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
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
This decision is a helpful addition to the decisions of the
courts of Western Canada limiting claims for economic loss against
Arora v. Whirlpool, citation of Supreme Court of
Canada; Arora v. Whirlpool Canada LP, 2013 ONCA 657
The recent decision of the Ontario Court of Appeal in BMW Financial Services Canada, a Division of BMW Canada Inc. v. McLean provides some useful insight into the relationship between automobile dealers and the financing arms of the manufacturers for whom those dealers are franchisees.
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