Date: Thu, 12 Sep 2002 10:19:23 -0400

From: Jason Neyers

Subject: Hughes v. Sunbeam Corp.

In an interesting and strange new case, Hughes v. Sunbeam Corp. (http://www.ontariocourts.on.ca/decisions/2002/september/hughesC35521.htm), the Ont. C.A. has dealt with the scope of recovery for pure economic loss and the effect of the dangerous defect doctrine enunciated in Winnipeg Condominium.

The facts of the case were that the plaintiff purchased a smoke detector from First Alert which he alleged was defective in being unable to detect small smouldering fires. The smoke detector was certified by Underwriters' Laboratories of Canada (ULC), a safety standards agency (though whether it was private or public is unclear). The plaintiff brought a class action against a number of partie s including First Alert and ULC. The motions judge struck out the plaintiff's claims for economic losses against both First Alert and ULC.

The CA reinstated the plaintiff's claim against First Alert on the theory that it was arguable that the defect in the smoke detector was a 'dangerous defect' rather than merely a defect in quality. Laskin J.A. stated at para. 27:

"A smoke detector that does not detect fires in time for occupants to escape injury is not itself dangerous, but relying on it is. The occupants are lulled into a false sense of security. The threatened harm to persons or property is no less than that from a dangerous defect. In other words, the safety considerations are similar. Safety justified compensating the owner of the apartment building in Winnipeg Condominium to eliminate the dangerously defective cladding. Safety may also justify compensating the owner of a defective smoke alarm to eliminate dangerous reliance on it." (See also the example of airbags in para. 28.)

The C.A., however, agreed with the motions judge that the plaintiff's claim against ULC could not be sustained because there was no proximity between the parties. The proximity was lacking since ULC approves products for the entire public (rather than for individuals) and it was unfair that a plaintiff who had not paid for the service should be able to sue ULC in negligence. Finally, policy reasons such as indeterminate liability also foreclosed a duty.

For what it's worth, I think that the Sunbeam decision amply demonstrates how untenable the current distinction between dangerous and non-dangerous defects really is in relation to the recovery of pure economic losses. As was stated in Murphy, neither a Condo, a Crane, a smoke detector nor an airbag is dangerous once a defect is discovered, since the consumer merely has to stop using the product to avoid the danger. The case also seems to demonstrate overzealousness in its application of the concept of proximity relating it almost with 'privity', an understanding long since abandoned.

Happy reading,

Jason Neyers

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