Atlantic Lottery Corporation Inc., et al. v. Douglas Babstock, et al.

(Newfoundland & Labrador) (Civil) (By Leave)


Civil procedure - Duty of care, Contracts, Breach - Torts – Duty of care – Causation – Contracts – Breach – Disgorgement of profits – Whether a new cause of action should be recognized entitling a plaintiff to a disgorgement remedy upon proof of the breach of a duty of care in negligence, absent damage, injury or loss – Whether the proper analytical framework was applied for disgorgement in breach of contract – Whether the proper interpretation of “three-card monte” discloses any reasonable prospect of the plaintiffs succeeding – Whether certification of the class action should have been denied.


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The Atlantic Lottery Corporation (ALC) is a corporation constituted by the governments of the four Atlantic Provinces to conduct lotteries and other gambling activities on behalf of the Crown. Douglas Babstock and Fred Small brought an application for certification as representatives of a class action against ALC and several other third party suppliers to ALC. The proposed class action alleged harm by video lottery terminals which offered line games similar to slot machines. The seven causes of action included (amongst others) breach of contract, negligence, unjust enrichment, and waiver of tort. In two separate decisions, a judge of the Supreme Court of Newfoundland & Labrador refused a motion to strike and then certified the class action. A majority of the Court of Appeal affirmed the certification except for claims under the Competition Act and Statute of Anne, 1710. In a dissenting opinion, Welsh J.A. would have allowed the appeal, set aside the certification order, and struck the claim in its entirety.