Sable Offshore Energy Inc. et al. v. Ameron International Corp. et al., (2007) 255 N.S.R.(2d) 164 (CA)

• Judge: Roscoe, Cromwell and Fichaud, JJ.A.
• Court: Court of Appeal of Nova Scotia (Canada)
• Case Date: June 08, 2007
• Jurisdiction: Nova Scotia
• Citations: (2007), 255 N.S.R.(2d) 164 (CA);2007 NSCA 70

Sable Offshore v. Ameron Intl. Corp. (2007), 255 N.S.R.(2d) 164 (CA);

    814 A.P.R. 164

MLB headnote and full text

Temp. Cite: [2007] N.S.R.(2d) TBEd. JN.017

Ameron International Corporation and Ameron B.V. (appellants) v. 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 (respondents)

(CA 275595; 2007 NSCA 70)

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

Nova Scotia Court of Appeal

Roscoe, Cromwell and Fichaud, JJ.A.

June 8, 2007.

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, in a judgment reported (2006), 249 N.S.R.(2d) 122; 792 A.P.R. 122, 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. The Ameron defendants appealed.

The Nova Scotia Court of Appeal dismissed the appeal. The trial judge applied the proper principles of law and the failure to intervene would not result in a patent injustice.

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 trial judge 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 - The Nova Scotia Court of Appeal dismissed the manufacturer's appeal - The trial judge did not err in finding that the novel claim was absolutely unsustainable or certain to fail - The court noted that absent the fact findings that would result from a trial, it would not give an advance ruling or opinion that there was no cause of action for economic loss resulting from nondangerous product defects.

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 for liability - Contract vs. tort - [See Damages - Topic 531 ].

Torts - Topic 4327

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

Cases Noticed:

Winnipeg Condominium Corp. No. 36 v. Bird Construction Co. et al., [1995] 1 S.C.R. 85; 176 N.R. 321; 100 Man.R.(2d) 241; 91 W.A.C. 241, refd to. [para. 4].

Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.), refd to. [para. 6].

Cooper v. Registrar of Mortgage Brokers (B.C.) et al., [2001] 3 S.C.R. 537; 277 N.R. 113; 160 B.C.A.C. 268; 261 W.A.C. 268, refd to. [para. 6].

Junior Books Ltd. v. Veitchi Co., [1982] 3 All E.R. 201 (H.L.), refd to. [para. 8].

National Bank Financial Ltd. v. Potter et al. (2005), 238 N.S.R.(2d) 237; 757 A.P.R. 237; 2005 NSCA 139, refd to. [para. 10].

Austen v. Forbes Leasing Ltd. (2006), 241 N.S.R.(2d) 295; 767 A.P.R. 295; 2006 NSCA 25, refd to. [para. 10].

MacQueen et al. v. Ispat Sidbec Inc. et al. (2007), 253 N.S.R.(2d) 188; 807 A.P.R. 188; 2007 NSCA 33, refd to. [para. 10].

Lonrho plc v. Fayed et al., [1992] 1 A.C. 448; 127 N.R. 295 (H.L.), refd to. [para. 13].

CGU Insurance Co. of Canada v. Noble et al. (2003), 218 N.S.R.(2d) 49; 687 A.P.R. 49; 2003 NSCA 102, refd to. [para. 20].

Future Inns Canada Inc. v. Labour Relations Board (N.S.) et al. (2000), 179 N.S.R.(2d) 213; 553 A.P.R. 213 (C.A.), refd to. [para. 20].

Canadian National Railway Co. et al. v. Norsk Pacific Steamship Co. and Tug Jervis Crown et al., [1992] 1 S.C.R. 1021; 137 N.R. 241, refd to. [para. 22].

Privest Properties Ltd. et al. v. Foundation Co. of Canada Ltd. et al. (1997), 87 B.C.A.C. 182; 143 W.A.C. 182 (C.A.), refd to. [para. 24].

Hughes v. Sunbeam Corp. (Canada) Ltd. et al. (2002), 165 O.A.C. 68 (C.A.), refd to. [para. 24].

Hasegawa (M.) & Co. v. Pepsi Bottling Group (Canada) Co. (2002), 169 B.C.A.C. 261; 276 W.A.C. 261; 2002 BCCA 324, refd to. [para. 24].

Brett-Young Seeds Ltd. et al. v. Assié Industries Ltd. et al. (2002), 166 Man.R.(2d) 33; 278 W.A.C. 33; 2002 MBCA 74, refd to. [para. 24].

Mariani v. Lemstra (2004), 246 D.L.R.(4th) 489 (Ont. C.A.), refd to. [para. 24].

North Sydney Associates v. United Dominion Industries Ltd. (2006), 243 N.S.R.(2d) 372; 772 A.P.R. 372; 2006 NSCA 58, refd to. [para. 24].

Plas-Tex Canada Ltd. et al. v. Dow Chemical of Canada Ltd. et al. (2004), 357 A.R. 139; 334 W.A.C. 139 (C.A.), refd to. [para. 24].

R. v. Marshall (D.J.), Jr., [1999] 3 S.C.R. 533; 247 N.R. 306; 179 N.S.R.(2d) 1; 553 A.P.R. 1, refd to. [para. 32].

Reference Re Secession of Quebec, [1998] 2 S.C.R. 217; 228 N.R. 203, refd to. [para. 32].

Allen v. Gulf Oil Refining Ltd., [1981] A.C. 1001 (H.L.), refd to. [para. 33].

Authors and Works Noticed:

Linden, Allen M., and Feldthusen, Bruce, Canadian Tort Law (8th Ed. 2006), pp. 472 [para. 27]; 475 [para. 28].

Johnson, Rebecca, and McEvoy, John P., Gérard V. La Forest at the Supreme Court of Canada 1985-1997 (2000), p. 41 [para. 26].

McLachlin, Beverly, The Evolution of the Law of Private Obligation: The Influence of Justice La Forest, in Johnson, Rebecca, and McEvoy, John P., et al., Gérard V. La Forest at the Supreme Court of Canada 1985-1997 (2000), p. 41 [para. 26].

Counsel:

John P. Merrick, Q.C., and Darlene Jamieson, Q.C., for the appellants;

Harvey L. Morrison, Q.C., and Robert G. Belliveau, Q.C., for the respondents.

This appeal was heard on May 29, 2007, at Halifax, N.S., before Roscoe, Cromwell and Fichaud, JJ.A., of the Nova Scotia Court of Appeal

On June 8, 2007, Roscoe, J.A., delivered the following judgment for the Court of Appeal.