Sable Offshore Energy Inc. et al. v. Ameron International Corp. et al., (2006) 249 N.S.R.(2d) 122 (SC)

• Judge: Hood, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: July 18, 2006
• Jurisdiction: Nova Scotia
• Citations: (2006), 249 N.S.R.(2d) 122 (SC);2006 NSSC 332

Sable Offshore Energy v. Ameron Intl. (2006), 249 N.S.R.(2d) 122 (SC);

    792 A.P.R. 122

MLB headnote and full text

Temp. Cite: [2006] N.S.R.(2d) TBEd. NO.021

Sable Offshore Energy Inc., as agent for and on behalf of the Working Interest Owners of the Sable Offshore Energy Project, ExxonMobil Canada Properties, Shell Canada Limited, Imperial Oil Resources, Mosbacher Operating Ltd., and Pengrowth Corporation; ExxonMobil Canada Properties as operator of the Sable Offshore Energy Project (plaintiffs) v. Ameron International Corporation, Ameron (UK) Limited, Ameron B.V., Allcolour Paint Limited, Amercoat Canada, Rubyco Ltd., Danroh Inc., Serious Business Inc., Barrier Limited, Parker Brothers Contracting Limited, Rko Steel Limited, Cherubini Metal Works Limited, Comstock Canada Ltd., Adam Clark Company Ltd., A.B. Mechanical Limited, A & G Crane Rentals Limited carrying on business as A & G Crane Limited, A.M.L. Painting Limited, Argo Protective Coatings Incorporated and Allsteel Coating Limited, Mills Painting & Sandblasting Limited (defendants) and Amec E & C Services Limited, successor to Agra Monenco Inc., in their own right, Kellogg Brown & Root, a division of Haliburton Group Canada Inc. and Amec Black & McDonald Limited operating as BMS Offshore, successor to BMS Offshore Limited, in their own right and/or collectively operating as BBA, a joint venture (third parties)

(SH 220343; 2006 NSSC 332)

Indexed As: Sable Offshore Energy Inc. et al. v. Ameron International Corp. et al.

Nova Scotia Supreme Court

Hood, J.

November 6, 2006.

Summary:

The plaintiffs' oil rig was painted using paint manufactured by the Ameron defendants. The paint failed, leading to corrosion of the steel the paint was intended to protect. As there was no privity of contract between the plaintiffs and the Ameron defendants, the plaintiffs' claim against the Ameron defendants was based in negligence, alleging, inter alia, that the paint was unsuitable for the project. The Ameron defendants applied under rule 14.25(1)(a) to strike the claim against them as failing to disclose a reasonable cause of action. The Ameron defendants submitted that the law did not recognize tort liability for pure economic loss resulting from "non-dangerous" defects in products.

The Nova Scotia Supreme Court dismissed the application. Assuming that the defect was "non-dangerous", it was not plain and obvious that tort liability for pure economic loss recognized by the Supreme Court of Canada for "dangerous defects" (Winnipeg Condominium case) would not be extended to "non-dangerous" defects. Alternatively, it was not plain and obvious that the defective paint failed to meet the level of dangerousness required by the Winnipeg Condominium case. Finally, it was not plain and obvious that the plaintiffs' claim was not for pure economic loss, as opposed to a property damage claim.

Damages - Topic 531

Limits of compensatory damages - Remoteness - Torts - Recoverable damages - Purely economic loss - In the Winnipeg Condominium case, the Supreme Court of Canada recognized tort liability for pure economic loss resulting from a dangerous defect in a product - The plaintiffs sued a paint manufacturer for losses resulting from corroded steel on an oil rig, alleging that the manufacturer was negligent in providing an unsuitable product, which failed to protect the steel from rusting - There was no privity of contract - The Nova Scotia Supreme Court dismissed the manufacturer's rule 14.25(1)(a) application to strike the claim against it for failing to disclose a reasonable cause of action - It was not plain and obvious that the action could not succeed - First, the Supreme Court of Canada had not foreclosed extending tort liability for pure economic loss to a "non-dangerous" defect in a product - The novelty of the claim did not doom it to failure - Policy considerations against extending tort liability beyond "dangerous" defects deserved a full trial - Secondly, it was not plain and obvious that the requisite level of "dangerousness" was not met - Finally, it was also not plain and obvious that the plaintiffs' claim was one for pure economic loss rather than a property damage claim - See paragraphs 1 to 139.

Practice - Topic 2230

Pleadings - Striking out pleadings - Grounds - Failure to disclose a cause of action or defence - [See Damages - Topic 531 ].

Torts - Topic 4205

Suppliers of goods - General principles and definitions - Basis of liability - Contract vs. tort - [See Damages - Topic 531 ].

Torts - Topic 4327

Suppliers of goods - Negligence - Manufacturers - Defective goods - [See Damages - Topic 531 ].

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Binder v. Royal Bank of Canada et al. (2003), 216 N.S.R.(2d) 363; 680 A.P.R. 363 (S.C.), refd to. [para. 10].

Keating v. Southam Inc. et al. (2000), 189 N.S.R.(2d) 153; 590 A.P.R. 153 (S.C.), refd to. [para. 13].

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Curry v. Dargie (1984), 62 N.S.R.(2d) 416; 136 A.P.R. 416 (C.A.), refd to. [para. 17].

Hunt v. T & N plc et al., [1990] 2 S.C.R. 959; 117 N.R. 321, refd to. [para. 18].

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

Pleau v. Canada (Attorney General) et al. (1999), 181 N.S.R.(2d) 356; 560 A.P.R. 356 (C.A.), refd to. [para. 19].

353903 Ontario Ltd. v. Nova Scotia (1998), 169 N.S.R.(2d) 88; 508 A.P.R. 88 (S.C.), refd to. [para. 20].

American Home Assurance Co. et al. v. Brett Pontiac Buick GMC Ltd. et al. (1992), 116 N.S.R.(2d) 319; 320 A.P.R. 319 (C.A.), refd to. [para. 21].

Lamey v. Wentworth Valley Developments Ltd. et al. (1999), 175 N.S.R.(2d) 356; 534 A.P.R. 356 (C.A.), refd to. [para. 23].

Future Inns Canada Inc. v. Labour Relations Board (N.S.) et al. (1999), 179 N.S.R.(2d) 213; 553 A.P.R. 213 (C.A.), refd to. [para. 25].

CGU Insurance Co. of Canada v. Noble (2003), 218 N.S.R.(2d) 49; 687 A.P.R. 49 (C.A.), refd to. [para. 26].

Joudrey v. Swissair Transport Co. (2001), 197 N.S.R.(2d) 312; 616 A.P.R. 312 (S.C.), refd to. [para. 27].

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Dorset Yacht Co. v. Home Office, [1970] A.C. 1004 (H.L.), refd to. [para. 145].

University of Regina v. Pettick et al. (1991), 90 Sask.R. 241; 77 D.L.R.(4th) 615 (C.A.), refd to. [para. 151].

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London Drugs Ltd. v. Brassart and Vanwinkel, [1992] 3 S.C.R. 299; 143 N.R. 1; 18 B.C.A.C. 1; 31 W.A.C. 1, refd to. [para. 153].

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Counsel:

Robert G. Belliveau, Q.C., Harvey L. Morrison, Q.C., and Christopher C. Robinson, Q.C., for the plaintiffs;

John P. Merrick, Q.C., and Darlene A. Jamieson, for Ameron International Corp. and Ameron BV.

This application was heard on July 18, 2006, at Halifax, N.S., before Hood, J., of the Nova Scotia Supreme Court, who delivered the following judgment on November 6, 2006.