The Supreme Court of Canada declined to hear an appeal of a decision of the Court of Appeal for Ontario that limits claims in class actions against manufacturers. The manufacturer was represented by a legal team of S. Gordon McKee and BLG’s Tim Buckley and Cheryl Woodin.

Consumers brought a class action claiming that washing machines manufactured over an 8 year period had design defects. The heart of the consumers’ claim against the manufacturer was that the machines were shoddy and not worth the purchase price. The consumers attempted to certify a class action against the manufacturer on behalf of all consumers for damages for the overpayment — a form of rebate for the difference in value between what the consumer paid and what they said the machine was worth.

The Superior Court of Justice of Ontario and the Court of Appeal for Ontario each refused to certify the case. In denying the consumers’ appeal, the Court of Appeal concluded that the consumers’ claim had no reasonable prospect of success.

The consumers argued to the Supreme Court of Canada in their leave to appeal motion that the case was one of national importance because the Supreme Court of Canada had not addressed the liability of manufacturers in negligence for economic losses. The Supreme Court of Canada declined to hear the appeal.

The decision of the Court of Appeal to strike the consumers’ claim is welcome news for manufacturers for several reasons. The Court of Appeal considered  that the Supreme Court of Canada had left open the issue whether a consumer could claim against the manufacturer for goods that were shoddy, but not dangerous. Helpfully, the Court of Appeal recognized that this uncertainty in the law had promoted increased litigation and promoted litigation costs. Both factors hinder the access to justice feature of class actions and call for a decision. Further, the Court of Appeal decided that the viability of the consumers’ claim could be decided on an analysis of the claim itself, without the need for a lengthy and costly trial.

The decision of The Court of Appeal for Ontario limiting claims against manufacturers is consistent with the decisions of the courts of British Columbia, Alberta, Saskatchewan and Manitoba.

The Court of Appeal for Ontario described the consumer claim as such a quantum leap from previous Supreme Court of Canada authorities that it was plain and obvious that the negligence claim against the manufacturer could not succeed.

The Court recognized that claims about relative product quality are customarily dealt with by contract law and not tort or negligence law. Requiring courts to analyze a myriad of consumer transactions under tort law – some involving small outlays of monies for goods that can quickly depreciate and become redundant-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.

The Court also recognized that the legislature has already signalled its intention to regulate consumer transactions through consumer protection legislation. The legislature could make changes after taking into account all relevant considerations and input from all stakeholders. The Court noted that the Ontario legislature has not made these changes, though it has amended the legislation on many occasions. The Court of Appeal for Ontario also clarified an issue that has annoyed manufacturers for some time. Several courts have certified class actions against manufacturers and included an issue for trial asking if the manufacturer owes the consumer a warranty that the goods be fit for the purpose and of merchantable quality. These warranties  are implied under the Sale of Goods Act, The Court of Appeal for Ontario correctly instructed that these warranties do not apply against the manufacturer under the Ontario legislation. They apply, in certain circumstances, against the seller. Hopefully, when claims against manufacturers are certified in future class proceedings, the courts will not require manufacturers to defend these particular claims.

This decision is a helpful addition to the decisions of the courts of Western Canada limiting claims for economic loss against manufacturers.

Arora v. Whirlpool, citation of Supreme Court of Canada; Arora v. Whirlpool Canada LP, 2013 ONCA 657 (CanLII)

Author

Tim Buckley 
TBuckley@blg.com
416.367.6169

Other Author

Cheryl M. Woodin

Expertise

Class Actions
Litigation and Arbitration