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Monday Morning Case Bites for October 7, 2019

Last Week’s Court Rulings from the Alberta Court of Queen’s Bench, Court of Appeal and SCC.

Edited by Amanda Kostek & Christie Dewar

Products Liability | Personal Injury | Apportionment of Liability
St Isidore Co-Op Limited v AG Growth International Inc, 2019 ABQB

This was a successful claim by a Plaintiff company who rented a fence post pounding machine to an individual, against the manufacturer of the machine. The individual died when a 600 Ib mast from the machine fell on him on July 12, 2012. The Plaintiff paid the individual’s Estate claim and then sought recovery from the manufacturer.

The Plaintiff had purchased the machine directly from the manufacturer in 1999. The manufacturer changed the design of the machine in 2005 to eliminate the risk of a falling mast, and created a retrofit kit for older models as a result of a “near miss.” The production cost of the retrofit was $250 and it was advertised in the manufacturer’s 2006 catalogue. The manufacturer also provided information about it to anyone ordering new cylinder parts for machines manufactured prior to 2005. However, the manufacturer made no effort to advise past purchasers such as the Plaintiff of the availability of the retrofit kit. Approximately 3000 units were sold before the design was updated in 2005. No effort was made to advise past purchasers of the risk of the mast falling backward on the operator.

The Plaintiff testified that if they had been advised of the retrofit kit, it would have purchased it. The Court accepted that the individual would not have died if the machine had the retrofit kit.

The Court accepted that a manufacturer has a duty to end users:

[35]           Manufacturers have a duty of care to avoid safety risks and to make products that are reasonably safe for their intended purposes. (See: Daishowa-Marubeni International Ltd v Toshiba International Corp, 2010 ABQB 627 (CanLII) [Daishowa-Marubeni] and Kuiper v Cook (Canada) Inc, 2018 ONSC 6487 (CanLII) at paras 109-123 [Kuiper]). In keeping with this fundamental principle of negligence law, Wheatheart did not challenge the assumption that it owed that duty of care to St. Isidore and Mr. Borger and other end users of its product.

[36]           Expanding on this fundamental duty: a manufacturer cannot make “an inherently dangerous article when a method exists of manufacturing the same article without risk of harm” (Tabrizi v Whallon Machine Inc, [1996] 29 CCLT (2d) 176 at para 28, 1996 CanLII 3532 (BC SC) [Tabrizi], citing Nicholson v John Deere Ltd (1986), 58 OR (2d) 53, 1986 CanLII 2502 at 58 (Ont SC)). Furthermore, a manufacturer cannot market a product that it knows is deficient with respect to safety concerns, or is inherently and/or unnecessarily dangerous to the reasonably knowledgeable and prudent consumer. (See: Allen M Linden & Bruce Feldthusen, Canadian Tort Law, 10th ed (Toronto, Ont: LexisNexis, 2015) at 665). Products that do not meet these standards are referred to as having a “design defect”: they have been negligently designed.

The Court accepted the following test for establishing negligent design of a product:

[37]           To prove negligent design, the plaintiff must generally: 1) identify a design defect, 2) establish that the defect created a substantial likelihood of harm, and 3) establish that there exists an alternative design that is safer and economically feasible to manufacture. (See: Kreutner v Waterloo-Oxford Co-operative Inc (2000), 50 OR (3d) 140, 2000 CanLII 16813 at para 8 (CA) [Kreutner]).

Industry Standards may play a role in determining whether a product is safe:

[38]           Industry standards can be relevant in determining the question of whether a particular product is “reasonably safe.” (See: Baker v Suzuki Motor Co, [1993] 143 AR 1, 1993 CanLII 7293 at para 129 (QB) [Baker] and Tabrizi at para 37). Even so, in assessing whether a design defect exists, the mere fact that a manufacturer could have used a safer design does not automatically result in liability. (See: Daillaire v Paul-Emile Martel Inc, [1989] 2 SCR 419, 1989 CanLII 29). The law does not require products to be “accident proof” so as to turn manufacturers into insurers: absent statutory provisions to the contrary, Canadian product liability law is based in negligence, not strict liability. (See: Baker at para 77).

In assessing alleged safety defects, a Court may consider whether the risks of the design outweigh the utility of it:

[39]           In considering whether a design is negligent due to alleged safety defects, the court may undertake a “risk-utility analysis” which “weighs the risks of the impugned design against the ease, cost, risk and loss of utility of a proposed safer design” (Dean F Edgell, Product Liability in Canada (Markham, Ont: Butterworths, 2000) at 52-53).

