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B.C. Court of Appeal Decision Illustrates Distinction Between Factual and Legal Causation in Negligence Cases

The B.C. Court of Appeal’s recent decision in Tellini v. Bell Alliance[1] illustrates how proving causation in negligence cases is not always easy. The plaintiff must prove not only that the defendant’s carelessness caused the plaintiff to suffer loss (“factual causation”), but also that the loss suffered was a reasonably foreseeable result of the defendant’s carelessness (“legal causation”). As Tellini illustrates, disputing causation can be an effective defence strategy in cases where the connection between the alleged carelessness and the alleged loss is either factually non-existent or legally too remote. Below, we summarize Tellini and our key takeaways from the decision.

Facts

The plaintiff and her common law partner agreed under a separation agreement that the plaintiff would receive her partner’s half interest in a property they owned jointly. Because the plaintiff was a “foreign national” under the Property Transfer Tax Act[2] at the relevant time, she would have to pay a foreign buyer’s tax upon registration of the transfer in the Land Title Office. After receiving her notice of assessment for the property, the plaintiff consulted a lawyer about the assessment’s effect on the amount of transfer tax she would have to pay upon registration. Soon after, the plaintiff instructed her lawyer to register the transfer. Her lawyer’s firm registered the transfer on January 16, 2017, and the plaintiff paid the foreign buyer’s tax.

Two months later, the provincial Lieutenant Governor in Council published an order contemplating amendments to the Property Transfer Tax Regulation[3] (the “Regulation”). These amendments, which came into force later that year, added a provision to the Regulation allowing a transferee to obtain a full refund of any foreign buyer’s tax paid if the transferee becomes a Canadian citizen or permanent resident “on or before the first anniversary of the registration date”.[4] The plaintiff then applied for permanent resident status, which she obtained on February 27, 2018. This meant that, had the plaintiff waited just 42 days longer to register the transfer, she would have been eligible for the refund. The plaintiff sued the lawyer and her firm, alleging that they were negligent in their provision of legal services, causing her to pay taxes that could have been avoided.

B.C. Supreme Court’s Decision

The B.C. Supreme Court ruled in the plaintiff’s favour. The court held that the defendants failed to meet the applicable standard of care in several respects, including by failing to advise the plaintiff about the possibility of waiting to register the transfer. The court also found that the defendants’ carelessness, and in particular the lawyer’s failure to provide competent advice, caused the plaintiff’s loss: but for this failure, the plaintiff would not have registered the transfer until at least March 13, 2017, and thus would have been eligible for a refund of the foreign buyer’s tax. The court ordered the defendants to pay this amount.

B.C. Court of Appeal’s Decision

The B.C. Court of Appeal allowed the appeal and dismissed the plaintiff’s action. The main issue on appeal was whether the lower court erred in its causation analysis. The Court of Appeal noted that, in order to establish negligence, the plaintiff needed to prove that the defendants’ carelessness caused the plaintiff’s loss both in fact and in law.

With respect to factual causation, the Court of Appeal did not revisit the lower court’s findings. The lower court found that the defendants’ failure to provide competent legal advice factually caused the plaintiff’s loss: “but for” that failure, the plaintiff would have waited to register the transfer and thus would have been eligible for the refund.

However, the Court of Appeal held that the trial judge erred by failing to consider legal causation. The plaintiff had to prove that her loss was a “real risk” — i.e., that a reasonable person in the defendants’ position would have foreseen the loss and not brushed it aside as far-fetched.[5] The Court of Appeal held that this type of causation could not be proven on the facts. The plaintiff’s loss of opportunity to claim a refund was not reasonably foreseeable when the lawyer provided her advice over two months before the notice of the relevant amendments was even published: “[a] reasonable solicitor would brush aside this ‘kind of thing’ as far-fetched”.[6]

Key Takeaways

Causation in negligence cases has two components: factual and legal. Factual causation is analyzed using a counterfactual “but for” test: But for the defendant’s carelessness, would the plaintiff have avoided the loss? On the other hand, legal causation is analyzed using a “remoteness” test: Did the defendants’ carelessness pose a “real risk” of bringing about the general type of loss that the plaintiff suffered? In other words, would a reasonable person in the defendant’s position have foreseen the loss and not brushed it aside as far-fetched? Only if the plaintiff proves both types of causation can the plaintiff establish negligence.

Disputing causation — factual and/or legal — can be an effective defence strategy. Even if the “but for” test is met, a defendant may be able to avoid liability by proving that the connection between the alleged wrong and the alleged loss is too remote. This strategy can be particularly effective in cases where the plaintiff’s loss was, as in Tellini, a “surprising and highly unlikely event”.[7]

We Can Help

Our National Appellate Litigation Group regularly represents appellants and respondents in appellate courts across the country. If you have questions about our appellate practice, please contact Brandon Kain or Adam Goldenberg.

 

Case Information

Tellini v. Bell Alliance, 2022 BCCA 106

Docket: CA47421

Date of Decision: March 22, 2022

___________________________________________

[1] 2022 BCCA 106 [Tellini].

[2] R.S.B.C. 1996, c. 378.

[3] B.C. Reg. 74/88 [Regulation].

[4] B.C. Reg. 108/2017.

[5] Tellini, at para. 53.

[6] Tellini, at para. 54 [emphasis in original].

[7] Tellini, at para. 55.

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