Gross Carelessness by Regulators Must Be Extreme for There to Be LiabilityFinney v. Barreau du Québec, 2004 SCC 36,  2 SCR 17
For almost two decades the case of Finney v Barreau du Québec, 2004 SCC 36, http://canlii.ca/t/1h87m has caused regulators to wonder in what circumstances a regulator could be held liable for faulty regulation. The cases before and after Finney are fairly consistent in saying that a regulator will only be held liable for harm caused by a failure to regulate where the regulator acted in bad faith, which is generally thought to require more than carelessness and negligence. However, in Finney, Canada’s highest court found the regulator liable for acts of “gross carelessness and serious negligence”, which, in the circumstances, amounted to a form of bad faith.
A recent case from the Alberta Court of Appeal spoke at some length about the exceptional circumstances of Finney that would not frequently apply to mistakes or omissions by regulators:
The lawyer in Finney had been subject to four disciplinary complaints between 1980 and 1985 and found guilty on at least three occasions. After a lengthy investigation, in 1990 the professional inspection committee determined he was incompetent and recommended his suspension. But instead of suspending the lawyer, in 1992 the Barreau ordered continuing education and supervision.
McCullock-Finney’s difficulties with the lawyer began in 1990, first as a client, and then as an adverse party. What followed was an escalating dispute between the lawyer and McCullock-Finney where the lawyer engaged in egregious conduct referred to as “guerilla war” and harassment of McCullock-Finney. The Barreau failed to intervene or exercise its statutory oversight even though McCullock-Finney and her lawyer filed numerous complaints against the lawyer, McCullock-Finney complained about the Barreau’s inaction, the courts alerted the Barreau to the lawyer’s troubling behavior and the lawyer’s supervisor withdrew. It was not until 1994 that the Barreau provisionally struck the lawyer off the rolls.
Both the lawyer’s behavior and the Barreau’s inaction in Finney were extreme; nothing akin to what has happened here.
See: Swaleh v Lloyd, 2020 ABCA 18, http://canlii.ca/t/j4rnl.
When described in this fashion, the limited circumstances in which gross careless and serious negligence would apply to a regulator becomes clearer.