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Bulletin

A Class Action Is Authorized Eleven Years After It Was First Instituted And Despite The Lack Of Written Notice of the Alleged Defect

Fasken
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Class Actions Bulletin

In a decision rendered on May 5, 2020 in Gaudette v. Whirlpool Canada,[1] Justice Suzanne Courchesne of the Superior Court authorized a class action against Whirlpool Canada LP, Whirlpool Corporation and Sears Canada Holdings Corp. (the "Defendants") on behalf of all residents in Québec who owned certain Whirlpool, Kenmore and Maytag models of front load washing machines manufactured before December 31, 2018 (the "Washing Machines") allegedly affected by a design defect which prevented correct washing and failed to prevent the accumulation of mould, bacteria and foul odours (the "Alleged Defect").

The Applicant's proposed class action was based on the statutory warranties of quality provided for under the Civil Code of Québec[2] (the "CCQ") and the Consumer Protection Act[3] (the "CPA"), and the duty to inform arising from the good faith obligations provided for at articles 6 and 1375 CCQ and section 52(1) of the Competition Act.[4]

This decision stems from a long and rather unusual procedural context. An application for authorization to institute a class action regarding the Alleged Defect was first filed in 2009 (the "Lambert Matter"), but was dismissed because the plaintiff's personal cause of action was prescribed (time barred).[5] The applicant appealed this decision all the way to the Supreme Court of Canada, which refused to hear the appeal.[6] Then, almost 8 years later in 2017, a new application for authorization to institute a class action regarding the same Alleged Defect was brought by applicant, Sylvain Gaudette (the "Applicant"). The Defendants unsuccessfully sought to have the application dismissed on the basis of res judicta and abuse of process. The Court of Appeal refused the Defendants' application for leave to appeal from this decision[7] and the Supreme Court refused to hear their appeal.[8]

Context

On April 13, 2008, the Applicant purchased a Whirlpool front load washing machine.

A few months after installing the washer, the Applicant and his wife noticed patches of mould on the rubber seal on the door. Moreover, they noticed accumulations of water that had to regularly be removed and a very foul odour in the washing machine. Consequently, they had to throw out some of their clothes.

As a result of these problems, they reread the user manual and visited the Defendants' website and only then did they allegedly learn that they had to run empty loads with bleach, use Affresh tablets once a week and leave the door open when the washer was not being used. These efforts did not, however, resolve the problem.

In 2015, the Applicant realized, while searching online, that the problems he was experiencing with his washing machine were related to design defects affecting the Defendants' Washing Machines.

When he learned that the application for leave in the Lambert Matter had been denied, the Applicant indicated a desire to file a new application and to act as representative.

The Plaintiff never stopped using the washing machine and never sent written notice to the Defendants to report the existence of the Alleged Defect prior to June 2016, when he filed his application for authorization to institute a class action.

Key Findings of the Decision

Seriousness of the Alleged Defect

The Defendants claimed that because the Applicant had used his washing machine for 8 years without repairing it or filing a complaint, this was evidence that the product was not affected by any latent defect or loss of use.

The Court relied on the Court of Appeal's reasoning in Fortin v. Mazda Canada inc.[9] and the principles set out by the Supreme Court of Canada's in ABB inc. v. Domtar [10] to dismiss this argument, stating that the key element in determining the existence of a latent defect is loss of use, which must be assessed in light of the buyer's legitimate expectations. The legitimate expectations of the buyer are assessed in light of certain factors, such as the nature of the product, its intended use, state of the art, information provided by the manufacturer and distributor and provisions in the contract. The defect need not affect the usefulness of the good or make it impossible to use.

As such, the Court found that the Applicant's allegations regarding the problems he had with his washing machine and the damage that he suffered were sufficient to demonstrate an arguable case on the merits and should be authorized to proceed. The Court further noted that the Applicant's claim is based in part on article 272 of the CPA, which provides and absolute presumption of prejudice when it can be shown that an obligation imposed by the CPA has been violated.

Lack of Written Notice Regarding the Alleged Defect

The Defendants asserted that the Applicant never sent them written notice of the existence of the Alleged Defect, as required under article 1738 CCQ, prior to filing the application for authorization to bring the class action and that, as a result, they were unable to inspect the washing machine.

