Kamloops (City) v. Nielsen
Encyclopedia
Kamloops v. Nielsen, [1984] 2 S.C.R. 2 ("Kamloops") is a leading Supreme Court of Canada
(SCC) decision setting forth the criteria which must be met in order for a plaintiff
to make a claim in tort
for pure economic loss. In this regard, the Kamloops case is significant because the SCC adopted the “proximity” test set out in the House of Lords
decision of Anns v. Merton London Borough Council
, [1978] A.C. 728. Kamloops is also significant as it articulates the “discoverability principle” in which the commencement of a limitation period is delayed until the plaintiff is aware of the material facts on which a cause of action are discovered or ought to have been discovered by the plaintiff in the exercise of reasonable diligence. This is later adopted and refined in Central Trust Company v. Rafuse
, [1986] 2 S.C.R. 147. Finally, Kamloops develops the law governing circumstances where a plaintiff can sue the government in tort.
had insufficient foundations which were discovered upon inspection by the city. Stop work orders were issued but not enforced. The house was sold to the Neilsens. On discovering the construction deficiencies, the Neilsens sued the city for negligent
performance of inspection.
, the city had a discretion whether to inspect construction. The city argued that it could not be liable for exercising that discretion. The statute also fixed a limitation period
in which a plaintiff could sue the city, and the city argued the limitation period had expired. Finally, the city argued that the damages sought were considered to be “pure economic loss”, which at law were generally not recoverable.
The court concluded that the limitation period had not expired when the action was started. While the lawsuit had commenced after the limitation period, if measured from the time the city failed to properly inspect. The court held that the commencement of a limitation period was delayed until the material facts on which a claim is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence. This principle is later refined by the SCC in Central Trust Company v. Rafuse.
Finally, the court held that the plaintiffs could recover its loss despite its categorization as “pure economic loss”. The SCC adopted the “Anns Test” (from Anns v. Merton London Borough Council), which allows a claim in tort for economic loss when:
Since its decision in Kamloops, the SCC has enumerated five categories of compensable economic loss, originating in Canadian National Railway Co. v. Norsk Pacific Steamship Co., [1992] 1 S.C.R. 1021. While the categories are not closed, those identified to date are:
While Anns has since been overturned in the United Kingdom
, on a number of occasions the SCC has reaffirmed the Anns Test in Canada
. Examples include Dobson (Litigation Guardian of) v. Dobson
(1999) and Cooper v. Hobart
(2001).
Supreme Court of Canada
The Supreme Court of Canada is the highest court of Canada and is the final court of appeals in the Canadian justice system. The court grants permission to between 40 and 75 litigants each year to appeal decisions rendered by provincial, territorial and federal appellate courts, and its decisions...
(SCC) decision setting forth the criteria which must be met in order for a plaintiff
Plaintiff
A plaintiff , also known as a claimant or complainant, is the term used in some jurisdictions for the party who initiates a lawsuit before a court...
to make a claim in tort
Tort
A tort, in common law jurisdictions, is a wrong that involves a breach of a civil duty owed to someone else. It is differentiated from a crime, which involves a breach of a duty owed to society in general...
for pure economic loss. In this regard, the Kamloops case is significant because the SCC adopted the “proximity” test set out in the House of Lords
Judicial functions of the House of Lords
The House of Lords, in addition to having a legislative function, historically also had a judicial function. It functioned as a court of first instance for the trials of peers, for impeachment cases, and as a court of last resort within the United Kingdom. In the latter case the House's...
decision of Anns v. Merton London Borough Council
Anns v. Merton London Borough Council
Anns v Merton London Borough Council [1978] A.C. 728 was decided in the House of Lords. It established a broad test for determining the existence of a duty of care in the tort of negligence called the Anns test or sometimes retronymically the two-stage test.- Facts and background :In 1962 the...
, [1978] A.C. 728. Kamloops is also significant as it articulates the “discoverability principle” in which the commencement of a limitation period is delayed until the plaintiff is aware of the material facts on which a cause of action are discovered or ought to have been discovered by the plaintiff in the exercise of reasonable diligence. This is later adopted and refined in Central Trust Company v. Rafuse
Central Trust Company v. Rafuse
Central Trust Co. v. Rafuse, [1986] 2 S.C.R. 147 is a leading decision of the Supreme Court of Canada on liability of solicitors in negligence and breach of contract as well as the doctrine of discoverability under the Statute of Limitations.-Background:...
