SUPREME COURT OF CANADA
Wabasso Ltd. v. National Drying Machinery Co.,  1 S.C.R. 578
Wabasso Limited (Plaintiff) Appellant; and
The National Drying Machinery Co. (Defendant) Respondent.
1981: March 23; 1981; June 22.
Present: Beetz, Estey, McIntyre, Chouinard and Lamer JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR QUEBEC
Negligence — Conflict of laws — Action for damages brought in Quebec — Declinatory exception — "Place where the whole cause of action has arisen" — Choice between contractual and delictual systems of liability — Jurisdiction of Quebec court — Civil Code, art. 1053 — Code of Civil Procedure, art. 68.
In 1969, by a contract concluded in Philadelphia, where respondent had its head office, appellant bought a machine for use in processing polyester fibres by means of heat. In June 1970, 'respondent's technicians came to Trois-Rivières to install this machine, and give appellant's employees the instructions required for its operation and maintenance.
In March 1973 the factory was destroyed by fire. Appellant alleged that the fire originated in the upper part of the machine and that its employees used it in accordance with the instructions of the technicians, but that the latter failed to warn the employees of the dangers and of the need to clean the upper part of the machine. Hence the action in damages, brought in the Superior Court for the district of Trois-Rivières.
By a declinatory exception, respondent alleged that none of the cases provided for by art. 68 C.C.P. applies to it in such a way as to give jurisdiction to the Superior Court. The motion was dismissed at first instance. This judgment was reversed on appeal (Paré J.A. dissenting).
The question is whether a party who has an action in damages based on a contract may disregard the contractual system and base his action on delictual liability when the wrongful act in question is also a fault covered by art. 1053 C.C.
Held: The appeal should be allowed.
The same fact can constitute both contractual fault and delictual fault, and the existence of contractual relations between the parties does not deprive the victim of the right to base his remedy on delictual fault. For
him to do so, the fault committed within the framework of the contract must in itself be a fault sanctioned by art. 1053 C.C., in the absence of a contract.
In the case at bar, the liability of respondent would exist even if there had been no contract between it and appellant. There is no reason why the negligent act should suddenly lose its delictual nature because the victim is a party to the contract during the course of which it is committed.
Accordingly, as the whole cause of action, as worded, arose in Trois-Rivières the Superior Court of that district has jurisdiction.
Ross v. Dunstall; Ross v. Emery (1921), 62 S.C.R. 393; Notre-Dame Hospital v. Patry,  2 S.C.R. 388; Alliance Assurance Co. et al. v. Dominion Electric Protection Company Limited,  S.C.R. 168; Villemure v. Turcot,  S.C.R. 716; Martel v. Hôtel-Dieu St-Vallier,  S.C.R. 745; Moran v. Pyle National (Canada) Ltd., [19751 1 S.C.R. 393; Distillers Co. (Biochemicals) Ltd. v. Laura Anne Thompson,  A.C. 458; McLean v. Pettigrew,  S.C.R. 62; Sorel Industries Ltd. v. Rhoades,  K.B. 247; Trower & Sons Ltd. v. Ripstein,  4 D.L.R. 497, referred to.
André Gagnon, Q.C., for the plaintiff, appellant.
Vincent O'Donnell, Q.C., Pierre de Grandpré, Q.C, and Fraser Martin, for the defendant, respondent.
English version of the judgment of the Court delivered by
CHOUINARD J.—By a majority decision of December 27, 1978, the Court of Appeal reversed the judgment of the Superior Court, allowed the declinatory exception of respondent and dismissed appellant's action.
Appellant has for several years operated a textile product factory in Trois-Rivières. On March 21, 1973, this factory was destroyed by a fire for which appellant holds respondent responsible,
hence its claim for some $19 million brought in the Superior Court for the district of Trois-Rivières.
Until about 1969, appellant manufactured cotton products. For the purpose of making cotton and polyester products appellant, by a contract concluded in Philadelphia, that is no longer in dispute, bought from respondent a machine made by it, known as a "Heat Setter", for use in processing the polyester fibres by means of heat.