The Court, referring to the decisions of the Court of Appeal in Claude Joyal inc. v. CNH Canada Ltd.[11] and Nadeau v. Mercedez-Benz Canada Inc.,[12] stated that the buyer's failure to send written notice must cause real prejudice to the seller in order to justify dismissing the claim, particularly where the good is still available for inspection after the claim is filed. In the present case, the Applicants' Washing Machine was never repaired and could be inspected.

The Court further stated that it was not demonstrated that the written notice to the seller stipulated under article 1739 CCQ also applied to the Applicants' claims under the CPA, which does not contain any provision requiring such notice.

Section 52(1) of the Competition Act

In the application for authorization to institute a class action, the Applicant further claims that the Defendants contravened section 52(1) of the Competition Act by failing to disclose the existence of the Alleged Defect to consumers:

52 (1) No person shall, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever, knowingly or recklessly make a representation to the public that is false or misleading in a material respect.

For the same reasons as those set out in a decision rendered by the Superior Court of Justice in Ontario[13] and upheld by the Ontario Court of Appeal[14] in connection with a similar claim involving the Defendants' Washing Machines, the Court ruled that the application for leave and the exhibits filed in support thereof did not show that there was a defendable cause of action under section 52(1) of the Competition Act. In the decision it is stated that, prima facie, the seller's silence must not be considered as being false or misleading within the meaning of that section, unless there is a fiduciary duty or legal obligation to disclose a fact.[15] Given that the Alleged Defect did not render the Washing Machines dangerous to use, the Defendants did not have a duty to criticize their own products and disclose the Alleged Defect.[16]

Prescriptive Period

The Lambert Matter was instituted on December 20, 2009 and was dismissed on October 29, 2015. The Defendants argued that the Lambert Matter had suspended the prescriptive period with regard to the claims that arose on or after December 20, 2006 and that all claims relating to the Washing Machines manufactured between 2001 and 2005 were already time barred. They also argued that the claims relating to the models manufactured in 2006 were time barred given the lapse of time between the end of the Lambert Matter and the filing of the Applicant's application for authorization to institute a class action.

The Court rejected these arguments, finding that the prescriptive period only starts to run when the defect first manifests itself in a "material fashion". Given that the evidence showed that the first signs of the Alleged Defect could appear between thirty days or three years after the initial use, the Court found that it was impossible to determine, at least at the authorization stage, whether the prescriptive period had begun to run from the date of purchase, the end of the model year or any other specific starting point.

As a result, the Court deferred the debate involving the prescriptive period to the merits of the action.

Conclusion

This decision sets out key issues regarding product liability claims that are likely to be raised in the context of other class actions arising from statutory warranties of quality incumbent on professional sellers and merchants under the CCQ and CPA.

The question raised by the Court as to whether a consumer is required to send written notice to the merchant is of particular interest and relevance in the context of a claim where the seller may have suffered a real prejudice by not being able to inspect the good before it was repaired, discarded or destroyed.

It should be noted, however, that the delay for leave to appeal from this decision has not yet expired.



[1] Gaudette v. Whirlpool Canada, 2020 QCCS 1423.

[2] CQLR, c CCQ-1991.

[3] CQLR, c P-40.1

[4] LRC (1985), c C-34.

[5] Lambert v. Whirlpool, 2013 QCCS 5688.

[6] Lambert v. Whirlpool Canada, l.p., 2015 QCCA 433; Lambert v. Whirlpool Canada LP, et al., 2015 CanLII 69429 (SCC).

[7] Whirlpool Canada v. Gaudette, 2018 QCCA 1206.

[8] Whirlpool Canada LP, et al. v. Gaudette, 2019 CanLII 73200 (SCC).

[9] 2016 QCCA 31.

[10] ABB inc. v. Domtar inc., 2007 SCC 50.

[11] 2014 QCCA 588, para. 35 and 36.

[12] Nadeau v. Mercedez-Benz Canada Inc., 2017 QCCA 460.

[13] Arora v. Whirlpool Canada LP, 2012 ONSC 4642, para. 184-201.

[14] Arora v. Whirlpool Canada LP, 2013 ONCA 657, para. 43-51.

[15] Arora v. Whirlpool Canada LP, 2012 ONSC 4642, para. 195.

[16] Id., para. 197.

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