, [1986] 2 S.C.R. 147. Finally, Kamloops develops the law governing circumstances where a plaintiff can sue the government in tort.
Facts
A house in Kamloops, British ColumbiaKamloops, British Columbia
Kamloops is a city in south central British Columbia, at the confluence of the two branches of the Thompson River and near Kamloops Lake. It is the largest community in the Thompson-Nicola Regional District and the location of the regional district's offices. The surrounding region is more commonly...
had insufficient foundations which were discovered upon inspection by the city. Stop work orders were issued but not enforced. The house was sold to the Neilsens. On discovering the construction deficiencies, the Neilsens sued the city for negligent
Negligence
Negligence is a failure to exercise the care that a reasonably prudent person would exercise in like circumstances. The area of tort law known as negligence involves harm caused by carelessness, not intentional harm.According to Jay M...
performance of inspection.
Issues
Under statuteStatute
A statute is a formal written enactment of a legislative authority that governs a state, city, or county. Typically, statutes command or prohibit something, or declare policy. The word is often used to distinguish law made by legislative bodies from case law, decided by courts, and regulations...
, the city had a discretion whether to inspect construction. The city argued that it could not be liable for exercising that discretion. The statute also fixed a limitation period
Statute of limitations
A statute of limitations is an enactment in a common law legal system that sets the maximum time after an event that legal proceedings based on that event may be initiated...
in which a plaintiff could sue the city, and the city argued the limitation period had expired. Finally, the city argued that the damages sought were considered to be “pure economic loss”, which at law were generally not recoverable.
Results
The exercise of the statutory discretion granted to the city to inspect was a policy decision. A plaintiff cannot sue government for a policy decision; however, once the city elected to inspect, the enforcement of that inspection was an operational decision which could give rise to a duty of care. On a breach of that duty of care, a plaintiff could sue. The court concluded that the city breached its duty of care by negligently enforcing inspection.The court concluded that the limitation period had not expired when the action was started. While the lawsuit had commenced after the limitation period, if measured from the time the city failed to properly inspect. The court held that the commencement of a limitation period was delayed until the material facts on which a claim is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence. This principle is later refined by the SCC in Central Trust Company v. Rafuse.
Finally, the court held that the plaintiffs could recover its loss despite its categorization as “pure economic loss”. The SCC adopted the “Anns Test” (from Anns v. Merton London Borough Council), which allows a claim in tort for economic loss when:
- a. there is a sufficiently close relationship between the parties so that in the reasonable contemplation of the defendant, carelessness on its part could cause damages to the plaintiff; and
- b. there are no considerations that should serve to limit or negative the scope of the duty, the class of persons to which it is owed, or the damages to which a breach of the duty would give rise.
Since its decision in Kamloops, the SCC has enumerated five categories of compensable economic loss, originating in Canadian National Railway Co. v. Norsk Pacific Steamship Co., [1992] 1 S.C.R. 1021. While the categories are not closed, those identified to date are:
- a. The Independent Liability of Statutory Public Authorities;
- b. Negligent Misrepresentation;
- c. Negligent Performance of a Service;
- d. Negligent Supply of Goods or Structures;
- e. Relational Economic Loss.
While Anns has since been overturned in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, on a number of occasions the SCC has reaffirmed the Anns Test in Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
. Examples include Dobson (Litigation Guardian of) v. Dobson
Dobson (Litigation Guardian of) v. Dobson
Dobson v. Dobson, [1999] 2 S.C.R. 753 was a landmark decision by the Supreme Court of Canada on a pregnant woman's legal duties in tort law. It was the first time the Supreme Court of Canada had to consider this issue...
(1999) and Cooper v. Hobart
Cooper v. Hobart
Cooper v. Hobart, [2001] 3 S.C.R. 537, 2001 SCC 79, is a Supreme Court of Canada case that redefined the Anns test adopted in Kamloops v. Nielsen to establish a duty of care in civil tort cases.- Background :...
(2001).