Liability

How BC law treats it

Liability in BC civil law usually comes from one of four sources. Contractual liability arises when a party fails to perform what it promised. Tort liability arises from wrongs such as negligence, nuisance, defamation or fraud, where the claimant must prove the elements of the tort and that the loss was caused by it and not too remote (Mustapha v Culligan of Canada Ltd, 2008 SCC 27). Statutory liability is imposed directly by legislation, for example an occupier's duty of reasonable care under the Occupiers Liability Act, RSBC 1996, c 337, s. 3. Equitable liability arises from breach of trust or fiduciary duty. Where more than one person is at fault, the Negligence Act, RSBC 1996, c 333 apportions liability according to degree of fault, including the claimant's own contributory fault. A person can also be vicariously liable for another's wrong, as an employer usually is for employees acting in the course of employment. Where the claimant is not at fault, defendants who are at fault are jointly and severally liable, so the claimant can recover the whole judgment from any one of them; where the claimant is partly at fault, each defendant is generally liable only for its own share (Negligence Act, ss. 1 and 4). The Limitation Act, SBC 2012, c 13 sets a basic two year period running from when the claim is discovered (s. 6) and an ultimate 15 year period (s. 21). Motor vehicle injuries are a major exception to ordinary fault liability: for accidents on or after May 1, 2021, BC's no fault Enhanced Accident Benefits scheme under the Insurance (Vehicle) Act, RSBC 1996, c 231 largely bars lawsuits against at fault drivers. Contracting parties can also limit or exclude liability by clear clauses, subject to the court's review of unconscionability and public policy.

What it means for your business

Every contract, product, premises and employee creates potential liability for a BC business. Understanding where liability comes from helps owners choose the right structure, insurance and contract terms. A limited liability company protects shareholders from the company's debts, but it does not protect a person from liability for their own torts, personal guarantees or statutory director liabilities. Limitation of liability and indemnity clauses can allocate risk between businesses, but only if they are clearly drafted. Example: A Burnaby equipment supplier delivers a defective machine that injures a customer's employee. The supplier may face contract claims from the customer, while the injured worker's compensation claim generally runs through WorkSafeBC rather than a lawsuit against his own employer.

Risks and common mistakes

Assuming incorporation protects owners from all liability, including their own negligence and personal guarantees. Missing the two year limitation period by waiting for settlement talks to finish without a standstill agreement. Relying on a limitation of liability clause that is buried, ambiguous or never brought to the other party's attention. Assuming an at fault driver can be sued in the usual way for a post May 2021 BC car accident. Failing to notify an insurer promptly of a claim, which can jeopardize coverage.