Appellant alleged that the fire originated in the upper part of this machine and was caused by the ignition of combustible deposits left and accumulated by the cotton and the polyester as they were processed, and that these deposits should have been regularly removed and cleaned out. The upper part of the machine is permanently and rigidly closed; it was so designed that it appeared that this upper part did not require any maintenance or cleaning. Appellant further stated that neither it nor its employees committed any fault or negligence, and that its employees could not reasonably have assumed in the circumstances that it was necessary to open and clean the upper part of this machine. Appellant further alleged that its employees used the machine in accordance with the instructions of respondent and its employees with regard to both the manner of its operation and of its maintenance. Finally, appellant relied primarily on paragraphs 4 and 11 of the statement of claim for its submission as to the nature of its action and the jurisdiction of the Superior Court:
[TRANSLATION] 4. Defendant's technicians came to Trois-Rivières in June 1970 to install the machine, start it up and give the instructions required for its proper operation and maintenance to the employees of plaintiff, since it involved new products and procedures;
11. Without prejudice to the foregoing, defendant and its employees are liable for the damage sustained by plaintiff for the following reasons:
(a) these technicians came to Trois-Rivières and were paid to instruct plaintiff's employees in the operation and maintenance of the machine in question, and the instructions given by them with regard to the said machine and concerning its operation and
maintenance were, in the circumstances, inadequate, incomplete and negligent;
(b) in view of the design of the upper part of the machine and the inadequacy of the instruction manual in this regard, defendant's technicians in the course of their duties, in June 1970 and subsequently, should have warned plaintiff's employees of the dangers and should have recommended that they dismantle and clean the upper part of the said machine regularly;
(c) defendant and its employees knew or should have known, in June 1970 and subsequently, of the serious and ordinarily unforeseeable dangers of fire inherent in the machine in question, as installed and as made and assembled, and they should have informed plaintiff thereof;
By its declinatory exception respondent alleged that it has its head office in Philadelphia, in the State of Pennsylvania, United States, that the contract of sale of the machine was concluded in Philadelphia, that the whole cause of action, if any, results from the sale of the machine, that it has neither its actual domicile nor an elected domicile, nor any office, place of business or agency, in Quebec, and that it has no property there. Respondent alleged, essentially that none of the cases provided for by art. 68 C.C.P. applies to it in such a way as to give jurisdiction to the Superior Court for the district of Trois-Rivières. Article 68 reads as follows:
68. Subject to the provisions of articles 70, 71, 74 and 75, and notwithstanding any agreement to the contrary, a purely personal action may be instituted:
1. Before the court of the defendant's real domicile or, in the cases contemplated by article 85 of the Civil Code, before that of his elected domicile.
If the defendant has no domicile in Quebec but resides or possesses property therein, he may be sued before the court of his ordinary residence, before the court of the place where such property is situated, or before the court of the place where the action is personally served upon him;
2. Before the court of the place where the whole cause of action has arisen; or, in an action for libel published in a newspaper, before the court of the district where the plaintiff resides if the newspaper has circulated therein;
3. Before the court of the place where the contract which gives rise to the action was made.
A contract giving rise to an obligation to deliver, negotiated through a third party who was not the representative of the creditor of such obligation, is deemed to have been made at the place where the latter gave his consent.
Appellant challenged the declinatory exception in writing, alleging first that the contract of sale was concluded at Trois-Rivières and not in the United States. It has since abandoned this argument. It further alleged that [TRANSLATION] "the action is based on facts and acts which occurred at Trois-Rivières, and the wrongful acts alleged were committed and the damage occurred at Trois-Rivières", and it stated, as it had already alleged in its statemeent of claim, that the whole cause of action originated in the district of Trois-Rivières.
The issue thus defined was focussed on the much-disputed questions of joint application of the systems of contractual and delictual liability and of an election by the creditor of either system.
In a study titled "Des régimes contractuel et délictuel de responsabilité civile en droit civil canadien", (1962) 22 R. du B. 501, Prof. Paul A. Crépeau writes by way of introduction:
[TRANSLATION] The problem of the relationships between the systems of liability results from a concept of civil liability that is both unitary and dualist. There is now general recognition—since the criticism of the point by Planiol—of the fundamental postulates of the theoretical unity and technical duality of civil liability. On the one hand, there is general agreement that civil liability is based essentially on the breach of a legal obligation, whether a contractual duty or a legal provision. On the other hand, however, it has to be admitted that, where the technical provision of a civil remedy for the damage is concerned, Quebec law like French civil law has developed two systems of liability: one, the contractual system, based on failure to perform an obligation undertaken by agreement; and the other, the extra-contractual system, based on the breach of a legal duty.
