Don’t Flush the Basics: OCHC v. Sloan Valve Company Affirms Fundamental Product Liability Concepts

  • April 02, 2024
  • Ethan Schiff and Phoebe Goldig

In OCHC v. Sloan Valve Company, 2024 ONSC 1493, Justice Corthorn of the Ontario Superior Court of Justice affirmed two product liability principles: (a) privity of contract is required for a buyer to be entitled to rely on the implied warranties and conditions under s. 15 of the Sale of Goods Act (SGA);[1] and (b) to have a cause of action in negligence, the plaintiff must demonstrate actual damage to person or property, or real and substantial danger to person or property.

Though not a class action, this case considering motions to strike under rule 21 of the Rules of Civil Procedure has important implications for product liability class actions against manufacturers who are not direct sellers, and where there are no allegations of injury to person or property. In particular, class action plaintiffs may struggle to meet the cause of action threshold of the certification test under section 5(1)(a) of the Class Proceedings Act, 1992.[2]

Background

After communicating with the defendant, Sloan Valve Company (Sloan), the plaintiff, the Ottawa Community Housing Corporation (OCHC), purchased Sloan’s “Flushmate System”, a toilet flushing system which purports to reduce water consumption and water costs. OCHC pursued the Flushmate System as an energy retrofit for the 15,000 residential units it owns and operates. The defendant, Wolseley Canada Inc. (Wolseley) was the successful bidder for the contract for the sale and supply of the system.

Approximately five years after implementing the system, OCHC noticed a rise in water consumption and higher water costs at several of its properties. OCHC concluded that the cause of this increase was the mass failure of a cartridge forming part of the system.

In 2022, OCHC commenced an action against Sloan and Wolseley, seeking damages of over $7 million for, among other things, excess water costs arising from the alleged failure of the system. OCHC advanced three causes of action as against the two defendants: (1) breach of warranty under the SGA; (2) negligence; and (3) negligent misrepresentation.

The defendants brought a motion to strike the claim in breach of implied warranty against Sloan and the claim in negligence for economic losses against both defendants.

Justice Corthorn ordered that both claims be struck.