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No-Fault Liability

The Supreme Court of Canada released a decision near the end of last year in a case involving a class action commenced by neighbours surrounding a cement plant in Quebec. In doing so, the court confir...


The Supreme Court of Canada released a decision near the end of last year in a case involving a class action commenced by neighbours surrounding a cement plant in Quebec. In doing so, the court confirmed the existence of a no-fault liability scheme in Quebec in respect of neighbourhood disturbances. The decision has created significant concern for companies whose operations are located in close proximity to residential neighbourhoods. Previously, many of these companies may not have been concerned about exposure to potential liability because they were in compliance with regulatory requirements. However, this ruling establishes that, if the annoyances suffered by neighbours are significant enough, the company’s legal compliance may be irrelevant to the imposition of significant damages in favour of those neighbours.

St. Lawrence Cement (SLC) constructed a cement plant in Quebec pursuant to a special statute passed by the Quebec Legislature in 1952 that authorized SLC to build the plant, which began operating in 1955. Shortly thereafter, neighbours around the plant began complaining about dust, odours and noise emissions from the plant. Quebec’s Ministry of the Environment made efforts to address the residents’ complaints.

In 1993, two of SLC’s neighbours filed a motion in the Quebec Superior Court for authorization on behalf of the residents to institute a class action based on the neighbourhood disturbances. The motion was granted in 1994 and the action was filed a few months later. The action alleged that the neighbourhood disturbances caused by the cement plant were abnormal and excessive.

Quebec court decisions

The Superior Court held that SLC was liable to the residents because the annoyances suffered by the members of the class action were excessive. Although the court acknowledged SLC’s efforts to comply with applicable standards in the operation of the cement plant, the emissions nevertheless constituted abnormal annoyances.

In the trial decision, the court did not find that SLC was at fault, but rather that the Civil Code of Quebec contained a provision that allowed damages to be awarded even in circumstances where there was no fault. In terms of damages, the court held that the evidence showed there was a common injury, but that it varied in intensity from zone to zone and from year to year. As such, the court awarded damages that varied depending on distance from the cement plant.

SLC appealed the decision of the trial court to the Court of Appeal, which rejected the theory of no-fault liability in respect of neighbourhood disturbances. The Court of Appeal nevertheless found SLC liable on the basis of proven fault. The court came to this conclusion based on SLC’s failure to comply with applicable regulatory requirements. The Court of Appeal also reduced the amount of the damages awarded by the lower court.

Supreme Court of Canada appeal

SLC appealed the Court of Appeal’s decision that SLC was liable on the basis of fault and, also, in respect of the method adopted by the Court of Appeal for determining the quantum of damages. The representative plaintiffs in the class action cross-appealed, seeking recognition of a no-fault liability scheme applicable to excessive neighbourhood annoyances.

The plaintiffs also sought to restore the trial court’s findings on the appropriate quantum of damages.

In its decision, the Supreme Court of Canada dismissed the principal appeal by SLC and allowed the cross appeal by the representative plaintiffs. The court recognized two separate regimes of civil liability in respect of neighbourhood disturbances under Quebec law. The first regime is based on the wrongful conduct of the entity that causes the disturbances. The second regime is based on a no-fault liability scheme related to the annoyances suffered.

The court held that, in the case of fault-based liability, a fault may relate either to the abusive exercise of a right of ownership, or to violation of standards of conduct found in regulatory provisions related to the use of property. In the case of fault-based liability, an owner who commits a fault may be held liable for damages, even if the damages do not reach the level of abnormal or excessive annoyances.

The Supreme Court of Canada held that, in addition to the general rules applicable to fault-based civil liability, a scheme of no-fault liability had to be recognized in respect of neighbourhood annoyances under Article 976 of the Civil Code of Quebec. In a no-fault regime, conduct is not a relevant factor. Liability is based on the annoyances caused to the victim rather than the conduct of the person who caused them. In other words, Article 976 does not require evidence of wrongful conduct to establish liability of an owner who has caused excessive neighbourhood annoyances. On this basis, SLC was ordered to pay millions of dollars in damages to its former neighbours, former because SLC actually stopped operating the plant in 1997.

Of significance to other common law jurisdictions across Canada is the Supreme Court’s acknowledgement that a scheme of civil liability based on the existence of abnormal neighbourhood disturbances, and that does not require fault, is consistent with the approaches taken in Canadian common law provinces.

Rosalind Cooper, LL. B., is a partner with Fasken Martineau DuMoulin LLP, with offices across Canada. Ms. Cooper is based in Toronto, Ontario. Contact Rosalind atrcooper@tor.fasken.com


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