These two systems have different characteristics in Quebec law, and contain separate rules favouring one or other of the parties.
Thus, at the outset of this inquiry, it is important to note the differences existing in Quebec positive law between the contractual and extra-contractual systems
of civil liability. This both provides a better understanding of the essentially practical nature of the problem which we are to examine and indicates how, specifically, the problem of the relationships between these two systems must be approached.
Some of these differences are real and illustrate clearly
the technical duality of civil liability; others, on the other hand, are very questionable and should perhaps no longer even be accepted. For these reasons, we will consider them separately.
After, as he said, analysing the differences between the two systems of liability, Prof. Crépeau stated the problem of their joint application and the making of a choice as follows:
STATEMENT OF PROBLEM
The relationships between the systems of civil liability essentially raise two considerations: that of a choice between the systems and that of the joint application of the systems. What is really involved? The problem of choice raises the question of whether the plaintiff who is a creditor under a contractual obligation may, if he so desires, rely on the contractual provisions, or may discard the latter and rely on the extra-contractual system of liability, depending on which is more favourable to his case. The question is thus one of a choice by the creditor between the contractual action and the extra-contractual action. The problem of joint application raises the question of whether the plaintiff who is a creditor under a contractual obligation can bring a "hybrid action", applying both systems of liability at once, but using the rules from either which are more favourable to his case. As can be seen, what results is a kind of contracto-delictualaction [sic] by which, for example, the plaintiff will rely on both the thirty-year prescription of a contractual action and the joint and several liability of the delictual action.
The solution applied will have the following consequences in the case at bar: if what has been called the contractual observance rule must be applied, the cause of action will be based on the breach of a contractual duty, and the Court must conclude, as Mayrand J.A. did, that the action should be brought in the court of respondent's real domicile or in that of the place where the contract was concluded, and in either case this would be the Philadelphia court.
However, if by joint application of the two systems of liability, or by appellant choosing the system of delictual liability, the action can be based on the delictual wrong which appellant alleges was committed at Trois-Rivières, the Superior Court will have jurisdiction.
In the latter connection, I should say that in my opinion in this case we are concerned not with joint application but with choice. It is true that Paré LA., dissenting in the Court of Appeal and with whose conclusion I concur, speaks of joint application. Additionally, there is some confusion in appellant's factum, which deals both with joint application and choice. Once appellant admits that the contract was concluded in Philadelphia, it is hard to see how it could base its action even in part on this contract in the Superior Court for the district of Trois-Rivières. Certain passages in appellant's factum indicate, in fact, that it intended to base its action on delictual liability:
[TRANSLATION] ... Respondent's technicians came to Trois-Rivières to install the machine, start it up and give the instructions required for its proper operation and maintenance.
We submit that appellant is basing its action on offences and quasi-offences, because it alleges that respondent's technicians, with regard to the operation and maintenance of the machine, gave inadequate, incomplete and negligent instructions; they did not inform appellant's employees of the serious risks involved in the machine, which they knew or were presumed to know. There was therefore fault, at least the fault of omission, and that fault and its effects continued up to the time of the fire.
This is the position adopted by counsel for the appellant at the hearing, based in particular on the aforesaid paragraphs 4 and 11 of the statement of claim. The real question that arises, therefore, is as to whether a party who has a remedy in damages based on a contract may disregard the contractual provisions and base his action on delictual fault when the fault in question is also one covered by art. 1053 C.C.
In support of its position appellant cited the
judgment Of this Court in Ross v. Dunstall; Ross v. Emery.
Appellant Ross was a manufacturer of sporting rifles, the mechanism of which was so designed that a layman could release the trigger with the bolt unlocked though appearing to be locked. To prevent rust, the guns were heavily oiled and purchasers were warned to wipe out this oil before using them. In order to do this, the bolt had to be taken apart, but no instructions were given as to the manner of reassembly. Two purchasers, Dunstall and Emery, were both seriously injured in separate accidents, in which each lost his right eye. Emery had purchased his gun directly from the manufacturer, while Dunstall had bought his through a dealer. Five of the six judges hearing the case found the manufacturer Ross liable in both cases.
