Canada: What Makes Negligence ‘Gross’ And When Is Misconduct ‘Wilful’?

Last Updated: May 7 2006

Article by Bryan Duguid, ©2006 Blake, Cassels & Graydon LLP

This article was originally published in Blakes Bulletin on Energy - Oil & Gas, March 2006

There is often debate during negotiations for joint venture and services agreements about the scope of the exclusion clause. Should liability include or be limited to "gross negligence", "wilful misconduct", or both? In addition to the differing levels of immunity that can be chosen, the parties can manage the likelihood of protracted litigation by clearly defining the chosen liability firewall. Through the use of contractual definitions for these terms, liability clauses provide a mechanism to reduce the risk or scope of disputes.

The Default at Common Law

The varying degrees of possible misconduct range along a continuum, including a progression from "mere" negligence, to "gross negligence", and then to "wilful misconduct". These terms are, of course, described variously in case law and legal dictionaries.

"Mere" negligence involves conduct described as:

  • The failure to exercise the standard of care that a reasonably prudent person would have exercised in a similar situation: Black’s Law Dictionary.
  • Carelessness amounting to the culpable breach of a duty: failure to do something that a reasonable man (i.e., an average responsible citizen) would do, or doing something that a reasonable man would not do: Oxford Dictionary of Law.

As one would expect, there is a higher hurdle for a claimant to prove that the negligence is "gross":

  • Conduct in which ... there is a very marked departure from the standards by which responsible and competent people habitually govern themselves: Dictionary of Canadian Law.
  • "A high or serious degree of negligence". (Holland v. Toronto (City))
  • A high degree of negligence, manifested in behaviour substantially worse than that of the average reasonable man: Oxford Dictionary of Law.

Other authorities regarding "gross negligence" focus more on the magnitude of the risks involved such that, if more than ordinary care is not taken, a serious mishap is likely to occur (Ogilvie v. Donkin).

Wilful misconduct is at a point further along the misbehaviour continuum:

  • Misconduct committed voluntarily and intentionally: Black’s Law Dictionary.
  • Wilfully has been defined as "intentionally", but it is also used to mean "recklessly".

Although the terms "gross negligence" and "wilful misconduct" are commonly negotiated and used, it is quite uncommon, especially until recently, to see agreements that actually set out definitions of these terms. It is true that, since these concepts are, by their nature, very circumstance dependent, it is impossible to provide a definition that will create a certain yardstick to measure all of the infinitely different possible types of conduct. However, considering the definitions provided by default, it is a worthwhile exercise to choose and set out a contractual definition, to limit the inherent uncertainty involved.

The Use Of Contractual Definitions

Consideration of the use of contractual definitions for these terms has been developing in the oil and gas industry in recent years. In the standard form construction, ownership and operation agreement developed by the Petroleum Joint Venture Association (PJVA), a definition of "Gross Negligence" has been included, which states:

"101. Definitions ...

"Gross Negligence" means: (i) a marked and flagrant departure from the standard of conduct of a reasonable person acting in the circumstances at the time of the alleged misconduct, OR (ii) such wanton and reckless conduct or omissions as constitutes in effect an utter disregard for harmful, foreseeable and avoidable consequences, provided that Gross Negligence shall not include any act or omission, insofar as it was done or omitted to be done in accordance with the instructions or express concurrence of the Operating Committee;" (emphasis added)

Also, in the current draft of the 2006 Operating Procedure developed by the Canadian Association of Petroleum Landmen (CAPL), the following definition is provided:

"Gross Negligence or Wilful Misconduct" means any act or failure to act (whether sole, joint or concurrent) by a person that was intended to cause or was in reckless disregard of, or wanton indifference to, the harmful consequences to the safety or property of another person which the person acting or failing to act knew, or should have known, would result from such act or omission, provided that Gross Negligence or Wilful Misconduct does not include any act or failure to act insofar as it: (i) constituted mere ordinary negligence; or (ii) was done or omitted in accordance with the express instructions or approval of all parties." (emphasis added)

Whether specifically intended or not, these two definitions create differing levels of protection from liability. The PJVA definition allows liability for gross negligence, as it is described in most of the legal dictionaries and case law, in other words, in circumstances that do not require intention or recklessness. On the other hand, the draft CAPL operating procedure, even though it uses the defined term "Gross Negligence or Wilful Misconduct", does not allow liability for "gross negligence" as contemplated by most of the authorities. Instead, there will be no liability unless there was "wilful misconduct", being conduct that is intentional, reckless or wanton in nature.

The Benefits of Using Contractual Definitions

Neither of the above definitions is better or incorrect. However, a comparison of these two clauses, against the backdrop of the default interpretations provided at common law, illustrates the benefit of choosing some definition that sets out clearly a particular level of protection.

A decision rendered by the Court of Queen’s Bench of Alberta in the early 1990s further suggests the benefits that might be obtained from stipulating a contractual definition, and the difference in result flowing from the particular liability threshold specified. One of the issues in the United Canso case, arose from the phrase "gross negligence or wilful misconduct", which was included in a Joint Operating Agreement among the parties. The phrase was not defined in that agreement. Although there were other issues involved, this litigation culminated in a lengthy trial, involving at least 12 lawyers.

On this particular issue the question was whether Husky, then Asamera, then Lasmer, as managing operators, were grossly negligent or had wilfully misconducted themselves when payout had been improperly calculated, and monies were paid out incorrectly as a result. In the end, after the Court evaluated the various circumstances, Husky was found not to be grossly negligent and not to have wilfully misconducted itself, whereas Asamera and Lasmer were found to have done so, and were therefore held liable for the consequences.

Even with contractual definitions of "gross negligence" and "wilful misconduct", the United Canso trial may have proceeded, and may have been lengthy. Factual disputes may continue to exist, even with well-defined terms, and the parties may disagree over the interpretation of the defined term. If a settlement had not been reached, evidence would still need to have been given about what was done, what was not done, and an assessment made by the Court as to whether this represented wilful misconduct or gross negligence as defined. However, one might conclude that there is very little downside and significant potential upside in defining terms, if only because it may serve to minimize the costly and time-consuming exercise that may unfold.


When negotiating and documenting industry agreements, participants would benefit from the use of clear contractual definitions to reflect the extent of the liability firewall intended.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
30 Oct 2019, Other, Toronto, Canada

The materials on the Blakes Business Class website are provided for informational purposes only. Accessing this information does not create a lawyer-client relationship.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions