Burr v. Tecumseh Products of Canada Limited, 2023 ONCA 135, A recent case out of the Ontario Court of Appeal, clarifies the law of product liability in Ontario.
Background
On November 5, 2012, the motor of a heat recovery ventilator overheated, exploded, and caught fire, seriously damaging the home of the plaintiffs. At the time of trial, there had been approximately 112 similar house fires. The parties agreed that the fire was caused by the end-of-life failure of the motor in the ventilator.
The ventilator was designed and manufactured by Venmar Ventilation Inc. (“Venmar”), while the motor was designed and manufactured by Fasco Industries Inc. (“Fasco”). The main issue was whether either Venmar, Fasco, or both were negligent for failing to install appropriate protective devices. A secondary issue was whether Fasco had a valid indemnity/exclusion clause in its contract with Venmar, indemnifying it from all damages and costs in the proceeding. This means that Fasco could not be sued for such issues.
Result
The Court of Appeal held that Venmar was liable to the plaintiffs and Fasco was not.
Venmar was held liable because it had not followed industry best practices. The reality is that in 1994, at the time of the sale and installation of the ventilator, motor failures like the one which occurred in 2012 were already well-known in the industry. As a result, devices that provided protection against these issues already existed and could have been installed in the ventilator to prevent a fire. Here, however, they were not. Interestingly, Venmar had gotten all the necessary certifications for its product. The Court found that Venmar knew or ought to have known that such issues existed in the industry and that industry standard was to install devices to protect against the issues. Therefore, because it did nothing, Venmar was still negligent.
The Court of Appeal was skeptical that Fasco was indeed not liable. Specifically, the Court of Appeal found there was no “principled reason” to exempt Fasco from a manufacturer’s duty to warn of risks associated with the reasonably foreseeable use of its products. The Court of Appeal, however, did not find it necessary to conclusively decide whether the circumstances of this case would otherwise make Fasco liable because Fasco had a validly enforceable indemnity clause with Venmar. This required Venmar to indemnify it from liability. In other words, even if Fasco was the only party responsible for damages, Venmar would be responsible for paying the damages that arose from Fasco’s liability
Takeaways
This decision reiterated numerous principles in product liability law. A manufacturer owes a duty of care to the ultimate consumer of the product to ensure there are no defects in manufacture which could cause injury in the ordinary course of use. There is similarly a duty for a company who discovers a defect in their product to warn consumers of the product of the defect. This duty includes:
- There is a duty to warn of dangers inherent in the use of a product;
- The duty is ongoing and continues after the product is delivered;
- Warnings must be clear and specific to dangers that arise from ordinary use; and
- The duty varies with the level of danger associated with ordinary use of the product.
Further, this case stands for the proposition that merely meeting regulatory standards is not always sufficient to avoid liability. Where defects are known in the industry and the industry standard is to address the problem with additional parts, failing to address the problem is sufficient to attract liability. It is important to remember that negligence is not formulaically tied to meeting any particular codes or regulations. Rather, it is flexibly applied with an objective standard: what would a reasonable person in the position of the defendant have done? Here, a reasonably competent company would know the industry standard and best practices, and thus have little excuse for failing to meet them. This is why, despite not being binding on the court, concepts such as “the industry standard” can be good approximations of what is reasonable for a company to know and do to avoid liability over one of its products.
Are you having an issue with product liability in your company? Contact Walker Law today!
Tags: Product Liability, Negligence