Michael F. Harrington

The plaintiffs sought damages for economic loss and property damage after a fire broke out on an oil drilling rig.

The fire was caused by arcing in a heat trace system that ignited inflammable Thermaclad wrap.

The Supreme Court of Canada held that the manufacturer, Raychem, breached its duty to warn the rig owner of the product's inflammability and could not rely on the learned intermediary defence.

However, the builder, SJSL, was shielded from liability by an exclusion clause in its contract with the owner.

The Court declined to allow the rig's lessees to recover contractual relational economic loss due to policy concerns over indeterminate liability.

Finally, the Court abolished the common law maritime rule that contributory negligence acts as a complete bar to recovery, allowing the rig owner to recover 40% of its damages despite being 60% at fault.

The appellant oil companies applied to the Canada-Newfoundland Offshore Petroleum Board for a significant discovery declaration (SDD) based on an offshore well that had already been the subject of an earlier SDD.

The Board's Chairman summarily rejected the application, stating that a new SDD required the drilling of a fresh well.

The Supreme Court of Canada held that while the Chairman breached the duty of fairness by rejecting the novel legal argument without affording the appellants a hearing, the statutory scheme clearly required a fresh well for a new SDD.

Because remitting the matter to the Board would be futile given this legal conclusion, the Court declined to grant the requested discretionary remedies of certiorari and mandamus.