Dunstall, who had bought his gun from a dealer and not from the manufacturer, based his action on art. 1053 C.C.
As to Emery, he argued for both contractual and delictual liability. Four of the five judges who ruled in the victim's favour accepted the argument of delictual liability under art. 1053 C.C. The following passage from Mignault J. at p. 422, which is translated in Notre-Dame Hospital v. Patry at pp. 397-8, is instructive:
The appellant's plea of prescription is not made out, for prescription certainly cannot run before the injury was incurred and these actions were served within the year of the accident. Were this a redhibitory action claiming annulment of the sale, it would possibly be a fatal objection that the respondent Emery allowed the rifle to remain in his possession for three years without firing. But, as I take it, his action can stand, notwithstanding the contractual relations between the parties, upon article 1053 as well as upon articles 1527, 1528 C.C. The former article is applied every day in the case of passengers injured while travelling on railway carriages, although a contract is made between them and the railway company for their transportation. And I cannot assent to the broad proposition that where the
relations between the parties are contractual there cannot also be an action ex delicto in favour of one of them. Very much depends on the circumstances of each particular case.
Davies C.J. concurred with Mignault J. Duff J. wrote, at p. 396:
Is the appellant responsible? I can see no reason for holding that such responsibility does not arise from the very terms of Art. 1053 C.C. unless it can be successfully contended that responsibility in such circumstances is limited to that arising from the contract of sale. I see no reason for such a limitation of the effect of the article mentioned.
Anglin J. wrote at p. 399:
The cases fall within the purview of Art. 1053 C.C.
and below, at p. 401:
I therefore prefer to rest my opinion in favour of the plaintiffs on Art. 1053 C.C.
In Alliance Assurance Co. et al. v. Dominion Electric Protection Company Limited, Pigeon J. wrote for the Court, at p. 173:
It is true that the existence of contractual relations does in no way exclude the possibility of a delictual or quasi-delictual obligation arising out of the same fact. However, it is necessary for this that all the elements required to give rise to such responsibility should be found. Obviously, a fault is the first of these elements. For a fault to exist, it is essential, as appears from the wording of art. 1053 C.C., that there be either a positive damaging and non-justifiable act or the omission to perform a duty towards the injured party.
In the case at bar no delictual liability was found against respondent because the latter did not owe to the injured party the duty which appellant alleged had not been performed. Pigeon J. explained, in this passage immediately preceding the passage cited above:
Here, on the contrary, it appears to me that the Court of Appeal is right in holding that the respondent did not have a legal obligation to perform the act it is blamed for not doing, namely to call the firemen promptly on reception of the signals coming from the premises of
Sportland Shoe. The respondent is not a public service charged with the duty of watching over a whole district generally, it is a private enterprise which assumes the obligation of surveillance of an establishment through an electrical system only towards those who subscribe to its service. The duty it is blamed for not performing and by reason of which it is alleged to have committed a fault involving liability is not one which falls on everybody; on the contrary, it is solely a contractual obligation.
The fact remains that, in Alliance, although no delictual liability was found, Pigeon J. clearly expressed the opinion that "the existence of contractual relations does in no way exclude the possibility of a delictual or quasi-delictual obligation arising out of the same fact".
We have seen that in 1921 Mignault J. had already stated in Ross v. Dunstall; Ross v. Emery that "The former article is applied every day in the case of passengers injured while travelling on railway carriages, although a contract is made between them and the railway company for their transportation".
Similarly, in the case of a hospital's liability for professional fault by a physician, this Court based such liability on art. 1054 C.C., despite the existence of a contract of care between the hospital and the patient. It will suffice to refer to Villemure v. Turcot and Martel v. Hôtel-Dieu St-Vallier.
In the Traité de Droit civil du Québec, vol. 8, Nadeau writes at p. 29:
[TRANSLATION] The civil liability of contracting parties may therefore be governed by arts. 1053 C.C. et seq., in addition to the special rules of contract, when the legal obligation not to commit civil fault exists alongside the obligation arising out of the contract.
