Canadian Product Liability Law - 2013 in Review

Article excerpt

CANADIAN product liability law continued to evolve in 2013. Ontario courts further clarified the law of pure economic loss; set the bar higher for plaintiffs when pleading product liability; and set the bar high for defendants to obtain sanctions for spoliation. In addition, Canada's Consumer Product Safety Program released more bulletins providing industry guidance on the manner in which Canada's Consumer Product Safety Act will be applied. This article reviews notable common law developments (excluding the province of Quebec, which is subject to its own Civil Code) that may be useful in defending product liability claims, including class actions. This article also summarizes recent industry guidance released by Health Canada's Consumer Product Safety Program to assist in understanding the application of the Consumer Product Safety Act. (1)

1. Recent Jurisprudence On Product Liability Law

A. Pure Economic Loss

Canadian courts have traditionally precluded tort recovery for economic loss absent physical harm or damage to property. In October 2013, the Ontario Court of Appeal released Arora v. Whirlpool Canada LP, (2) dismissing claims for pure economic loss in negligence for allegedly defective, non-dangerous consumer goods. The plaintiffs' pleading in this case was not capable of being amended because the claim, at its core, was for non-recoverable pure economic loss.

1. Background

The plaintiffs sought to certify a class action against Whirlpool alleging that their front-loading washing machines were defectively designed and prone to developing an unpleasant smell, mold and mildew. Plaintiffs purchased Whirlpool machines from retail vendors, not from Whirlpool directly. They claimed damages for breach of express and implied warranty, breach of the Competition Act, (3) negligence and waiver of tort. The most significant claim advanced by the plaintiffs was in negligence for pure economic loss incurred as a result of alleged negligent design against Whirlpool as the manufacturer of a non-dangerous consumer product.

The motion judge refused certification, concluding that none of the claims as pleaded disclosed a reasonable cause of action. Plaintiffs' appeal to Ontario's highest Court was subsequently dismissed. The factual background and analysis of this matter is discussed next.

2. Breach of Express Warranty

Whirlpool provided warranties for the machines, but these warranties were limited to one year from the purchase date. The warranties provided that Whirlpool would pay for parts and labor to correct deficiencies in materials or workmanship. However, the Court found that the plaintiffs' claim was for the defective design of the washing machines. Further, the Court found that plaintiffs' claim on the express warranty were made more than one year after purchase and therefore were beyond the limited one year warranty. As a result, the Court of Appeal found that it was plain and obvious that the express warranties did not cover claims advanced by the plaintiffs. (4)

3. Breach of Implied Warranty

Plaintiffs also claimed that Whirlpool breached the implied condition that the machines were fit for their purpose. The fact that Whirlpool did not sell the machines directly to the plaintiffs was critical to the viability of the implied condition claim. Although the Sale of Goods Act (5) provides a remedy for implied condition, the remedy provided under the Act is against a seller. In this case, Whirlpool was not the seller of the machines. Accordingly, the claim against Whirlpool for breach of implied warranty of fitness had no reasonable prospect of success. (6)

4. Breach of the Competition Act

Plaintiffs claimed that Whirlpool breached the Competition Act by providing false or misleading representations. The plaintiffs alleged that they relied on an omission by Whirlpool, alleging that Whirlpool did not advise the plaintiffs that its machines were susceptible to mold and mildew build-up. …