1998/99 Legislative Session: 3rd Session, 36th Parliament
FIRST READING


The following electronic version is for informational purposes only.
The printed version remains the official version.


HONOURABLE PENNY PRIDDY
MINISTER OF HEALTH AND MINISTER
RESPONSIBLE FOR SENIORS

BILL 30 -- 1998

TOBACCO DAMAGES RECOVERY
AMENDMENT ACT, 1998

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province of British Columbia, enacts as follows:

1 The Tobacco Damages Recovery Act, S.B.C. 1997, c. 41, is amended by repealing the title and substituting the following:

TOBACCO DAMAGES AND HEALTH CARE COSTS
RECOVERY ACT .

2 Section 1 is amended

(a) by adding the following definition:

"affiliate" means affiliate as defined in section 1 of the Company Act; ,

(b) in the definition of "cost of future health care benefits" by striking out "disease," and substituting "tobacco related disease," ,

(c) in the definition of "cost of past health care benefits" by striking out "disease" and substituting "tobacco related disease" ,

(d) by repealing the definition of "disease",

(e) by repealing the definition of "exposure" and substituting the following:

"exposure" means any contact with, or ingestion, inhalation or assimilation of, a tobacco product, including any smoke or other by-product of the use, consumption or combustion of a tobacco product; ,

(f) by adding the following definitions:

"joint venture" means an association of 2 or more persons, if

(a) the relationship among the persons does not constitute a corporation, a partnership or a trust, and

(b) the persons each have an undivided interest in assets of the association;

"manufacture" includes, for a tobacco product, the production, assembly or packaging of the tobacco product; ,

(g) by repealing the definition of "manufacturer" and substituting the following:

"manufacturer" means a person who manufactures or has manufactured a tobacco product and includes a person who currently or in the past

(a) causes, directly or indirectly, through arrangements with contractors, subcontractors, licensees, franchisees or others, the manufacture of a tobacco product,

(b) owns a trade-mark, trade name or brand name, registered or not, under which a tobacco product is promoted to the public,

(c) is related to a person described in this definition and has a right to use a trade-mark, trade name or brand name, registered or not, for the purpose of promoting a tobacco product to the public,

(d) for any fiscal year of the person, generates at least 10% of its worldwide revenues, determined on a consolidated basis in accordance with generally accepted accounting principles in Canada, from the manufacture or promotion of tobacco products,

(e) is related to a person described in this definition and is engaged in, or causes, directly or indirectly, other persons to engage in the promotion of a tobacco product, or

(f) is a trade association primarily engaged in

(i) the advancement of the interests of manufacturers,

(ii) the promotion of a tobacco product, or

(iii) causing, directly or indirectly, other persons to engage in the promotion of a tobacco product; ,

(h) by adding the following definitions:

"person" includes a trust, joint venture or trade association;

"promote" or "promotion" includes, for a tobacco product, the marketing, distribution or sale of the tobacco product and research with respect to the tobacco product; ,

(i) by repealing the definition of "tobacco product" and substituting the following:

"tobacco product" means tobacco and any product that includes tobacco; ,

(j) by adding the following definitions:

"tobacco related disease" means a disease caused or contributed to by exposure to a tobacco product;

"type of tobacco product" means one or a combination of the following categories:

(a) cigarettes;

(b) loose tobacco intended for incorporation into cigarettes;

(c) cigars;

(d) cigarillos;

(e) pipe tobacco;

(f) chewing tobacco;

(g) nasal snuff;

(h) oral snuff;

(i) a prescribed form of tobacco; ,

(k) by repealing the definition of "tobacco related wrong" and substituting the following:

"tobacco related wrong" means a tort or breach of a common law, equitable or statutory duty or obligation owed by a manufacturer to persons who have been exposed or might become exposed to a tobacco product that causes or contributes to disease. , and

(l) by renumbering the section as section 1 (1) and by adding the following subsections:

(2) For the purposes of this Act, a person is related to another person if, directly or indirectly, the person is an affiliate of the other person or of an affiliate of the other person.

(3) For the purposes of subsection (2), a person is deemed to be an affiliate of another person if the person

(a) is a corporation and the other person, or a group of persons not dealing with each other at arm's length of which the other person is a member, owns a beneficial interest in shares of the corporation

(i) carrying at least 50% of the votes for the election of directors of the corporation and the votes carried by the shares are sufficient, if exercised, to elect a director of the corporation, or

(ii) having a fair market value, including a premium for control if applicable, of at least 50% of the fair market value of all the issued and outstanding shares of the corporation, or

(b) is a partnership, trust or joint venture and the other person, or a group of persons not dealing with each other at arm's length of which the other person is a member, has an ownership interest in the assets of that person that entitles the other person or group to receive at least 50% of the profits or at least 50% of the assets on dissolution, winding up or termination of the partnership, trust or joint venture.

