The question of 'psychological harm'

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"The risk to you is low," more than 4,400 patients at Lakeridge Health in Oshawa, Ont., were told when warned that they might have been exposed to active tuberculosis while visiting the hospital in 2003 or 2004.

For some, that reassurance from public health officials provided little solace. Many of the patients had cancer and compromised immune systems; now they were being warned they could have caught another potentially fatal disease while receiving chemotherapy.

The vast majority of patients tested negative for TB and got their results in three days. Some of that group, however, said the incident caused them to suffer from depression, anxiety and sleeplessness, and fear they had infected their families. In a class-action lawsuit against the hospital they demanded compensation for "psychological harm."

The Ontario Court of Appeal recently upheld a lower-court decision tossing out their claims. It reaffirmed that, in most cases, absent an actual physical injury, only those who suffer a diagnosed "recognized psychiatric illness" - also known in law as "nervous shock" - are entitled to compensation. And plaintiffs who are simply upset by something unpleasant or disturbing generally are not.

The case has been watched closely by lawyers who defend manufacturers and pharmaceutical companies against class actions over defective or dangerous products and drugs, in which plaintiffs have made similar claims.

"Basically what the court says is, granted that this may have been upsetting, anxiety-provoking, but the law says you have to have more than that," said Caroline Zayid, a veteran litigator for defendants in class-action cases and a partner with McCarthy Tétrault LLP in Toronto who is not involved in the case.

"It will be reassuring for defendants in these types of lawsuits - product-liability, environmental cases," Ms. Zayid said of the appeal decision. "This is one we'd want to quote from."

This conventional threshold for psychological injury is often summed up in a line from a 1999 Ontario Court of Appeal judgment, which denied compensation to the parents of an 11-year-old girl who consumed tainted grape juice but emerged unharmed: "Life goes on."

Attention was focused on the debate, Ms. Zayid said, with a 2008 Supreme Court of Canada ruling that received wide attention. It was also pivotal in the TB case.

In Waddah Mustapha v. Culligan of Canada Ltd., a Windsor, Ont., hairdresser suffered "a major depressive disorder with associated phobia and anxiety" after he found a dead fly, and part of a second dead fly, in a bottle of drinking water. The Supreme Court ruled against his case for compensation, saying his unfortunate reaction was not "reasonably foreseeable" and that a person of "ordinary fortitude" would not have reacted the same way.

Lawyers for the plaintiffs in the TB case seized on a passage from the Supreme Court's unanimous Mustapha judgment, arguing that it does not appear to limit emotional or psychological claims to diagnosed illnesses.

In that section, Chief Justice Beverley McLachlin writes that she "would not purport to define compensable injury exhaustively, except to say that it must be serious and prolonged and rise above ordinary annoyances, anxieties and fears that people living in society routinely, if sometimes reluctantly, accept."

But the Ontario Court of Appeal ruled that it was not the Supreme Court's intention to change the law, and rejected the Lakeridge patients' lawyers argument based on this passage. However, the Court of Appeal did appear to leave the question open for future cases.

It cited several Canadian cases over the years in which plaintiffs without full-blown mental illnesses still received compensation, including decisions in favour of a 13-year-old girl who saw her parents die in a car accident, and a retired police officer who sued after a funeral home lost his parent's ashes.

Glenn Zakaib, a partner with Cassels Brock & Blackwell LLP who defends companies in product-liability class actions, said he thought the Ontario Court of Appeal's interpretation of the Mustapha decision is correct.

Manufacturers, who face an increasing number of lawsuits when consumer products are pulled off the shelves in safety recalls, would naturally be concerned about a precedent that allowed plaintiffs to sue just for anxiety or worry, he said, even if not a single customer were hurt.

"You could potentially be opening the door … And I think it's a slippery slope to go down," said Mr. Zakaib, who is not involved in the case.

Barry Glaspell, a lawyer at Borden Ladner Gervais who acted for Lakeridge Health, declined to comment, as the case could still be appealed. But he said he welcomed the ruling.

(Separate claims from the nearly 500 patients who tested positive for latent, symptom-free TB - no full-blown active cases were contracted - are to go ahead, and were not at issue in the Ontario Court of Appeal ruling.)

Jonathan Ptak, a partner at Koskie Minsky LLP who acts for the patients exposed to TB, said that despite the loss at the Ontario Court of Appeal, it was clear the court did not rule out a future redefinition of the legal threshold for psychological harm. He said his clients have not yet decided whether to seek leave to the Supreme Court of Canada.

The appeal judges "go so far as to expressly say that the door is not closed. And they spend quite a bit of time acknowledging what they consider to be a legitimate debate between academics and judges on both sides of the fence on this issue," Mr. Ptak said. "We certainly thought this would meet [the]threshold. Unfortunately the court disagreed."