F. Remoteness of Damage

Author:Philip H. Osborne
Profession:Faculty of Law. The University of Manitoba

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The courts have consistently held that a defendant is not liable for every consequence of a breach of a duty of care. There are situations where the loss is so different from what one might have expected, so dispro-

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portionate to the magnitude of the fault, or so fluky or bizarre that it is unfair to hold the defendant legally responsible for it. In such cases, the courts may resort to the second control device of negligence law and hold that the loss is too remote from the negligent act to warrant liability. The role of remoteness of damage, like that of duty of care, is to contain liability within fair and reasonable boundaries. A variety of concepts might be used to perform this task. Liability could be restricted to damage that is a natural, direct, probable, possible, immediate, foreseeable, or close consequence of the negligent act. All of those terms indicate the need for some proximate connection between the negligent act and the damage. No single concept, however, can easily or fairly resolve the many difficult issues that arise in litigation. The true determinants of decision making are more likely to be current judicial policy and an intuitive and impressionistic sense of fairness about where to draw the line on the defendant’s responsibility than any single rule. Nevertheless, a great deal of judicial energy has been expended over the choice and interpretation of the rule of remoteness of damage in negligence.

1) The Reasonable Foreseeability Rule

Early in the twentieth century, the courts adopted the directness rule.183

Under that rule a defendant was liable for all the direct consequences of her negligence. Reasonable foreseeability was relevant to culpability (breach and duty) but not to the extent of liability. The directness rule tended to favour plaintiffs. By mid-century, however, directness had fallen into judicial disfavour. It was perceived as being too difficult to interpret and apply. This led to a reassessment of the rule of remoteness by the Privy Council in Overseas Tankship (U.K.) Ltd. v. Morts Dock and Engineering Co. Ltd., The Wagon Mound (No. 1).184In that case, the defendant, who was the charterer of the ship The Wagon Mound, negligently discharged furnace oil into Sydney harbour. Eventually it spread under the plaintiff’s wharf where welding equipment was being used by the plaintiff’s employees. Molten metal from the welding operations dropped onto and ignited cotton waste floating on the water. This in turn ignited the oil and the plaintiff’s wharf was damaged by fire. At trial, the fire was found to be unforeseeable. The Australian courts, however, applied the directness rule and imposed liability on the defendant. In the Privy Council the directness rule was repudiated and the defendant’s appeal was allowed. The Court held that the defendant was liable only for the

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reasonably foreseeable consequences of its negligence. The foreseeablity test was favoured on the grounds of fairness and justice to the defendant, its simplicity of application, and the logic of synthesizing breach, duty, and remoteness under the single concept of foreseeability. After a brief period of indecision the Supreme Court adopted the foreseeability test and it is now well entrenched in Canadian negligence law.

It was not, however, immediately clear how the foreseeability test would be interpreted in the context of remoteness of damage. The judgment in Wagon Mound No. 1 suggested a relatively strict approach. It was, in policy, a pro-defendant decision that treated negligence law as predominantly a loss-shifting system grounded in notions of corrective justice between individuals. This approach was at odds with the emerging pro-plaintiff trends of negligence law that emphasized compensation and loss distribution policies. Today, it is apparent that Wagon Mound No. 1 did not unduly hamper the pro-plaintiff drift of negligence law. In a series of decisions the courts have indicated a desire to promote a broad and robust interpretation of foreseeability in the context of remoteness of damage.

