canada held that B.C. Hydro breached the contract - Further, Checo was not precluded from pursuing a tort (misrepresentation) action against B.C. Hydro merely because the matter was dealt with by an express term of the contract - The court discussed the calculation of damages in this concurrent liability situation - See paragraphs 39 to 49.

Damages - Topic 5710

Contracts - Breach - Damages - Breach of contract compared with tort - [See Damages - Topic 3630].

Fraud and Misrepresentation - Topic 2508

Misrepresentation - Negligent misrepre­sentation - [See first Contracts - Topic 4005].

Fraud and Misrepresentation - Topic 2515

Misrepresentation - Concurrent liability in contract and tort - [See first Contracts - Topic 4005].

Cases Noticed:

Forbes v. Git, [1922] 1 A.C. 256 (P.C.), reving. (1921), 62 S.C.R. 1, refd to. [para. 9].

Git v. Forbes - see Forbes v. Git.

Hassard v. Peace River Co-operative Seed Growers Association Ltd., [1954] 2 D.L.R. 50 (S.C.C.), refd to. [para. 9].

Cotter v. General Petroleums Ltd., [1951] S.C.R. 154, refd to. [para. 9].

Central Trust Co. v. Rafuse and Cordon, [1986] 2 S.C.R. 147; 69 N.R. 321; 75 N.S.R.(2d) 109; 186 A.P.R. 109; 42 R.P.R. 161, refd to. [paras. 15, 32-36, 50, 81, 84 et seq.].

Dyck v. Manitoba Snowmobile Association Inc. and Wood, [1985] 1 S.C.R. 589; 58 N.R. 144; 35 Man.R.(2d) 22, refd to. [para. 15].

Elder, Dempster & Co. v. Paterson, Zoch­onis & Co., [1924] A.C. 522 (H.L.), refd to. [paras. 21, 101].

Lister v. Romford Ice and Cold Storage Co., [1957] A.C. 555 (H.L.), refd to. [para. 29].

Canadian Indemnity Co. v. Andrews & George Co., [1953] 1 S.C.R. 19, refd to. [para. 30].

Dominion Chain Co. v. Eastern Construc­tion Co. Ltd. (1976), 68 D.L.R.(3d) 385 (Ont. C.A.), affd. sub nom. Giffels As­sociates Ltd. v. Eastern Construction Co., [1978] 2 S.C.R. 1346; 19 N.R. 298, refd to. [paras. 31, 101, 107].

Giffels Associates Ltd. v. Eastern Con­struction Co. - see Dominion Chain Co. v. Eastern Construction Co. Ltd.

Batty v. Metropolitan Property Realisations Ltd., [1978] 1 Q.B. 554 (C.A.), refd to. [para. 35].

Jarvis v. Moy, Davies, Smith, Vandervell & Co., [1936] 1 K.B. 399 (C.A.), refd to. [paras. 36, 99].

Rainbow Industrial Caterers Ltd. et al. v. Canadian National Railway Co. et al., [1991] 3 S.C.R. 3; [1991] 6 W.W.R. 385; 126 N.R. 354; 3 B.C.A.C. 1; 7 W.A.C. 1; 8 C.C.L.T.(2d) 225; 59 B.C.L.R.(2d) 129, refd to. [paras. 45, 46, 107, 131].

Baud Corp. N.V. v. Brook, [1979] 1 S.C.R. 633; 23 N.R. 181; 12 A.R. 271; [1978] 6 W.W.R. 301; 89 D.L.R.(3d) 1, refd to. [para. 48].

Asamera Oil Corp. Ltd. v. Sea Oil and General Corp. - see Baud Corp. N.V. v. Brook.

Hofstrand Farms Ltd. v. B.D.C. Ltd., [1986] 1 S.C.R. 228; 65 N.R. 261, refd to. [para. 48].

K.R.M. Construction Ltd. v. British Col­umbia Railway Co. (1981), 18 C.L.R. 159 (B.C.S.C.), affd. in part (1982), 18 C.L.R. 159 (B.C.C.A.), refd to. [para. 59].

Donoghue v. Stevenson, [1932] A.C. 562 (H.L.), refd to. [paras. 67, 94, 95, 119, 128].

Hedley Byrne & Co. v. Heller & Partners Ltd., [1964] A.C. 465 (H.L.), refd to. [paras. 67, 114, 118-120, 126, 129].

Rainbow Industrial Caterers Ltd. et al. v. Canadian National Railway Co. et al. (1988), 30 B.C.L.R.(2d) 273 (C.A.), refd to. [para. 68].

Rainbow Industrial Caterers Ltd. et al. v. Canadian National Railway Co. et al. (1990), 43 B.C.L.R.(2d) 1 (C.A.), affd. [1991] 3 S.C.R. 3; [1991] 6 W.W.R. 385; 126 N.R. 354; 3 B.C.A.C. 1; 7 W.A.C. 1; 8 C.C.L.T.(2d) 225; 59 B.C.L.R.(2d) 129, refd to. [para. 69].

