Many American companies doing business north of the border had hoped Canadian litigation might reverse its recent tendency to mimic its U.S. counterpart, particularly with the advent of class actions in Canada. To them, Mustapha v. Culligan of Canada Ltd.–a case about a fly in the water–looked a bit too much like the fly in the ointment.

Fortunately, a fly in the water does not a fly in the ointment make–at least not after the Supreme Court of Canada’s May 2008 decision in Mustapha.

To the relief of the business and insurance communities, the high court upheld the 2006 ruling of the Ontario Court of Appeal overturning a $341,000 judgment by Superior Court Justice John Brockenshire in favor of Waddah Mustapha. The Windsor, Ontario, man claimed he suffered severe mental distress after noticing a fly in a replacement bottle of drinking water supplied by Culligan, a popular distributor of “clean water” products.

“Had the Supreme Court allowed Mr. Mustapha’s claim, it would have set the bar for
success so low that Canadian courts would have been inundated with similar claims,” says Hillel David of McCague Peacock Borlack McInnis & Lloyd. David represented Culligan. “I also believe that had Mustapha succeeded, there would have been sufficient outcry from the business community to bring about remedial legislation.”

Extreme Reaction
Indeed, Paul Pape of Pape Barristers, Mustapha’s lawyer, maintains that the Pandora’s box
scenario–with U.S.-style litigation pouring out of the box–was his client’s most formidable obstacle to success.

“If the Supreme Court decided in my client’s favor in a situation where the vast majority of the population would never have had the reaction that he did, it would have brought the system of justice into disrepute,” Pape says. “But my answer to that is that hard cases make bad law.”

In 1986, a Culligan representative who extolled his product’s purity as particularly beneficial for pregnant women and children convinced Mustapha to install Culligan dispensers at his business and at his home. The family used nothing but bottled Culligan water for the next 15 years.

In 2001, Mustapha and his wife were replacing the bottle in the home dispenser when they noticed a dark object in the replacement bottle that turned out to be a dead fly.

According to his suit, Mustapha felt nauseous and experienced abdominal pain. He could not get the fly out of his mind and became obsessed with fear that his health and that of his family had been compromised and that Culligan had betrayed them. He claimed he had nightmares, was unable to drink water, avoided long showers and required treatment and medication.

Brockenshire accepted the medical evidence that Mustapha had developed “nervous shock,” a major depressive disorder with associated phobia and anxiety that supported a claim
of negligence. Although he observed that Mustapha’s reaction was “objectively bizarre,” Brockenshire found that his cultural background and the family’s high level of cleanliness and avoidance of insects predisposed his reaction.

Insect Negligence
On appeal, Culligan did not deny that the fly in the bottle contributed to Mustapha’s illness. But David argued that Brockenshire had erred by failing to consider the objective question of whether the effects of the incident were reasonably foreseeable in a person of “reasonable fortitude and robustness.”

The Ontario Court of Appeal agreed with David and dismissed Mustapha’s suit. However, a three-judge panel of the Supreme Court granted leave to appeal, indicating a belief that there was merit and national importance to the issues raised.

Proponents of U.S.-style rights for Canadian plaintiffs were overjoyed. But the elation was short-lived: after hearing full argument on the case, a seven-judge bench agreed unanimously with the Court of Appeal that Mustapha’s case should be dismissed.

While acknowledging that Culligan did owe the plaintiff a duty of care that the company breached and that Mustapha’s reaction–although purely psychological–was compensable, the court ruled he could not recover because “the law of tort imposes an obligation to compensate for any harm done on the basis of reasonable foresight, not as insurance.”

Here, Mustapha’s “unusual” or “extreme” reaction to Culligan’s negligence, while “imaginable,” was not reasonably foreseeable. Therefore, the court found, it was too remote to attract an award of damages.

Raising Questions
Lisa La Horey, who was co-counsel with David, maintains that the decision is beneficial both to Canadian plaintiffs and defendants.

“To the extent this ruling brings clarity to the law, it is beneficial to all litigants because it makes it easier for lawyers to provide guidance to their clients,” she says.

But Professor Russell Brown of the University of Alberta’s Faculty of Law finds it difficult to understand how the suit made it to the Supreme Court.

“It’s not clear to me why the Supreme Court agreed to hear this case,” he says. “The court passed up the opportunity to make a comprehensive statement on the law regarding compensation for nervous shock other than to say that the distinction between physical and mental injury is ‘elusive and arguably artificial’–and if they weren’t going to make a comprehensive statement, why hear the case?”

Brown also says the decision raises more questions than it answers. “The court provides little guidance for distinguishing psychological upset, which it says is not compensable, from psychological disturbance that rises to the level of compensable injury,” he says.

The upshot from Mustapha seems to be that even if Canadian courts aren’t moving to U.S.-style litigation, the potential for litigation generally shows no signs of abating.