2) The Interpretation of Reasonable Foreseeability

The courts have used a variety of interpretive techniques and stratagems to apply reasonable foreseeability in a generous manner. In combination, they give a great deal of discretion to the trial judge and permit an extensive responsibility for the consequences of a negligent act.

a) The Mechanics of the Accident

In Wagon Mound No. 1 the Court spoke of the need to establish both foreseeability of damage and foreseeability of the consequences of the accident. This left some uncertainty about what, precisely, had to be foreseen, and, in particular, whether the nature of the accident and the manner in which it occurred must be foreseen. This issue was resolved in Hughes v. Lord Advocate.185In that case, employees of the defendant Post Office negligently left a manhole open and unattended while they took a tea break. The manhole had a canvas tent over it and paraffin lamps surrounding it. The plaintiff, a young boy, took one of the lamps and climbed down a ladder to explore the manhole. As he was emerging, he accidentally dropped the lamp down the hole where it exploded violently. He fell back into the hole and suffered serious burns. The defendant argued that the explosion, which was caused by the

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vapourization of some of the paraffin, was entirely unforeseeable and, consequently, the plaintiff’s loss was too remote. The House of Lords held that the defendant was liable. It decided that there was no need to establish the foreseeability of the explosion. It was sufficient that the plaintiff had suffered a kind of harm (burns) that was foreseeable. The Court’s decision that it was not necessary to foresee the manner in which the accident occurred, the mechanics of the accident, or the precise concatenation of events that led to the accident has contributed significantly to the expansive interpretation of the remoteness rule.186

b) The Likelihood of Damage

In Wagon Mound No. 1, the Privy Council held that the defendant must foresee that the damage was a probable consequence of the negligent act. Some years later, however, in companion litigation arising out of the same incident, the Privy Council held that foreseeability that the damage was a possibility was sufficient. In Wagon Mound No. 2187the plaintiff owned a ship that was tied up at the wharf where the fire occurred. It also suffered considerable damage. The evidence adduced at trial, on behalf of the plaintiff shipowner, was different from the first case188and it supported a conclusion that while damage by fire was not probable, it was a possibility that in exceptional circumstances could become an actuality. The risk of fire was low, but it was not so far-fetched as never

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to occur to the mind of a reasonable person. This was held to be sufficient to satisfy the foreseeability test and liability was imposed. After Wagon Mound No. 2, Canadian courts adopted the view that the harm needed only to be reasonably foreseeable as a possibility rather than a probability.189This further dissipated the pro-defendant sentiment of Wagon Mound No. 1.

In its recent decision in Mustapha v. Culligan of Canada Ltd.,190how-ever, the Supreme Court expressed dissatisfaction with the "possibility of damage" test, claiming that it was not a meaningful standard for the application of reasonable foreseeability since any harm that has actually occurred is possible.191The Court preferred to use other language also found in Wagon Mound No. 2, and framed the question as being "whether it [the harm] is a ‘real risk’ i.e. one which would occur to the mind of a reasonable man in the position of the defendant and which he would not brush aside as far-fetched?" It is not clear that this language will change the patterns of decision making in favour of defendants. The terms reasonably foreseeable as a "possibility," "real risk," and "not far-fetched" would appear to be of uniform imprecision and inexactness and are all equally unlikely to reverse the general pro-plaintiff trend in remoteness analysis.

c) Linkage

A common technique to bridge a substantial gulf between the negligent act and the ultimate damage is to divide the causal sequence into a number of discrete steps, each of which is a readily foreseeable consequence of the preceding step. A narrative from step to foreseeable step allows the gulf to be spanned in a persuasive way with apparent fidelity to the foreseeability principle. The technique was used in Assiniboine South School Division No. 3 v. Greater Winnipeg Gas Co.192In that case, the defendants’ failure to start a snowmobile with reasonable care resulted in fire damage to the plaintiff’s school. The risk inherent in the starting procedure was that the snowmobile might take off without its rider to the peril of persons and property in the vicinity. The chain of events that led to the fire was broken down into a series of foreseeable occurrences. They included the foreseeability of impact with a building, foreseeability of gas-riser pipes on buildings in that area of Win-

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nipeg, foreseeability of impact with a gas-riser pipe, foreseeability of the escape of gas from the impact with a pipe, and foreseeability that gas might find its way into the school where it might be ignited by a foreseeable pilot flame in the boiler room. Foreseeability was thereby established and liability was imposed. This technique of building foreseeability on foreseeability is not uncommon in remoteness cases.193

d) The Demarcation of Damage

Courts seeking to impose...

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