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1935 Supreme(SC) 50
Privy Council At Alberta
Wright, Lords Blanes Burgh , Viscount Hailsham, Justice Lord Chancellor, JJ.
Northwestern Utilities Ltd. -Appellant
Versus
London Guarantee and Accident Co. Ltd. and others -Resopndent
Appeal No. 27 of 1935
Decided On : 24-10-1935
Redden, Blake , Frank Gahan, S.B. Woods, W.N. Tilley, G.H. Steer, Wilfred Greene
A utility company carrying dangerous substances under statutory authority is not strictly liable for escapes caused by a third party's independent act, but remains liable for negligence if it fails to monitor conspicuous third-party works that could jeopardize the installation's security.
Headnote:(A) Statutory Law - Sections relating to the location and construction of utility works - Strict liability for the escape of dangerous substances - Statutory authority as a defense - Where a utility company carries a dangerous substance, it is prima facie subject to strict liability if the substance escapes - However, where the company acts under statutory powers, the rule of strict liability is modified; the company is not liable if the work was properly done in pursuance of those powers and the accident was caused by the independent act of a third party without negligence on the part of the company.
(B) Statutory Interpretation - "Locate and construct" - The words "locate and construct" refer to the initial installation or new works and do not encompass the ongoing duty to "maintain" or repair - In matters of maintenance, the company is subject only to the obligation to use reasonable care.
(C) Negligence - Duty of care - A company carrying highly inflammable gas under public streets owes a duty to the public to exercise all care and skill to prevent damage - This includes a duty to be vigilant and monitor conspicuous public works conducted by third parties in the vicinity of its mains to ensure the security of the installation.
Facts of the case:
A utility company laid a high-pressure gas main under a public street. Subsequently, a municipality constructed a storm sewer system, including a weir chamber and tunnel, in close proximity to the main. The excavation caused the ground to subside, leading to a break in a welded joint of the gas pipe. Gas escaped, ignited, and caused a fire that destroyed a building and damaged adjacent properties. The company argued the break was solely due to the municipality's negligent excavation. The respondents alleged the company was negligent in failing to monitor the municipality's works.
Findings of Court:
The cause of the pipe break was the ground subsidence resulting from the municipality's construction of the sewer and weir chamber. However, the company was negligent because it failed to monitor the municipality's operations, which were public, conspicuous, and carried on for a significant duration. Given the high risk associated with high-pressure gas, the company had a duty to be vigilant.
Issues: Whether the company was subject to strict liability under the relevant statute; whether the act of a third party exonerated the company; and whether the company was negligent in failing to foresee and guard against the risk posed by the third party's works.
Ratio Decidendi: While the act of a third party is generally a defense to strict liability, the defendant remains liable in negligence if they fail to foresee and guard against the consequences of that third party's act. The company's failure to inspect conspicuous public works near its dangerous installation constituted a breach of its duty of care to the public.
Result: Appeal dismissed.
Legal Category Hierarchy
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tort
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strict liability
- dangerous substances
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negligence
- duty of care
- third party intervention
- nuisance
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strict liability
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administrative law
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statutory interpretation
- statutory authority
- franchise rights
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statutory interpretation
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practice and procedure
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pleadings
- amendment of claims
- costs
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pleadings
Lord Wright:-
The action out of which this appeal arises, was brought by the respondents as respectively owners of property in the city of Edmonton in Alberta and their insurers; they claimed that the property had been destroyed or damaged by a fire due to an escape of gas from the gas main of the appellants for which the appellants are liable. The damages claimed amounted to $320,278,64 but all questions of amount were reserved. On the question of liability before Ford, J., the appellants succeeded, but his decision was reversed by a judgment of the Supreme Court of Alberta (Appellate Division) by a majority (Lunney and Mitchell, JJ. A. dissenting) who ordered judgment to be entered for damages to be assessed. From that judgment, the present appeal is brought. The appellants are a public Utility Company incorporated under the Dominion Companies Act : they distribute natural gas under a franchise granted to their predecessors-in-title the Northern Alberta Natural Gas Development Company Limited (hereinafter called the company) by the City of Edmonton (hereinafter called the City) in November 1915, and confirmed by statute ( Alberta Statutes, 1916, c 29 ) The franchise was assigned to the appellants by deed dated 29th May 1923.
Under this franchise, the city granted to the company the full power to pull down, take up repair, maintain or operate its gas pipe lines along, through or under the streets and other public places within the city for the purpose of supplying natural gas to consumers, with power to break up the surface and make necessary excavations for that purpose. By Cl. 11 it was provided that the company should indemnify the city against any damages arising out of the construction and operation of its works, owing to the negligence of the company, its servants and employees, and that the city should be liable for all damage to the plant of the company caused by the negligence of the city, its workmen and employees. The company was bound to supply natural gas as required to consumers within the city limits at the property line when their land or premises were situated along the company's main line. The franchise was subject to the provisions of the Water Gas Electric and Telephone Companies Act of Alberta which by amendment made in 1924 was applied to companies incorporated or licensed under any statute of the Dominion or of Alberta. It is convenient to recite here Ss. 11 and 13 of that Act. S. 11 was in these terms:
The company shall make satisfaction to the owners or proprietor of any building or other property or to the Municipality or Minister of Public Works, as the case may be, for all damages caused in or by the execution of all or any of the said powers.
By S. 13 it was provided as follows: The company shall locate and construct its gas or water works or electric or telephone system and all apparatus and appurtenances thereto belonging or appertaining or therewith connected and wheresoever situated so as not to endanger the public health or safety.
The appellants in August 1923, laid a 12 inch intermediate pressure gas main along a lane in Edmonton, south of Jasper Avenue, and running at right angles into 107th Street; the lane was unpaved, but where the main went across and under the street an open trench could not be cut; the width of the street was 77 feet, and three excavations were made, one at each end about 7 feet from the side pavement and one in the middle, spaces of about 11 feet being left in the street for the traffic, the two intervening spaces being tunnelled. Each excavation was about 15 feet wide. The main was laid at a depth of 3 feet 6 inches: in the pipe were three welded joints, the one in the centre being in the space of the middle excavation: the pipe was pushed or pulled through the length of the tunnelled and excavated spaces, the earth being back-filled. Not far from this main and about the same level below the ground the appellants also laid a low pressure 10 inch main. There was also a