[40]           In Rentway Canada Ltd/Ltée v Laidlaw Transport Ltd (1989), 49 CCLT 150, 1989 CarswellOnt 23 (WL) at para 55 (Ont SC (HCJ)) [Rentway], Ontario’s Superior Court adopted the American statement that the court may, in balancing a product’s risks against its utility and cost, consider factors including:

  1. utility of the product to the public and the individual user;
  2. likelihood that the product will cause injury;
  3. availability of a safer design;
  4. potential for designing the product so that it is safer but remains functional and reasonably priced;
  5. ability of the plaintiff to have avoided injury by careful use of the product;
  6. degree of awareness of the product’s potential danger that can be attributed to the plaintiff; and
  7. the manufacturer’s ability to spread out any costs related to improving the safety of the design.

The risk must be foreseeable.  Courts will consider the state of technology, and assume that a manufacturer has the same level of expertise as an expert in the field:

[42]           A failure to take precautions against harms that are not foreseeable will not be a breach of the standard of care. A manufacturer can only be held liable if the product in question had a design defect based on a safety risk the manufacturer either knew, or ought to have known about at the time the product was manufactured, or which came to its attention afterwards, and it failed to address that risk.

[43]           In determining what the manufacturer knew or ought to have known, the Court will “consider the state of knowledge and technology at the time the product was manufactured in assessing negligence in design” so as not to fall into the trap of assessing the issue with the wisdom of hindsight. (See: Brunski v Dominion Stores Ltd (1981), 20 CCLT 14, 1981 CarswellOnt 591 (WL) (Ont SC (HCJ)) at para 32 and Dean F Edgell, Product Liability Law in Canada (Toronto, Ont: Butterworths, 2000) at 52).

[44]           That said, it is logical that a manufacturer of a product should be held to the same level of knowledge and expertise as an expert in the field: Ruegger v Shell Oil Ltd, 1963 CanLII 307 (ON SC), [1964] 1 OR 88, 1963 CarswellOnt 162 (WL) at para 29 (SC (HCJ)); Labrecque v Saskatchewan Wheat Pool (1977), 78 DLR (3d) 289, 1977 CanLII 1475 at para 50 (Sask QB), rev’d on other grounds. Furthermore, a manufacturer must take into consideration not just the intended use of its product, but also the environment in which the product will be utilized (Rentway at paras 53-54).

The Court outlined the law on a manufacturer’s duty to warn at length:

[50]           A manufacturer who markets a dangerous product – even if the product itself is not defective – has a duty to specify the attendant dangers to users of the product. (See: Lambert v Lastoplex Chemicals Co (1971), [1972] SCR 569, 1971 CanLII 27 [Lambert] and Buchan v Ortho Pharmaceutical (Canada) Ltd (1984), 46 OR (2d) 113, 1984 CanLII 1938 at paras 46-48 (Ont SC) [Buchan]). The explicitness of the required warning will vary with the danger likely to be encountered in the ordinary use of the product.

[51]           Once a manufacturer becomes aware of a danger involved in the continued use of its product, for the purpose for which it was designed, it has a duty to warn. (See: Rivtow Marine Ltd v Washington Iron Works (1973), 1973 CanLII 6 (SCC), [1974] SCR 1189, 1973 CarswellBC 191 (WL) at para 19 [Rivtow].

[52]           A manufacturer’s duty is to give adequate warning not only of dangers arising from the proper use of the product, but also those that could arise from the reasonably foreseeable improper use. (See: Ho Lem v Barotto Sports Ltd (1976), 69 DLR (3d) 276 (CanLII), 1976 AltaSCAD 153 at para 37 (Alta SC (AD)).

[53]           These principles were described and applied by the Supreme Court of Canada in Hollis v Dow Corning Corp, [1995] 4 SCR 634, 1995 CanLII 55 [Hollis]. In Hollis, the plaintiff received a breast implant to correct a breast deformity. At the time of the surgery, the defendant, which marketed the implants in question to doctors and not to the general public, had warned doctors that abnormal squeezing or trauma to the breasts could rupture the implants. The defendant gave no further warning despite having received approximately 50 reports of “unexplained” ruptures, representing a very small fraction of all implants sold. The plaintiff’s implant ruptured, causing her injury. Surgery was required to remove it. The Court accepted that had the plaintiff been properly warned about the possibility of rupture she would not have gotten the implant.