(4) For the purposes of subsection (2), a person is deemed to be an affiliate of another person if the other person, or a group of persons not dealing with each other at arm's length of which the other person is a member, has any direct or indirect influence that, if exercised, would result in control in fact of that person except if the other person deals at arm's length with that person and derives influence solely as a lender.

(5) For the purposes of determining the market share of a defendant manufacturer for a type of tobacco product sold in British Columbia, the court must

(a) consider the defendant manufacturer and the manufacturers related to that defendant manufacturer to be one manufacturer, and

(b) calculate the defendant manufacturer's market share for the type of tobacco product by the following formula:

dm
  dms =  
  x 100%
MM

where

dms = the defendant manufacturer's market share for the type of tobacco product from the date of the earliest tobacco related wrong committed by that defendant manufacturer to the date of trial;

dm = the quantity of the type of tobacco product manufactured or promoted by the defendant manufacturer that is sold within British Columbia from the date of the earliest tobacco related wrong committed by that defendant manufacturer to the date of trial;

MM = the quantity of the type of tobacco product manufactured or promoted by all manufacturers that is sold within British Columbia from the date of the earliest tobacco related wrong committed by the defendant manufacturer to the date of trial; .

3 Sections 13 and 14 are repealed and the following substituted:

Direct action by government

13 (1) Despite the government having the right to commence or having commenced an action under section 9 or having a right of recovery under section 11, the government has a direct and distinct action against a manufacturer to recover the cost of health care benefits that have been incurred, or will be incurred, by the government resulting from a tobacco related wrong.

(2) An action under subsection (1) is brought by the government in its own right and not on the basis of a subrogated claim.

(3) In an action under subsection (1), the government may recover the cost of health care benefits whether or not there has been any recovery by other persons who have suffered damage resulting from the tobacco related wrong committed by the person against whom the government's action is brought.

(4) If an action under subsection (1) is commenced, any benefits claim brought under section 5, or actions under section 9, must be stayed to the extent necessary to prevent double recovery.

(5) In an action under subsection (1), the government may recover the cost of health care benefits

(a) that have been provided or will be provided to particular individual insured persons, or

(b) on an aggregate basis, that have been provided or will be provided to that portion of the population of insured persons who have suffered disease as a result of exposure to a type of tobacco product.

(6) If the government seeks in an action under subsection (1) to recover the cost of health care benefits on an aggregate basis,

(a) it is not necessary

(i) to identify particular individual insured persons,

(ii) to prove the cause of disease in any particular individual insured person, or

(iii) to prove the cost of health care benefits that have been provided or will be provided to any particular individual insured person,

(b) the health care records and documents of particular individual insured persons or the documents relating to the provision of health care benefits to particular individual insured persons are not compellable except as provided under a rule of law, practice or procedure that requires the production of documents relied on by an expert witness,

(c) no person is compellable to answer questions with respect to the health of, or the provision of health care benefits to, particular individual insured persons,

(d) despite paragraphs (b) and (c), on application by a defendant, the court may order discovery of a statistically meaningful sample of the documents referred to in paragraph (b) and the order must include directions concerning the nature, level of detail and type of information to be disclosed, and

(e) if an order is made under paragraph (d), the identity of particular individual insured persons must not be disclosed and all identifiers that disclose or may be used to trace the names or identities of any particular individual insured persons must be deleted from any documents that are disclosed.

Recovery of cost of health care benefits on aggregate basis

13.1 (1) In an action under section 13 for the recovery of the cost of health care benefits on an aggregate basis, subsection (2) applies if the government proves, on a balance of probabilities, that, in respect of a type of tobacco product,

(a) the defendant manufacturer breached a common law, equitable or statutory duty or obligation owed to persons who have been exposed or might become exposed to the type of tobacco product,

(b) exposure to the type of tobacco product can cause or contribute to disease, and

(c) during all or part of the period of the breach referred to in paragraph (a), the type of tobacco product, manufactured or promoted by the defendant manufacturer or the manufacturers related to the defendant manufacturer, was offered for sale in British Columbia.

(2) Subject to subsections (1) and (4), the court must presume that

(a) the population of insured persons who were exposed to a tobacco product, manufactured or promoted by the defendant manufacturer or the manufacturers related to the defendant manufacturer, would not have been exposed to the product but for the breach referred to in subsection (1) (a), and

(b) the exposure described in paragraph (a) caused or contributed to disease in a portion of the population described in paragraph (a).

