N. Non-statutory Regulatory Bodies

• Author: Philip H. Osborne
• Profession: Faculty of Law. The University of Manitoba
• Pages: 243-248

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The work of statutory regulatory agencies is complemented by a range of private sector commercial and non-commercial regulatory bodies. Members of the public may agree to form an association that regulates an activity in which they all participate. The power of the regulatory body to make and enforce rules derives from the agreement of its members. The function of the body may be both to protect the interests of its members and to protect the interests of some segment of the public. There are a multitude of such organizations involved in a very wide range of activities giving rise to difficulty in determining the existence and scope of any duty of care owed to members and/or a class of the public. A few illustrations will suffice to present the range of circumstances and the issues involved.

Some organizations promote the integrity and competence of service providers. In Morgis v. Thomson Kernaghan & Co.,²⁴⁴for example, the Ontario Court of Appeal held that the Investment Dealers Association of Canada, an unincorporated voluntary association of securities’ dealers owed no duty of care to an investor for financial loss suffered by the misconduct of a member. It was alleged that the association was under a duty to ensure the competence and integrity of its members and respond to complaints in a timely and effective manner. The Court held that albeit that the Association was not a statutory body, its function and responsibilities were sufficiently similar to the statutory regulator considered in Cooper v. Hobart²⁴⁵to warrant an immunity.

Other organizations focus on the safety of products and services. In Hughes v. Sunbeam Corporation (Canada),²⁴⁶the Ontario Court of Appeal held that an independent tester and endorser of a consumer product (smoke alarm) owes no duty of care to the ultimate consumers of the product and was not liable for the cost of replacements. Similarly, the House of Lords held in Marc Rich & Co AG v. Bishop Rock Marine Co. Ltd.²⁴⁷that a private classification society that regulated the sea-worthiness of ships owed no duty of care to the owners of cargo that was lost when the ship sank. The ship had been cleared to sail after an inadequate inspection failed to disclose a cracked hull. These two cases may, however, be contrasted with Perrett v. Collins²⁴⁸ and, more

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recently, More v. Bauer Nike Hockey Inc.²⁴⁹ Perrett dealt with a flying association that certified the air-worthiness of a kit-set aircraft assembled by its members. A duty of care was owed to a passenger of a member injured in a crash. More dealt with the Canadian Standards Association (CSA) which sets minimum impact-resistance standards for ice hockey helmets.²⁵⁰The plaintiff, who was wearing a CSA certified helmet, was injured when he fell and hit his head against the boards. It was held that the CSA owed a duty of care to the plaintiff and liabililty may be imposed if unreasonably low standards were set.²⁵¹These cases may be reconciled on the basis of the interests protected. In More, Hughes was distinguished as an economic loss case and Marc Rich dealt with property losses.²⁵²There are also bodies that regulate sporting and recreational activities. The English Court of Appeal and the High Court of Australia have both had an opportunity to consider their responsibilities to the participants in these activities. In Watson v. British Boxing Board of Control²⁵³ the plaintiff suffered permanent brain injuries when he was knocked...