While in France the majority opinion appears to reject choice, this is not unanimous. In his Traité de la responsabilité civile en droit français, vol. I, 2nd ed., 1951, René Savatier writes at pp. 192-3, No. 148:
[TRANSLATION] Can the same person on the basis of the same fact allege against the same defendant both contractual liability and delictual liability? It involves a
choice rather than joint application, as the same damage obviously cannot be compensated for twice. However, this choice would appear to allow the victim to rest his case on whichever of the two forms of liability is most advantageous for him.
Such a choice presents no difficulty in principle. It has been made by individuals having several capacities; and it is well established that the beneficiary of a contract can, instead of relying on the contract, use extra-contractual rights. Thus, one who has paid the debt of another with subrogation may bring an action on the contract against the debtor, but also has an action negotiorum gestio. Many such examples could be given.
There does not appear to be any reason why, if a wrongful act against the same victim both breaches a contractual obligation and a non-contractual duty, the existence of the contract would deprive the victim of the delictual action. There is even less reason why the breach of a contractual duty to the victim should deprive him of the benefit of legal liability based on arts. 1384 et seq.
However, to provide a legal basis for a choice by the victim between the contractual action and the delictual action, the special and distinct features of each must of course all be present.
And at pp. 200-01, No. 155:
[TRANSLATION] If the foregoing conditions are met, the victim has a choice between the contractual action and the delictual action. It has been argued that this choice does not provide him with any advantages, as allegedly the delictual action cannot enable him to escape the limitations placed by law or agreement on the contractual action, but this argument is not borne out in practice. Prescription, predetermined deadlines and limitations by agreement or by law on contractual liability are futile when the victim relies on delictual liability. Similarly, he can then choose the jurisdiction of the Court where the damaging act took place, or in the case of a criminal offence a criminal jurisdiction.
On the other hand, the courts have always preserved with all its advantages the action arising out of contract, especially where prescription is concerned.
Counsel for the appellant cited to this Court for purposes of comparison certain cases from other jurisdictions, especially the decision of this Court in a Saskatchewan case, Moran v. Pyle National
(Canada) Ltd., and the decision of the Privy Council in an Australian case, Distillers Co. (Biochemicals) Ltd. v. Laura Anne Thompson, where it can be seen that the solution which was adopted is the same as the one I am suggesting. However, I do not propose to discuss these cases any further, as they do not create precedents for Quebec civil law.
None of the other cases cited by either side appears to me to be any more decisive of the matter under consideration.
On the other hand, in his study cited above, Prof. Crépeau, commenting on McLean v. Pettigrew, writes that [TRANSLATION] "it can be definitely stated that the Supreme Court has by implication rejected the choice theory".
As a consequence of an automobile accident the victim, a non-paying passenger, contended that the driver was both contractually and delictually liable. The Court found that there was no contractual relationship between the driver and the non-paying passenger. Accordingly, it dismissed the claims of the victim based on contractual liability.
The following is the complete passage, at p. 548, in which Prof. Crépeau, after analysing this case and citing an extract from the opinion of Taschereau J., concluded that this Court had by implication rejected the choice theory:
[TRANSLATION]This text, which clearly demonstrates the dual nature of the systems of liability, certainly cannot be taken as expressly sanctioning the theory that the systems are incompatible, since the Court finally opted for exclusive application of the delictual system; but since, first, the plaintiff had pleaded both systems, and second, the Court properly thought it necessary, on account of the practical importance attaching in the area of conflicts of law to the distinction between the systems of liability, to discuss at considerable length the type of liability of the gratuitous driver, it can be definitely stated that the Supreme Court has by implication rejected the choice theory.
With respect, I do not share this view. The Court necessarily had to rule on the contractual liability pleaded by the victim. It held that the latter could not plead contractual liability because there was no contract. The Court did not go beyond this. In the circumstances, the problem of choice did not arise. The victim had only one remedy available, that of art. 1053 C.C.
