Ontario Court of Appeal Refuses to Take ‘Quantum Leap’ in Expanding Manufacturers’ Tort Liability
On March 13, 2014, the Supreme Court of Canada denied leave
to appeal the Ontario Court of Appeal’s (OCA) decision in Arora v. Whirlpool Canada LP
. As a result, the OCA’s unanimous decision – refusing to certify a class action and dismissing the case in its entirety – stands as the leading Ontario decision on the liability of manufacturers under a variety of causes of action: breach of express warranty, breach of implied warranty, breach of section 52 of the Competition Act
, negligence, and waiver of tort.
The case is summarized in our previous Blakes Bulletin: Certification Denied in Consumer Product Class Action
regarding the motions judge’s decision on the motion for class certification. Briefly, it concerned a putative class action against the manufacturers of certain older models of front-loading washing machines. The motions judge dismissed the plaintiffs’ class certification motion and dismissed the action, in part on the basis that the claim for recovery of pure economic loss and other causes of action were not sustainable. On appeal, the OCA upheld the motions judge’s decision, albeit on somewhat narrower grounds. It found that the plaintiffs’ claim boiled down to this: they purchased allegedly “shoddy” but non-dangerous goods and sought damages in the form of a partial rebate of the purchase price they paid. That claim was not sustainable under the causes of action pleaded.
Among several important holdings, the OCA determined:
- express warranties covering “defects in materials or workmanship” do not extend to “design defects;”
- implied warranties under the Sale of Goods Act require privity of contract, so a manufacturer who did not sell goods directly to the consumer is not subject to such warranties;
- a manufacturer who “fails to disclose an alleged defect” has not made any “representation” within the meaning of section 52 of the Competition Act, absent an express representation which could convert an omission into a misrepresentation by implication, or a duty to disclose based on some other legal obligation;
- a consumer cannot recover in negligence for pure economic loss based on diminution in value, if that loss was caused by a shoddy but non-dangerous product; and
- a claim for waiver of tort requires a predicate wrongdoing on which to base the plea, absent which there can be no waiver of tort – in this case, because there was no tenable cause of action pleaded and no duty of care in tort in respect of “diminution in value,” there was no basis to claim waiver of tort.
In its reasoning, the OCA held that “policy considerations negate recognizing a cause of action in negligence for diminution in value for a defective, non-dangerous consumer product.” It found courts should be wary of wading into the regulation of consumer transactions – an area already governed extensively by contract and statute:
“[R]equiring the courts to analyze a myriad of consumer transactions – some involving small outlays of money for goods that quickly depreciate and become redundant – in tort, without the framework of consumer protection legislation, to determine whether the consumer received value for his or her money, would burden an already taxed court system.”
On this point, the OCA agreed with the motions judge that the plaintiffs “should not look to tort law to negotiate a better bargain for themselves.”
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