Catre Industries Ltd. v. Alberta (1989), 99 A.R. 321 (C.A.), refd to. [paras. 74, 85].

University of Regina v. Pettick et al. (1991), 90 Sask.R. 241 (C.A.), refd to. [para. 85].

Fletcher v. Manitoba Public Insurance Co. (1989), 44 O.A.C. 81; 68 O.R.(2d) 193 (C.A.), refd to. [para. 85].

Pittman v. Manufacturers Life Insurance Co. (1990), 88 Nfld. & P.E.I.R. 279; 274 A.P.R. 279; 76 D.L.R.(4th) 320 (Nfld. C.A.), refd to. [para. 85].

Clark v. Naqvi (1989), 99 N.B.R.(2d) 271; 250 A.P.R. 271 (C.A.), refd to. [para. 85].

Esso Petroleum v. Mardon, [1976] 2 All E.R. 5 (C.A.), refd to. [paras. 93, 102, 124, 130].

Leame v. Bray (1803), 3 East. 593; 102 E.R. 724 (K.B.), refd to. [para. 95].

Bretherton v. Wood (1821), 3 Brod. & B. 54; 129 E.R. 1203 (Ex. Ch.), refd to. [para. 96].

Boorman v. Brown (1842), 3 Q.B. 511; 114 E.R. 603 (Ex. Ch.), affd. (1844), 11 Cl. & Fin. 1; 8 E.R. 1003 (H.L.), refd to. [paras. 97, 98, 102, 106].

Brown v. Boorman - see Boorman v. Brown.

Groom v. Crocker, [1939] 1 K.B. 194 (C.A.), refd to. [para. 99].

Bagot v. Stevens Scanlan & Co., [1966] 1 Q.B. 197 (H.L.), refd to. [paras. 99, 129].

Williamson v. Allison (1802), 2 East. 446; 102 E.R. 439 (K.B.), refd to. [para. 100].

Legge v. Tucker (1856), H. & N. 500; 156 E.R. 1298 (Ex. Ct.), refd to. [para. 100].

Turner v. Stallibrass, [1898] 1 Q.B. 56 (C.A.), refd to. [para. 100].

Edwards v. Mallan, [1908] 1 K.B. 1002 (C.A.), refd to. [para. 100].

J. Nunes Diamonds Ltd. v. Dominion Electric Protection Co., [1972] S.C.R. 769, refd to. [paras. 101, 106].

Batty v. Metropolitan Property Realisations Ltd., [1978] Q.B. 554, refd to. [para. 102].

Anns v. Merton London Borough Council, [1978] A.C. 728; [1977] 2 W.L.R. 1024; [1977] 2 All E.R. 492 (H.L.), refd to. [para. 103].

New Brunswick Telephone Co. v. Maryon (John) International Ltd. (1982), 43 N.B.R.(2d) 469; 113 A.P.R. 469 (C.A.), refd to. [paras. 104, 112].

Mason (V.K.) Construction Ltd. v. Bank of Nova Scotia and Courtot Investments Ltd., [1985] 1 S.C.R. 271; 58 N.R. 195; 8 O.A.C. 381; 116 D.L.R.(4th) 598; 35 R.P.R. 118, refd to. [para. 108].

V.K. Mason Construction Ltd. - see Mason (V.K.) Construction Ltd.

Miida Electronics Inc. v. Mitsui O.S.K. Lines Ltd. and ITO-International Ter­minal Operators Ltd., [1986] 1 S.C.R. 752; 68 N.R. 241; 28 D.L.R.(4th) 641, refd to. [para. 111].

London Drugs Ltd. v. Brassart and Van­winkel (1992), 143 N.R. 1; 18 B.C.A.C 1; 31 W.A.C. 1 (S.C.C.), refd to. [paras. 111, 112].

London Drugs Ltd. v. Kuehne & Nagel International Ltd. - see London Drugs Ltd. v. Brassart and Vanwinkel.

Hall v. Brooklands Auto Racing Club, [1933] 1 K.B. 205 (C.A.), refd to. [para. 111].

Peters v. Parkway Mercury Sales Ltd. (1975), 10 N.B.R.(2d) 703; 2 A.P.R. 703 (C.A.), refd to. [para. 112].

Carman Construction Ltd. v. Canadian Pacific Railway Co. and C.P. Rail, [1982] 1 S.C.R. 958; 42 N.R. 147, refd to. [paras. 115, 131].

Queen (D.J.) v. Cognos Inc. (1993), 147 N.R. 169 (S.C.C.), refd to. [para. 117].

Derry v. Peek (1889), 14 App. Cas. 337 (H.L.), refd to. [paras. 121, 124-126].

