(Supreme Court of Canada) Saint John Shipbuilding Limited (SJSL) constructed an oil rig for Bow Valley Husky (Bermuda) Limited (BVHB) which was to conduct drilling operations off the east coast of Canada. A heat trace system was required in order to prepare the rig for winter operations. The purpose of a heat trace system was to prevent the rig’s pipes or ‘mud lines’ from freezing. The heat trace system which was installed was supplied by Raychem Canada Limited and Raychem Corporation (Raychem). This system was chosen after consultation with Raychem representatives because it had a self-regulating heater. Raychem’s heat trace system used Thermaclad wrap to keep moisture from the insulation and heat trace wire. The specification for the Raychem heat trace system required the installation of a ground fault circuit breaker system, the purpose of which was to cut off the power in the event of an electrical fault, to prevent arcing of the heat trace wire. The ground fault circuit breaker system initially installed by SJSL was unsuitable, and a functioning system was not installed on the rig until after the incident which formed the basis of the case. During the drilling of an exploratory well a fire broke out on the oil rig, causing damage to cables.
In a subsequent litigation, the trial judge held inter alia that SJSL was liable in tort for breach of duty to warn of the inflammability of Thermaclad. He also held that the defendant Raychem was liable in tort for breach of its duty to warn. When the case reached the Supreme Court of Canada, it was held by a majority that SJSL’s appeal with regard to the duty to warn should be allowed. The majority of the court held that BVHB was not entitled to claim against SJSL on the basis of the tort duty to warn, by reason of provisions of the contract between them. The majority did not however disagree with what was said by the minority of the court about the duty to warn.
The opinion of the minority was delivered by McLachlin J., who said at: ‘SJSL argues that in order for a duty to warn to arise, there must be an ‘informational imbalance’ between the manufacturer or supplier and the party who is owed the warning. SJSL submits that the plaintiff BVHB knew as much about the inflammability of the Thermaclad as it did.
The law may be simply stated. Manufacturers and suppliers are required to warn all those who may reasonably be affected by potentially dangerous products: Lambert v Lastoplex Chemicals Co [1972] S.C.R. 569, and Hollis v Dow Corning Corp. [1995] 4 S.C.R. 634. This duty extends even to those persons who are not party to the contract of sale: Rivtow Marine Ltd v Washington Iron Works [1974] S.C.R. 1189. The potential user must be reasonably foreseeable to the manufacturer or supplier – manufacturers and suppliers (including a builder-supplier like SJSL) do not have the duty to warn the entire world about every danger that can result from improper use of their product.
The plaintiff BVHB was clearly within the class of persons that SJSL and Raychem ought to have known might reasonably be affected by the use of Thermaclad. SJSL was in a contractual relationship with BVHB, and Raychem had directly approached BVHB’s predecessor […] to encourage the use of its products in the construction of the rig.
The defendant SJSL submits that there is an additional requirement for a duty to warn: a knowledge imbalance between the manufacturer or supplier and the consumer. It goes on to argue that since BVHB knew about the inflammability of Thermaclad no duty to warn arose. The Court of Appeal held that knowledge may be a defence, but only where the plaintiff can be viewed as accepting the risk (volenti non fit iniuria).
I agree with the Court of Appeal that knowledge that there may be a risk in some circumstances does not negate a duty to warn. Liability for failure to warn is based not merely on a knowledge imbalance. If that were so every person with knowledge would be under a duty to warn. It is based primarily on the manufacture or supply of products intended for the use of others and the reliance that consumers reasonably place on the manufacturer and supplier. Unless the consumer’s knowledge negates reasonable reliance, the manufacturer or supplier remains liable. This occurs where the consumer has so much knowledge that a reasonable person would conclude that the consumer fully appreciated and willingly assumed the risk posed by use of the product, making the maxim volenti non fit iniuria applicable: Lambert, supra.
The evidence establishes that the plaintiff BVHB knew that Thermaclad would burn under some circumstances. The defendants SJSL and Raychem, however, had much more detailed knowledge of the specific inflammability characteristics of the Thermaclad. Raychem gained this knowledge through its own testing as manufacturer. SJSL gained it through its request to Raychem for information on Thermaclad’s inflammability. BVHB did not have the degree of knowledge necessary to negate reliance on SJSL and Raychem. SJSL and Raychem did not demonstrate that BVHB accepted the risk of using Thermaclad. It follows that both SJSL and Raychem owed BVHB a duty to warn […].’
Judges:
McLachlin J (minority)
Citations:
[1997] 3 SCR 1210
Jurisdiction:
Canada
Cited by:
Cited – McTear v Imperial Tobacco Ltd OHCS 31-May-2005
The pursuer sought damages after her husband’s death from lung cancer. She said that the defenders were negligent in having continued to sell him cigarettes knowing that they would cause this.
Held: The action failed. The plaintiff had not . .
Lists of cited by and citing cases may be incomplete.
Commonwealth, Negligence
Updated: 30 November 2022; Ref: scu.226221