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CCCA_V5No4_Col-McCarthys-FIN_CCCA_V1No2_Col-Litigat-V1.qxd 11/20/11 11:29 PM Page 50 Legal Update – McCarthy Tétrault LLP True Policy Decisions at the Supreme Court of Canada By Brendan Brammall n a recent judgment, R. v. ImperialTobacco Canada itself. Just v. British Columbia, operational decisions. “In fact,” the Court ICanada Ltd., 2011 SCC 42, the Supreme [1989] 2 S.C.R. 1228, for example, is wrote, “decisions in real life may not fall Court of Canada refined its approach to a viewed as the high water mark of potential neatly into one category or the other.” challenging issue in tort law — namely, governmental liability. In that case, a boul- Instead, core policy decisions should be when may a governmental agency be sued der crashed onto the plaintiff’s car, injuring defined positively, the Court explained, as for negligence? him and killing his daughter,and he alleged “decisions as to a course or principle of Governmental agencies perform many of that the province had failed to maintain the action that are based on public policy con- their activities under permissive legislation, highway.The Court held that the highway siderations, such as economic, social and which empowers them to do something but inspections and remedial work at issue were political factors, provided they are neither ultimately leaves the decision whether and properly characterized as “operational.” By irrational nor taken in bad faith.”The rank of how to do it within their discretion. contrast, in Brown v. British Columbia the person making the impugned decision, Exercising this discretion often involves (Minister of Transportation and Highways), though not determinative, may assist the considering a variety of political, social, and [1994] 1 S.C.R. 420, the plaintiff’s truck analysis, as employees working at a lower, economic factors. Difficult choices must be skidded on black ice and went over an operational level tend not to make policy made. Accordingly, it has been widely rec- embankment. He alleged that the province choices.The Court also stressed that policy ognized that governmental agencies differ had failed to maintain the road, but the is “a narrow subset” of discretionary deci- from private actors and should not be Court held that the maintenance schedule sions. Though policy decisions are always exposed to potential negligence liability in place at the time involved “classic policy discretionary, the converse is not true. whenever they exercise a statutory power. considerations.” The comparable facts and In Imperial Tobacco, the Court held that At the same time, the early common law different outcomes in Just and in Brown,and the alleged conduct at issue — statements position, which shielded the Crown from in other cases, have suggested to some by Canada that low-tar cigarettes are less liability on the basis that “the King can do commentators that the policy/operations harmful than other cigarettes, and the no wrong,” was discarded long ago. The distinction is too unpredictable. development by Canada of low-tar strains challenge lies in establishing a workable In Imperial Tobacco, the Court recognized of tobacco — formed part of a high-level framework for determining when it is, and that “courts have found it notoriously diffi- governmental policy to encourage contin- is not,appropriate to allow a negligence suit cult to decide whether a particular govern- uing smokers to switch to low-tar ciga- against a governmental agency. ment decision falls on the policy or opera- rettes.The Court therefore struck as non- The dominant Canadian approach has tional side of the line.” The Court then actionable the tobacco companies’ third- been to distinguish between “policy” and reviewed English,Australian, and American party negligent misrepresentation and neg- “operations”at the second stage of the duty case law and made three observations. First, ligent design claims against Canada. of care analysis. Thus,a true policy decision governmental action should not be immune The Court indicated that its refined is exempt from suit (provided that it is nei- from negligence liability merely because it approach is not a “litmus test” and that dif- ther irrational nor made in bad faith), involves “discretion.” As the Court noted, ficult cases may still arise, but that most whereas a lower-level, operational decision “[d]iscretion can imbue even routine tasks, true policy decisions will now be “readily may give rise to a duty of care and expose like driving a government vehicle.”Second, identifiable.” It will be interesting to see the governmental agency to liability. the “central insight” in the case law — whether ImperialTobacco brings greater pre- Simple as this distinction between “poli- that“true”or“core”policy decisions should dictability to this area of tort law. cy” and “operations” is to express in gener- be immune from negligence liability — has al terms, it has proven difficult to apply. considerable support in all jurisdictions. Brendan Brammall is an associate in McCarthy Commentators have illustrated the difficul- Third, defining a core policy decision Tétrault LLP's Litigation Group in Toronto. ty with reference to arguably inconsistent negatively — as“not operational”— creates He maintains a general litigation practice. decisions from the Supreme Court of a false dichotomy between policy and (bbrammall@mccarthy.ca) 50 CCCA Canadian Corporate Counsel Association WINTER 2011