I conclude that the same fact can constitute both contractual fault and delictual fault, and that the existence of contractual relations between the parties does not deprive the victim of the right to base his remedy on delictual fault. I concur in the following passage from the judgment of Paré J.A. (at p. 283):
[TRANSLATION] .. . the fact that a contracting party, the seller in the case at bar, committed some contractual fault is not a sufficient basis for the conclusion that he is delictually liable under art. 1053 C.C. on account of his fault on the one hand and the damage suffered by the contracting party on the other. Thus, the seller will not be liable under art. 1053 C.C. if he sells a defective item which is unsuited to its purpose and this results in commercial loss for the buyer.
It is therefore necessary that the fault committed within the framework of the contract be in itself a fault sanctioned by art. 1053 C.C. even in the absence of a contract. In the case at bar, the fault alleged was committed within the contract under consideration, but it would exist whatever the contract and whatever its nature (I am of course excluding cases of contractual limitations of liability). This liability would exist even if there had been no contract, and respondent had come into possession of the dangerous object only as the result of appellant's inaction. Indeed, from the viewpoint of art. 1053 CC., it is not so much the sale which gives rise to liability here, but rather the fact that appellant permitted respondent to use an object made by it, knowing the risks of using it, without warning respondent of those risks. This duty to warn becomes the basis of the liability, and it exists whether or not there is a contract. It is an aspect of negligence which could be cited without recourse to the contract, for anyone who places an object which he knows to be dangerous in use in the hands of another has a duty to warn him of this.
Furthermore, here as in the Ross case, I do not see how negligence committed within the framework of a contract can be merely contractual so far as the contracting
party who suffers from it is concerned, while it is delictual with regard to a third party who suffers the same damage. I do not see why the negligent act should in itself suddenly lose its delictual nature because the victim is a party to the contract during the course of which it is committed. To those who might argue that the parties to the contract intended to limit their mutual liability solely to the provisions of the contract, I would reply that any limitation on liability whatever, solely within the limits allowed, can only result from a specific agreement and not from a mere assumption of intent such as that on which this theory necessarily rests.
To the question whether the whole cause of action, namely all the facts that must be proven in order for the action to succeed, arose in the district of Trois-Rivières, I would answer in the affirmative on the action as worded.
The statement of claim bases the delictual action on the facts occurring in Trois-Rivières. It is alleged in paragraph 4 that defendant's technicians came to Trois-Rivières in June 1970 "to install the machine, start it up and give the instructions required . . . ". In paragraph 11, there is again a reference to Trois-Rivières, to which defendant's technicians came and were paid to "instruct plaintiff's employees in the operation and maintenance of the machine", and it is further alleged that the instructions given regarding the operation and maintenance were inadequate, incomplete and negligent. In subparagraph (b) it is alleged that in the course of their duties, in June 1970 and subsequently, defendant's technicians ought to have warned plaintiff's employees of the risk and should have recommended that they regularly dismantle and clean the upper part of the said machine. The statement of claim mentions that all these facts occurred at Trois-Rivières.
In this connection, counsel for the respondent cited, inter alia, a decision of the Court of Appeal, Sorel Industries Ltd. v. Rhoades, and a decision of the Privy Council, Trower & Sons Ltd. v. Ripstein. I do not think either of these cases is useful for a solution of the issue before this Court.
In Sorel Industries, an action had been instituted for a reduction of price and a refund with regard to pieces of artillery manufactured by defendant and found to be defective. The contract was made at Montreal, and the pieces manufactured and delivered at Montreal. The action, which was brought in the district of Richelieu, was transferred to the Superior Court for the district of Montreal.
In Trower & Sons Ltd., there was an action pro socio brought in Montreal and based on a contract concluded in London. It was held that the Superior Court for the district of Montreal lacked jurisdiction.
From the foregoing I conclude that the whole cause of action, as worded, arose in the district of Trois-Rivières, and that the Superior Court of that district has jurisdiction.
For these reasons I would allow the appeal, reverse the decision of the Court of Appeal, restore the judgment of the Superior Court and dismiss the declinatory exception of respondent, the whole with costs throughout.
Appeal allowed with costs.
Solicitors for the plaintiff appellant: Gagnon, de Billy, Cantin, Martin, Beaudoin and Lesage, Quebec.
Solicitors for the defendant, respondent: Lavery & O'Brien, Montreal.