Nocton v. Lord Ashburton, [1914] A.C. 932 (H.L.), refd to. [paras. 121, 127-129].

Heilbut Symons & Co. v. Buckleton, [1913] A.C. 30 (H.L.), refd to. [paras. 122-126].

De Vall v. Gorman, Clancey & Grindley Ltd. (1919), 58 S.C.R. 259, refd to. [para. 125].

Kinsman v. Kinsman (1912), 3 O.W.N. 966 (H.C.), refd to. [para. 125].

Howse v. Quinnell Motors Ltd., [1952] 2 D.L.R. 425 (B.C.C.A.), refd to. [para. 125].

Chapman v. Warren, [1936] O.R. 145 (H.C.), refd to. [para. 125].

Gardner v. Merker (1918), 43 O.L.R. 411 (C.A.), refd to. [para. 125].

Kennedy v. Anderson (1919), 50 D.L.R. 105 (Sask. C.A.), refd to. [para. 125].

Gilmour v. Trustee Co. of Winnipeg, [1923] 3 W.W.R. 177 (Man. C.A.), refd to. [para. 125].

Thurston v. Streilen (1950), 59 Man. R. 55 (K.B.), refd to. [para. 125].

Scholte v. Richardson, [1951] O.R. 58 (H.C.), refd to. [para. 125].

Candler v. Crane Christmas & Co., [1951] 1 All E.R. 426 (C.A.), refd to. [para. 126].

Cann v. Willson (1888), 39 Ch. D. 39, refd to. [para. 127].

Heaven v. Pender (1883), 11 Q.B.D. 503 (C.A.), refd to. [para. 127].

George v. Skivington (1869) L.R. 5 Ex. 1, refd to. [para. 128].

Clark v. Kirby-Smith, [1964] 2 All E.R. 835 (Ch. D.), refd to. [para. 129].

Kingu v. Walmar Ventures Ltd (1986), 38 C.L.L.T. 51 (B.C.C.A.), refd to. [para. 130].

Authors and Works Noticed:

Baker, J.H., An Introduction to English Legal History (1979), pp. 277, 278 [para. 95]; 293-295 [para. 122]; 342-345 [para. 94].

Berryman, Jeffrey, Remedies: Issues and Perspectives (1989), pp. 395, 401, 402 [para. 45].

Blom, Joost, Remedies in Tort and Con­tract: Where is the Difference?, in Jef­frey Berryman, ed., Remedies: Issues and Perspectives (1989), pp. 395, 401, 402 [para. 45].

Chitty on Contracts (26th Ed. 1989), vol. 1, pp. 520, 526 [para. 9].

Fifoot, C.H.S., History and Sources of the Common Law: Tort and Contract (1949), pp. 157-159 [para. 97].

French, Christine, The Contract/Tort Dilemma (1983), 5 Otago L. Rev. 236, pp. 273-278 [para. 97].

Fuller, L.L., and W.R. Purdue, The Reli­ance Interest in Contract Damages (1936-37), 46 Yale L.J. 52, p. 373 [para. 45].

Johnson, Howard, Contract and Tort: Or­thodoxy Reasserted! (1990), 9 Int'l. Banking L. 306, generally [para. 108].

Lewison, Kim, The Interpretation of Con­tracts (1989), pp. 124, 206 [para. 9].

McLachlin, Beverly M., and Wilfred J. Wallace, The Canadian Law of Archi­tecture and Engineering (1987), p. 134 [para. 113].

McLauchlan, D.W., Assessment of Dam­ages for Misrepresentations Inducing Contracts (1987), 6 Otago L. Rev. 370, pp. 375-378 [para. 45].

McLauchlan, D.W., Pre-Contract Negli­gent Misrepresentation (1977), 4 Otago L. Rev. 23, generally [para. 129].

Counsel:

Glenn A. Urquhart, Arthur M. Grant and Gordon D. Phillips, for British Columbia Hydro and Power Authority;

Donald J. Sorochan, Q.C., Meredith A. Quartermain and Mari A. Worfolk, for BG Checo International Ltd.

Solicitors of Record:

Singleton, Urquhart, MacDonald, Van­couver, British Columbia, for British Columbia Hydro and Power Authority;

Swinton & Co., Vancouver, British Col­umbia, for BG Checo International Ltd.

This appeal was heard on January 28, 1992, before La Forest, L'Heureux-Dubé, Sopinka, Gonthier, McLachlin, Stevenson and Iaco­bucci, JJ., of the Supreme Court of Canada. The decision of the court was delivered in both official languages on Jan­uary 21, 1993, including the following opin­ions:

La Forest and McLachlin, JJ. (L'Heur­eux-Dubé and Gonthier, JJ., concur­ring) - see paragraphs 1 to 49;

Iacobucci, J., dissenting in part (Sopinka, J., concurring) - see paragraphs 50 to 147;

Stevenson, J., took no part in the judg­ment.