Supreme Court of Canada
Alliance Assurance Company Limited et al. v. Dominion Electric Protection Company Limited,  S.C.R. 168
Alliance Assurance Company Limited et al. (Plaintiffs), Appellants;
Dominion Electric Protection Company Limited (Defendant), Respondent.
1969: May 13, 14; 1969: October 7.
Present: Fauteux, Abbott, Ritchie, Spence and Pigeon JJ.
ON APPEAL FROM THE COURT OF QUEEN’S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC
Negligence—Liability—Automatic sprinklers—Supervisory service—Fire activated sprinkler head—Delay in calling fire department—Contractual obligation—Legal obligation—Civil Code, art. 1053.
The plaintiffs were the insurers of S company which occupied, as tenant, a building belonging to the wife of its president. The building was equipped with automatic sprinklers. Under contract with the owner, the defendant had undertaken to provide supervisory service for the sprinklers and S was to pay the cost of this service. Before the closing of the establishment for two weeks holidays, a fire department officer telephoned the defendant’s local manager asking that special attention be given to any call coming from these premises. The following night a fire broke out and one sprinkler head was activated. The fire was put out but an hour passed before the defendant’s agents gave the alarm to the firemen who were the only persons authorized to shut off the water. The agents were not told to pay special attention to the building and went to an adjoining building first, from which a signal had also been received. Under their contracts with S the plaintiffs were forced to indemnify it for damages. They obtained subrogation and sued the defendant jointly. The latter pleaded absence of fault and of privity. The trial judge ruled that the defendant had committed a fault by not, taking immediately upon receipt of the signals the necessary steps to check the situation immediately and by failing to notify the fire department without delay. He considered that this fault made the defendant liable towards S despite the absence of privity of contract. This judgment was reversed by the Court of Appeal. The plaintiffs appealed to this Court.
Held: The appeal should be dismissed.
The Court of Appeal was right in holding that the defendant 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. The defendant 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 through an electrical system only towards those who subscribe to its service. It is true that the existence of contractual relations does not exclude the possibility of a delictual or quasi-delictual obligation arising out of the same fact. However, a fault is the first of the elements required to give rise to such responsibility.
APPEAL from a judgment of the Court of Queen’s Bench, Appeal Side, province of Quebec, reversing a judgment of Brossard J. Appeal dismissed.
L.P. de Grandpré, Q.C., and Francis Fox, for the plaintiffs, appellants.
Gustave Monette, Jr., for the defendant, respondent.
The judgment of the Court was delivered by
PIGEON J.—The appellants are the insurers of Sportland Shoe Company Limited which occupied, as tenant, a building in Montreal belonging to Mrs. Fischler, the wife of its President. As protection against fire, the building was equipped with automatic sprinklers. Under contract with the owner, the respondent had undertaken to provide supervisory service for these sprinklers and, under its lease, Sportland Shoe was to pay the cost of this service. The latter had also signed directly with the respondent another contract under which a burglar alarm service was supplied.
On Friday, July 5, 1957, after noon, an officer of the City of Montreal fire department, informed of the imminent closing of the establishment for two weeks holidays, went there with an investigator from an underwriters association and, together with a representative of Sportland Shoe, inspected the premises. This precaution was justified by the fact that the previous year, at the
same time, a fire of criminal origin had broken out and caused considerable damage. After the visit, the fire department officer telephoned respondent’s local manager, reminding him of the events of the previous year and asking that special attention be given to any call coming from these premises. The following night, a fire broke out and one sprinkler head was activated. The fire was put out, but an hour passed before the respondent’s agents gave the alarm to the firemen who are the only persons authorized to shut off the water. Having received simultaneous signals from the building occupied by Sportland Shoe and from an adjoining building, the respondent’s agent allegedly thought that a sudden rise of pressure only was involved not the release of a sprinkler head. Instead of alerting the firemen immediately, he waited to have men available. These men were not told to pay special attention to Sportland Shoe. Therefore, they went first to the other building and found nothing unusual. It is only later, nearly an hour after the signals were received, that they finally found out what had happened and called the firemen.
Under their contracts with Sportland Shoe, the appellants were forced to indemnify it for damages amounting to nearly $50,000. They obtained subrogation and sued the respondent jointly. The latter pleaded absence of fault and of privity.
In the Superior Court, Brossard J. ruled that the respondent had committed a fault by not taking, immediately upon receipt of the signals, the necessary steps to check the situation immediately and, if these could not be taken at once, by failing to notify the fire department without delay. He considered that this fault made respondent liable towards Sportland Shoe despite the absence of privity of contract and he estimated the damages therefrom at half the total damage, namely at $22,484.70.
The Court of Appeal reversed this judgment. The essential reasons for the decision rendered
by the Chief Justice of the Province and upon which his four brothers were in agreement were as follows:
[TRANSLATION] It seems clear to me that the learned trial Judge was right in disregarding the contract between Dominion Electric and Mrs. Fischler. Sport-land was not a party to this contract and neither it nor its transferees could invoke it.