(3) If the presumptions under subsection (2) (a) and (b) apply,

(a) the court must determine the aggregate cost of health care benefits that have been, or will be, provided after the date of the breach referred to in subsection (1) (a) resulting from disease caused or contributed to by exposure to a type of tobacco product, and

(b) each defendant manufacturer to which the presumptions apply is liable for the proportion of the aggregate cost referred to in paragraph (a) equal to its market share in that type of tobacco product.

(4) The amount of a defendant manufacturer's liability assessed under subsection (3) (b) may be reduced, or the proportions of liability assessed under subsection (3) (b) readjusted amongst the defendant manufacturers, to the extent that a defendant manufacturer proves, on a balance of probabilities, that the breach referred to in subsection (1) (a) did not cause or contribute to the exposure referred to in subsection (2) (a) or to the disease referred to in subsection (2) (b).

Joint and several liability

13.2 Despite section 13.1, if the government establishes that 2 or more defendant manufacturers committed a tobacco related wrong in concert, the liability of those defendant manufacturers is joint and several.

Population based evidence to establish causation and quantify damages or cost

14 Statistical information and information derived from epidemiological, sociological and other relevant studies, including information derived from sampling, is admissible as evidence for the purposes of establishing causation and quantifying damages or the cost of health care benefits respecting a tobacco related wrong in an action brought

(a) by or on behalf of an insured person in the person's own name or as a member of a class of persons under the Class Proceedings Act, or

(b) by the government under section 9 or 13.

4 Section 15 (1) is amended by striking out "including" and substituting "or".

5 Section 16 is repealed and the following substituted:

Liability based on risk contribution

16 (1) This section does not apply to an action under section 13 for the recovery of the cost of health care benefits on an aggregate basis.

(2) If a plaintiff is unable to establish which defendant manufacturer caused or contributed to the exposure described in paragraph (b) and, as a result of a breach of a common law, equitable or statutory duty or obligation,

(a) one or more defendant manufacturers causes or contributes to a risk of disease by exposing persons to a type of tobacco product, and

(b) the plaintiff has been exposed to the type of tobacco product referred to in paragraph (a) and suffers disease as a result of the exposure,

the court may find each defendant manufacturer that caused or contributed to the risk of disease liable for a proportion of the damages or cost of health care benefits incurred equal to the proportion of its contribution to that risk of disease.

(3) The court may consider the following in apportioning liability under subsection (2):

(a) the length of time a defendant manufacturer or the manufacturers related to the defendant manufacturer engaged in the conduct that caused or contributed to the risk of disease;

(b) the market share the defendant manufacturer had in the type of tobacco product that caused or contributed to the risk of disease;

(c) the degree of toxicity of any toxic substance in the type of tobacco product manufactured or promoted by a defendant manufacturer or the manufacturers related to the defendant manufacturer;

(d) the amount spent by a defendant or the manufacturers related to the defendant manufacturer on promoting the type of tobacco product that caused or contributed to the risk of disease;

(e) the degree to which a defendant manufacturer collaborated or acted in concert with other manufacturers in any conduct that caused, contributed to or aggravated the risk of disease;

(f) the extent to which a defendant manufacturer or the manufacturers related to the defendant manufacturer conducted tests and studies to determine the risk of disease resulting from exposure to the type of tobacco product;

(g) the extent to which a defendant manufacturer or the manufacturers related to the defendant manufacturer assumed a leadership role in manufacturing or promoting the type of tobacco product;

(h) the efforts a defendant manufacturer or the manufacturers related to the defendant manufacturer made to warn the public about the risk of disease resulting from exposure to the type of tobacco product;

(i) the extent to which a defendant manufacturer or the manufacturers related to the defendant manufacturer continued manufacture or promotion of the type of tobacco product after it knew or ought to have known of the risk of disease resulting from exposure to the type of tobacco product;

(j) affirmative steps that a defendant manufacturer or the manufacturers related to the defendant manufacturer took to reduce the risk of disease to the public;

(k) other considerations considered relevant by the court.

6 Section 17 (2) is repealed and the following substituted:

(2) Despite the Negligence Act and subject to section 18 (5) of this Act, all defendant manufacturers who are found liable for the same tobacco related wrong are jointly and severally liable for all the damages or the cost of health care benefits suffered as a result of that wrong.

7 The following section is added:

Joint and several liability for related manufacturers and for manufacturers acquiring the tobacco related part of the business of other manufacturers

17.1 (1) A court must consider all related manufacturers

(a) to be one manufacturer for the purposes of establishing a tobacco related wrong, and

(b) to be jointly and severally liable for the tobacco related wrongs committed by any of the related manufacturers.

