The Supreme Court of Canada’s latest pronouncement on government liability for negligence has muddied the waters. It is now more difficult than ever to determine whether particular government conduct falls within the protected realm of policy, foreclosing any negligence claim.
R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42 arose from two lawsuits against tobacco companies alleging wrongful conduct towards smokers in British Columbia. A central plank of the lawsuits was that the tobacco companies communicated to smokers that low-tar cigarettes were safer than regular cigarettes when they allegedly were not.
While denying the allegations against them, the tobacco companies made third-party claims against the government of Canada. The companies alleged that Health Canada had told them, and smokers, that low-tar cigarettes were safer and had urged smokers to switch to those cigarettes. It had also told the companies when and how to warn smokers about the risks of smoking. For its part, Agriculture Canada had designed, manufactured, promoted and licensed new breeds of tobacco for use in low-tar cigarettes.
The federal government moved to strike the third-party claims on the basis that they had no reasonable prospect of success. On appeal, one major question for the Supreme Court was whether the third-party claims attacked policy decisions. Since Kamloops v. Nielsen,  2 S.C.R. 2, the law in Canada’s common law provinces has been that the government owes no duty of care with respect to policy decisions, but that the implementation of those decisions – so-called operational conduct – is actionable, if not done with reasonable care.
Writing for the court, Chief Justice McLachlin began by describing the "elusiveness of a workable test" for identifying policy decisions. After reviewing jurisprudence from the United Kingdom, Australia and the United States, the Chief Justice defined policy decisions as "decisions as to a course or principle of action that are based on public policy considerations, such as economic, social and political factors, provided they are neither irrational nor taken in bad faith."
Applying that definition to the third-party claims, the Chief Justice said it was plain and obvious that the government had, out of concern for the health of Canadians and the costs associated with tobacco-related disease, made a policy decision to encourage smokers to switch to low-tar cigarettes. Since the government’s impugned conduct was all "part and parcel of," "integral to" or "relate[d] to" that policy decision, none of it was actionable in negligence.
McCarthy Tétrault Notes
On its own, Imperial Tobacco’s new definition of policy decisions is nothing remarkable; more than two decades ago, in Just v. British Columbia,  2 S.C.R. 1228, the Supreme Court similarly endorsed the view that policy decisions "involve or are dictated by financial, economic, social or political factors or constraints."
However, by situating all of the government’s impugned conduct within the policy realm, Imperial Tobacco blurs the scope of the government’s immunity for negligence.
It may be plausible to describe a high-level government strategy to reduce the risks of smoking as a policy decision driven by on the one hand, concerns about health and, on the other, societal acceptance of smoking’s risks, and the importance of taxes on cigarettes to the public purse. However, it is doubtful that the choice to promote low-tar cigarettes to implement this strategy was itself public policy. It seems more likely that this choice was driven by scientific and expert judgments as to the health qualities of those cigarettes and their palatability to smokers. Under Just, the choice would have been operational conduct and subject to a duty of care.
It is also a significant development to treat government conduct as immune from liability in tort to the extent that it is part and parcel of, integral to or related to a policy decision. As a result of this development, the viability of a negligence claim against government may no longer depend on the old distinction between policy and its implementation. The central debate may now concern the strength of the link between policy and the government conduct in question.
In light of Imperial Tobacco, parties who wish to sue the government, for negligence in the absence of clear irrationality or bad faith will need to closely consider whether the government conduct in question is a policy decision or perhaps just integral to one. They must be prepared to deal with increased uncertainty in the event that they bring suit.