It seems clear to me also that an omission may constitute a fault, but only when there is an obligation to act, that is, to perform, either acts prescribed by the law, or acts that must be considered obligatory in view of necessary human relations (Carpentier et du Saint, Répertoire général, tome XXXII, vis Responsabilité civile, n° 343, p. 883).
In the case at bar, the delay was due in the first place to a faulty interpretation of the signal received and then to the fact that Dominion Electrie’s employees first checked the building next to the one occupied by Sportland Shoe. Did Dominion Electric have the civil obligation towards Sportland Shoe of calling the firemen as soon as the signal was received and to check first the premises of Sportland Shoe? It seems to me that this obligation is imposed neither by law, nor by necessary human relations. It seems to me that a citizen who knows, by some means, that a sprinkler system has been activated in two buildings is under no civil obligation to call the firemen and to go and check one building instead of the other. If Dominion Electric had this civil obligation, it could only be by virtue of the promise made by its manager Neely, during his conversation with Captain Rowe on July 5, 1957. But then, we are out of the field of offenses or quasi‑offenses. It is an obligation that Dominion Electric would have assumed through its manager. But the learned trial Judge found that this conversation did not constitute a contract and I think he is right. To his reasons, I will add the following: the evidence shows without contradiction that Neely did not have the authority to bind Dominion Electric by contract.
My conclusion is that Dominion Electric did not commit any fault towards Sportland Shoe because it had no obligation to perform the act it is blamed for not doing. The facts of the case at bar are not unlike those which led to our judgment in Banque de Montréal v. Boston Insurance Company (1963, Q.B. 487) affirmed by the Supreme Court of Canada (1964, S.C.R. v).
I must say at first that it does not seem quite certain to me that Sportland Shoe and its transferees cannot invoke the contract between Mrs. Fischler and the respondent. However, it is not necessary to decide if Sportland Shoe actually did make itself responsible for the contract without getting this benefit because, even if it could take advantage of it, the following clause would bar the claim:
5. It is agreed by and between the parties hereto that Dominion Company is not an insurer, and that the rates hereinafter named are based solely on the probable value of the service in the operation of the system described, and in case of failure to perform such service and a resulting loss its liability hereunder shall be limited to and fixed at the sum of fifty dollars ($50.00) as liquidated damages.
I fail to see how in proceedings based on the contract we could avoid giving effect to this stipulation of nominal damages just as, in general, we must give effect to a stipulation of exemption from liability: Glengoil Steamship Co. v. Pilkington. There is no question here of gross negligence as in the case of Canada Steamship Lines Ltd. v. The King. It is equally clear that the telephone conversation did not create a separate agreement exempt from the conditions of the contract with Mrs. Fischler.
The only question therefore is whether the Court of Appeal was right in excluding the quasi‑delictual liability on which the trial Judge based his decision. In his judgment, the latter said:
[TRANSLATION] Towards Mrs. Fischler, on the one hand, and Sportland Shoe, on the other, the defendant and its agents were in the same situation as the driver of an automobile towards his employer with whom he has contractual obligations, on the one hand, and third parties, motorists or pedestrians, on the other hand, to whom he has an obligation of care.
With deference to the learned Judge, the comparison is inaccurate, I must say. The obligation of the driver of an automobile towards third parties, or more accurately the duty of care
lying upon him, is unmistakably established by law. 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.
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.
At the hearing, as in a prolix factum, a great many cases and authors were quoted to demonstrate that a duty a breach of which is a fault may exist without an explicit legal provision proclaiming its existence. This is not doubtful but does not mean that we should consider as such a duty an obligation that does not arise from the law but solely from a contract with a third party.
As the Court of Appeal rightly pointed out, such a concept of civil responsibility might result in creating in favor of third parties, who are strangers to the contract, obligations more onerous than those enuring therefrom to the contracting party. This would happen whenever an exclusion or limitation of liability is stipulated.
Many cases were cited respecting the responsibility of the manufacturer of a dangerous product towards persons who did not contract with him. In such cases, the source of the responsibility is the breach on the duty lying upon the manufacturer not to put such things on the market and this duty is independent of his contractual obligation, as vendor: Ross v. Dunstall. The same observation applies to the owner of a leased building towards persons admitted to the premises by the lessee. The responsibility for damages resulting from a defective condition rests with him as owner and exists independently of his contractual obligations as lessor. Examples could be multiplied and in every case where quasi-delictual responsibility has been held to exist, it will be found that its basis is the existence of a duty other than one deriving solely from a contractual obligation.
The appeal must be dismissed with costs. This dismissal is adjudged on the merits because, at the start of the hearing, leave to appeal was granted without costs to the appellants; their appeal as of right was ill-founded because the amount in controversy is to be considered separately for each, however respondent on his part had failed to move to quash for that reason.
Appeal dismissed with costs.
Solicitors for the plaintiffs, appellants: Tansey, de Grandpré, Bergeron, Monet, Lavery & O’Donnell, Montreal.
Solicitors for the defendant, respondent: Monette, Filion, Clerk, Michaud, Barakett & Lévesque, Montreal