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Torts - Negligence - Wilful Misconduct

Peracomo Inc. v. TELUS Communications Co. (SCC, 2014)

In this case the Supreme Court of Canada reviewed the jurisprudence on what constituted "wilful misconduct", here in the context of allocating liability under an insurance contract and an international maritime convention:
[56] While this Court has not interpreted “wilful misconduct” in the context of a marine insurance exclusion, it has interpreted similar language in other contexts on many occasions. One statement that has been particularly influential is that of Duff C.J. in McCulloch v. Murray, 1942 CanLII 44 (SCC), [1942] S.C.R. 141. The Court had on appeal a jury finding that a driver was liable to a gratuitous passenger. That liability depended on whether it had been open to the jury to find that the passenger’s injury had been the result of the driver’s “gross negligence, or wilful and wanton misconduct”: Motor Vehicle Act, S.N.S. 1932, c. 6, s. 183. In upholding the finding of liability made by the jury, Duff C.J. held that the terms “gross negligence”, “wilful misconduct” and “wanton misconduct” all “imply conduct in which, if there is not conscious wrong doing, there is a very marked departure from the standards by which responsible and competent people in charge of motor cars habitually govern themselves”: p. 145. I pause to note that, unlike the standard set by the Convention, “conscious wrongdoing” — that is “intentional wrongdoing” — is not required in order for the insured’s actions to constitute wilful misconduct. While Duff C.J. did not set out an exhaustive definition of “wilful misconduct”, his comments have been repeatedly cited with approval by the Court in gratuitous passenger cases: Studer v. Cowper, 1951 CanLII 34 (SCC), [1951] S.C.R. 450; Thompson v. Fraser, 1955 CanLII 92 (SCC), [1955] S.C.R. 419; Walker v. Coates, 1968 CanLII 79 (SCC), [1968] S.C.R. 599; Markling v. Ewaniuk, 1968 CanLII 119 (SCC), [1968] S.C.R. 776; Goulais v. Restoule, 1974 CanLII 10 (SCC), [1975] 1 S.C.R. 365.

[57] In other contexts, “wilful misconduct” has been defined as “doing something which is wrong knowing it to be wrong or with reckless indifference”; “recklessness” in this context means “an awareness of the duty to act or a subjective recklessness as to the existence of the duty”: R. v. Boulanger, 2006 SCC 32 (CanLII), 2006 SCC 32, [2006] 2 S.C.R. 49, at para. 27, citing Attorney General’s Reference (No. 3 of 2003), 2004 EWCA Crim 868, [2005] Q.B. 73. Similarly, in an insightful article, Peter Cane states that “[a] person is reckless in relation to a particular consequence of their conduct if they realize that their conduct may have that consequence, but go ahead anyway. The risk must have been an unreasonable one to take”: “Mens Rea in Tort Law” (2000), 20 Oxford J. Legal Stud. 533, at p. 535.

[58] These formulations capture the essence of wilful misconduct as including not only intentional wrongdoing but also conduct exhibiting reckless indifference in the face of a duty to know. This view is supported by two of the key authorities relied on by the appellants and they are, as I see it, sufficient to deal with the issue raised on this appeal.

[59] The appellants’ point first to the reasons of Bramwell L.J. in Lewis v. Great Western Railway Co. (1877), 3 Q.B.D. 195 (C.A.). He referred to wilful misconduct (in the context of carriage by rail) as being either conduct such that “the person guilty of it should know that mischief will result” or which the person “acted under the supposition that it might be mischievous, and with an indifference to his duty to ascertain whether it was mischievous or not”: p. 206. This formulation encompasses not only intentional wrongdoing but also reckless indifference in the face of a duty to know.

[60] The appellants also rely on the judgment of Cresswell J. in Thomas Cook Group Ltd. v. Air Malta Co., [1997] 2 Lloyd’s Rep. 399 (Q.B.D.), dealing with the limitation in the unamended Warsaw Convention which excluded limitation of liability for damage caused by the wilful misconduct of the carrier: art. 25(1). Cresswell J. reviewed the English jurisprudence in detail and set out six propositions concerning the meaning of wilful misconduct. He began by dealing with the word “misconduct” and holding that the inquiry is as to whether the conduct is so far outside the range of conduct expected of a person in the circumstances as to be properly regarded a misconduct: p. 407. He then turned to the sort of misconduct that could be considered wilful. Among the sorts of conduct to which he refers is this:
A person wilfully misconducts himself if he knows and appreciates that it is misconduct on his part in the circumstances to do or to fail or omit to do something and yet . . . acts with reckless carelessness, not caring what the results of his carelessness may be. (A person acts with reckless carelessness if, aware of a risk that goods in his care may be lost or damaged, he deliberately goes ahead and takes the risk, when it is unreasonable in all the circumstances for him to do so.) [p. 408]
[61] Without attempting to spell out exhaustively the sorts of conduct that are covered by the term “wilful misconduct”, I accept, as do the appellants, that these statements accurately, although not necessarily exhaustively, describe types of conduct that fall within that description for the purposes of the exclusion of liability under the Marine Insurance Act. In short, wilful misconduct includes not only intentional wrongdoing but also other misconduct committed with reckless indifference in the face of a duty to know.

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