Panacea or Pandemic: Comparing 'Equitable Waiver of Tort' to 'Aggregate Liability' in Cases of Mass Torts with Indeterminate Causation

• Author: Craig Jones
• Position: Professor, Faculty of Law, Thompson Rivers University
• Pages: 301-338

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(2016) 2(1) CJCCL

Panacea or Pandemic: Comparing

“Equitable Waiver of Tort” to

“Aggregate Liability” in Cases of

Mass Torts with Indeterminate

Causation

Craig Jones*

e equitable doctrine of “waiver of tort”, in which a plainti surrenders the right to

tort damages and seeks instead a disgorgement of the defendant’s wrongful prots, has

received a mixed reception in Canadian courts. In this article, the author explains the

doctrine and its dicult history, and proposes that the problem against which waiver

of tort is usually being applied — indeterminate causation in mass tort claims — is

very real. However, the author concludes that the use of the doctrine of waiver is a

partial solution at best, and advocates instead for a more fundamental rethinking of our

approach to causation in class actions.

* Professor of Law, ompson Rivers University. e author is grateful for

the research assistance of Kendra Morris, J.D. Candidate, ompson

Rivers University.

302

Jones, Panacea or Pandemic

I. I

II. W  T  C L

A. e Dicult Doctrine

B. e Jurisprudence

III. W  W W  W  T C

A. What is the Problem, Exactly?

B. Wrongs “In the Air”

C. Under-Compensation and Under-Deterrence

D. e Divergence of Interests of Class Counsel

IV. A B W

A. e Problem, Reiterated

B. Assessment of Liability, Harm, and Damages on an Aggregate Basis

V. C

I. Introduction

Is the equitable doctrine of waiver of tort, as they say nowadays, “a

thing”? If so, should it be the “next big thing” in mass tort class actions?

My answers to these questions are a qualied “yes” and an emphatic

“no”. Waiver of tort should be recognized as a cause of action, I will

argue, and may at times be useful, but it should not be the doctrine of

rst, or even second, resort in mass tort class actions, as it is generally

inferior to the available alternative: the evolution of tort law to permit the

aggregate determination of causation in large-scale claims.

What exactly is waiver of tort? After 20 tumultuous years during

which it has been pleaded and occasionally argued before the courts in

Canada, we still do not know much about the rather obscure doctrine. In

its most robust formulation, waiver of tort allows a plainti who is able

to prove all the constituent elements of a traditional wrong except that

they have suered a loss as a consequence of the defendant’s breach to

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“waive” tort compensation and claim only “disgorgement”1 of the prots

that the defendant earned as a result of the wrongful behaviour. As the

Supreme Court of Canada noted in its decision in Pro-Sys Consultants

Ltd v Microsoft Corporation2 (“Microsoft”): “[a]n action in waiver of tort

is considered by some to oer the plainti an advantage in that it may

relieve them of the need to prove loss in tort, or in fact at all”.3

e doctrine is based on the intuitively appealing notion, deeply

rooted in equity, that a defendant ought not be able to prot from

wrongdoing. It also bears on deterrence: equitable waiver allows a plainti

who has not suered from harm to perform a corrective role in depriving

a wrongdoer of prots, disincentivizing antisocial behaviour. But where a

class of persons have suered harm as a result of a mass wrongdoing, one

might ask, why would they give up what may well be the overwhelming

bulk of their claim?

One answer is straightforward: a waiver of tort claim “may be the

easiest cause of action to prove”,4 because disgorgement ows from

the wrongdoing of the defendant, rather than the harm caused to the

plainti. Under its theory, it is enough for a plainti to show that the

defendant behaved in a way that was wrong — usually that it breached a

duty somewhat “at large” or generic — but the plainti need not establish

a wrong — that is, there is no requirement that all the elements of a

complete tort be present. So, if a manufacturer produced a dangerously

defective product, or failed to provide a necessary warning to its customers,

or if an issuer of shares deliberately or negligently misrepresented facts in

a prospectus, or if a factory breached pollution standards and exposed its

neighbours to risk, the defendant could lose whether or not the plainti

1. e cases and literature on waiver of tort often use the language of

a number of equitable remedies — “accounting”, “disgorgement” or

“constructive trust”. But no matter how it is cast, the eect is the same:

some amount equivalent to the defendant’s ill-gotten prots will be

calculated and surrendered to the plainti or class.

2. 2013 SCC 57 [Microsoft SCC].

3. Ibid at para 93.

4. Paul Perell, “Field Notes on Products Liability Claims in Class Actions”

(2011) 38:2 Advocates’ Quarterly 149 at 163 (describing possible

advantages in the context of products liability claims).