[54]           In finding the Defendant liable on the basis of a breach of its duty to warn, the Supreme Court held at para 20 that:

… [t]he duty to warn is a continuing duty, requiring manufacturers to warn not only of dangers known at the time of sale, but also of dangers discovered after the product has been sold and delivered … All warnings must be reasonably communicated, and must clearly describe any specific dangers that arise from the ordinary use of the product.

(See also: Andersen v St Jude Medical Inc, 2012 ONSC 3660 (CanLII) at para 185)

[55]           The Court in Hollis found that despite the statistically small number of ruptures, the defendant had an obligation to consider the seriousness of the risk posed to each user by a potential rupture when determining whether it had a duty to warn (para 41). (See also: Smithson v Saskem Chemicals Ltd (1985), [1986] 1 WWR 145, 1985 CanLII 2547 (Sask QB).

[56]           The duty to warn is not based on mere knowledge imbalance, but rather on the manufacture or supply of products intended for use by others, and the reasonable reliance that consumers place on the manufacturer and supplier: the good neighbor principle. Where the consumer has some knowledge of the risk, but reasonably relies on the manufacturer and/or supplier, a duty to warn still exists. (See: Bow Valley Husky (Bermuda) Ltd v Saint John Shipbuilding Ltd, [1997] 3 SCR 1210, 1997 CanLII 307).

The Court concluded that this was an inherently dangerous machine. Although the machine was not likely to cause injury in normal use, it was foreseeable that the mast might fall on someone if there was a component failure. In addition, the Court concluded that there were safer, economically feasible designs available in 1999 on the following basis:

[71]           This is not a case where the so-called improvement came about as a result of some major evolution in manufacturing design or technology. Again, noting that manufacturers are expected to be experts in their field, the simple metal limiter blocks added in 2005 could easily have been incorporated into the original Heavy Hitter had Wheatheart acted more diligently to come up with a safer design, at that time, based on the reasonably foreseeable risk that the mast could fall on the operator of the machine. (See: Tabrizi at para 50).

[72]           On the issue of industry practices, I note Wheatheart’s direct local competitor, Flexi-Coil, had implemented a mechanical fall or tipping fail-safe with respect to its post pounder machine several years earlier. While the mechanical safety fix added by Flexi-Coil was quite different than the safety fix in the present case, the principle was the same: to keep the heavy mast from falling, to the greatest extent possible, so as to fulfill the duty of care required of a competent manufacturer to its end users.

In addition, the near miss in 2005 was key.  That established a failure rate of 1 in 3000.  Notwithstanding that the failure rate was statistically small, the risk of harm was serious and therefore, the manufacturer had a duty to warn end users of the risk:

[79]           In any event, I do not accept that the one “near miss” in this case was not enough to trigger a duty to warn past purchasers of the relevant risks. A manufacturer is obligated to consider the seriousness of the consequences to the end user of a materialized risk even where the number of incidents of a materialized risk is statistically small. (See: Hollis at para 41). In this case, the first materialized risk occurred when the 600 lb metal mast fell and almost hit someone. Mr. Borger was the unlucky victim of the second materialized risk, when the 600 lb metal mast fell and actually hit someone.

[80]           In my view, the fact that the retrofit kit was created represents a recognition by Wheatheart of a deficiency in the Heavy Hitter’s original design. Having recognized the safety defect, Wheatheart had a corresponding duty to fix the defect in Heavy Hitter machines manufactured from that point onward, to warn end users of the attendant risks of previously manufactured models of the Heavy Hitter, and to tell them about the existence and availability of a retrofit kit which would remedy the defect.

[85]           Wheatheart had a duty to do more than just fix the safety deficiency in its machines moving forward: it had a duty to warn end users of the risk that the mast of pre-2005 Heavy Hitter machines could fall on the operator due to “unexpected events” and to advise past purchasers, including distributors like St. Isidore and UFA, that it had developed a retrofit kit to prevent that from happening.

The Court concluded that the manufacturer was 75% liable notwithstanding that the immediate cause of the loss was a cylinder rod breaking:

[109]      In the present case, I find that similarly, while the immediate cause of the accident was the cylinder rod breaking, the greatest share of liability should go to Wheatheart. Wheatheart failed to warn St. Isidore about the reasonably foreseeable possibility of the mast falling and the availability of the retrofit kit, which could have been installed to prevent that from happening, regardless of the cause.