(2) A manufacturer that has purchased, leased or otherwise acquired any tobacco related part of a business of another manufacturer is jointly and severally liable with the other manufacturer for the tobacco related wrongs committed by that other manufacturer in the course of that business.

8 Section 18 (2), (3) and (5) (c) is amended by striking out "damages" wherever it appears and substituting "damages or the cost of health care benefits".

9 Section 19 (2) is amended by adding the following paragraph:

(b.1) prescribing a form of tobacco for the purposes of paragraph (i) of the definition of "type of tobacco product" in section 1; .

10 Section 20 is amended by renumbering the section as section 20 (1) and by adding the following subsection:

(2) When brought into force under subsection (1), a provision of this Act has the retroactive effect necessary to give the provision full effect for all purposes including allowing

(a) a benefits claim to be included under section 5 in an action, or

(b) an action to be brought under section 9 or 13,

arising from a tobacco related wrong, whenever it occurred.

Commencement

11 This Act comes into force by regulation of the Lieutenant Governor in Council.

 
Explanatory Notes

SECTION 1: [Tobacco Damages Recovery Act, amends title] amends the title of the Act to complement other amendments made by this Bill that make a legal action seeking to recover the cost of providing health care benefits distinct from a legal action for damages.

SECTION 2: [Tobacco Damages Recovery Act, amends section 1] revises the definitions to reflect the other amendments to the Act.

SECTION 3: [Tobacco Damages Recovery Act, enacts sections 13, 13.1, 13.2 and 14 in place of the current sections 13 and 14]

Section 13 of the Act will provide that the government has a distinct and independent cause of action to recover its cost for the provision of health care benefits resulting from tobacco related disease and that this cause of action is not based on a subrogated claim. Section 13 also clarifies that the government's claim can be based on the fact that the government provided health care benefits to a portion of the population of British Columbia, in aggregate, in response to the prevalence of tobacco related disease within British Columbia generally and that the manner of establishing the nature and extent of a legal claim on an aggregate basis is inherently different than for a claim respecting damages suffered by an individual.

Section 13.1 of the Act will require a court hearing an action for recovery under section 13 of the Act on an aggregate basis, after the government and a defendant manufacturer have an opportunity to present their arguments on the point, to draw the presumptions under section 13.1 (2) and apply them under section 13.1 (3) respecting the defendant manufacturer if the government has proved all 3 matters described in section 13.1 (1) respecting that defendant manufacturer. Section 13.1 (4) will allow that defendant manufacturer the opportunity to then argue for a reduction in its liability.

Section 13.2 of the Act will reaffirm a common law principle respecting tort liability in the special circumstances of a right of action created by section 13 of the Act.

Section 14 of the Act will provide that information derived on a statistical or other population grounded bases can be used by a plaintiff or defendant in a legal proceeding respecting a tobacco related wrong.

SECTION 4: [Tobacco Damages Recovery Act, amends section 15 (1)] is consequential to amendments in this Bill that make a legal action seeking to recover the cost of providing health care benefits distinct from a legal action for damages.

SECTION 5: [Tobacco Damages Recovery Act, re-enacts section 16] clarifies that in appropriate circumstances in a legal action on behalf of an individual, or on behalf of a member of a class of individuals, the liability of each defendant will be proportionate to the extent that defendant manufacturer caused the risk of the disease that resulted from the tobacco related wrong.

SECTION 6: [Tobacco Damages Recovery Act, repeals and replaces section 17 (2)] ensures that 2 or more defendant manufactures remain jointly and severally liable in appropriate circumstances for all the damages or the cost of health care benefits suffered as a result of a tobacco related wrong.

SECTION 7: [Tobacco Damages Recovery Act, enacts section 17.1] ensures that if 2 or more defendant manufacturers are related companies as defined in section 1 of the Act, they will be jointly and severally liable for the tobacco related wrongs of any of the members of this related group of defendant manufacturers. It also ensures that civil liability passes with any transfer of a tobacco related business that relates to a tobacco related wrong.

SECTION 8: [Tobacco Damages Recovery Act, amends section 18 (2), (3) and (5) (c)] is consequential to amendments in this Bill that make a legal action seeking to recover the cost of providing health care benefits distinct from a legal action for damages.

SECTION 9: [Tobacco Damages Recovery Act, amends section 19 (2)] amends the regulating making powers to complement paragraph (i) of the definition of "type of tobacco product" in section 1 of the Act.

SECTION 10: [Tobacco Damages Recovery Act, amends section 20] makes it clear that a benefits claim or an action under section 9 or 13 does not fail solely because it relates to a cost of health care benefits incurred before this Bill is enacted.


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