Canadian case law: Arora et al v Whirlpool Canada LP and ...

Justice Perell reviewed a number of decisions discussingrecoverability of pure economic loss and onlyallowing recovery for “dangerous” products, as well as anumber of earlier class certification decisions, includingsome that held claims for pure economic loss couldproceed to trial and certified the class actions proposed:Griffın v Dell Canada Inc; 5 Gariepy v Shell Oil Co; 6Bondy v Toshiba Canada Ltd; 7 and Barwin v IKOIndustries. 8 Justice Perell distinguished most of theselatter decisions but generally held that, insofar as any ofthem stands for the proposition that a plaintiff canrecover in tort for pure economic loss, he believes theyare wrongly decided.First principles analysisJustice Perell also offered a theoretical explanationfor why the law should not recognise tort claims for pureeconomic loss. He found that, although manufacturersowe consumers a prima facie duty of care, that duty isnegated by public policy considerations when the lossesclaimed are pure economic losses. He found that thereasons given for why economic loss should not beactionable reflect a policy decision that compensationfor economic losses is best regulated by contract andproperty law absent, some countervailing policy (eg,protecting injury from a dangerous product) to justifytort law regulating economic activity. He thereforeconcluded that the “century old policies … againstnegligence law providing compensation for pure economiclosses apply in the case at bar to negate a duty ofcare…”Contractual and statutory claimsThe plaintiffs also claimed that Whirlpool breachedan express or implied warranty to supply goods freefrom material defects and fit for their intended purpose.While the washing machines did include a warranty,Justice Perell found that the warranty only covereddefects in materials or workmanship, and that there wasno express or implied term of the warranty coveringdesign defects. Thus there was no tenable cause ofaction for breach of warranty.Justice Perell also ruled that there was no tenablecause of action with respect to the Competition Actclaims. The plaintiffs argued that Whirlpool had madefalse and misleading representations by omission, thatis, that Whirlpool failed to disclose a defect to customers.Justice Perell agreed that in some circumstances anomission can constitute a false and misleading representationwithin the meaning of the Competition Act.However, absent a duty of care, statutory duty todisclose or a fiduciary duty to speak, silence willgenerally not be considered a representation. In thiscase, given that the alleged design defect was notdangerous, Justice Perell held that.Whirlpool “was not under a duty to disparage its ownproduct and disclose the alleged design defect.”ConclusionThis decision is of significant importance to theproducts liability bar and to manufacturers doing businessin Canada. It confirms that product liability negligenceclaims for non-dangerous products are not actionable,a ruling that should help manufacturers resist classactions in similar cases and rely more strongly on theircontracts.Daniel SternAssociateBlake, Cassels & Graydon LLPdaniel.stern@blakes.comFootnotes1. Arora et al v Whirlpool Canada LP and Whirlpool Corporation[2012] ONSC 2642.2. Martel Building Ltd v Canada [2000] 2 SCR 860; 2000 SCC60.3. Canadian National Railway Co v Norsk Pacific Steamship Co(1992) 91 DLR (4th) 289; [1992] 1 SCR 1021.4. Winnipeg Condominium Corporation No 36 v Bird ConstructionCo (1995) 121 DLR (4th) 193; [1995] 1 SCR 85; [1995]3 WWR 8.5. Griffın v Dell Canada Inc [2009] OJ No 418.6. Gariepy v Shell Oil Co [2002] OJ No 2766.7. Bondy v Toshiba Canada Ltd [2007] OJ No 784.8. Barwin v IKO Industries [2012] OJ No 3332.300australian product liability reporter October 2012