Burr v. Tecumseh | Jan 21, 2022

CITATION: Burr v. Tecumseh, 2022 ONSC 0412

COURT FILE NO.: CV-14-831

DATE: 2022 01 21

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

)

Leroy Burr and Joan Callister

Robert Dowhan, Danielle Marks, and

Matthew McMahon, Counsel for the

Plaintiffs

– and –

Tecumseh Products of Canada,

Limited, Tecumseh Products

Company, and Venmar Ventilation

Inc.

Thomas Curry, Dena Varah, and

Sarah Bittman, Counsel for the

Defendants Tecumseh Products of

Canada, Limited and Tecumseh

Products Company

Defendants

Gosia Bawolska and Kara Denny,

Counsel for the Defendant, Venmar

Ventilation Inc.

) HEARD: May 10 to 14, 17- 21, 24 –

27,31, June 1 – 4, 7-9,21, August 23-

26, 2021

JUSTICE G.D. LEMON

REASONS FOR JUDGMENT

Page: 2

Contents

REASONS FOR JUDGMENT ............................................................................... 1

Introduction............................................................................................................ 4

The Parties............................................................................................................ 6

The HRV and the Motor ........................................................................................ 7

The Unit ............................................................................................................. 7

The Thermal Protector....................................................................................... 7

Attended and Unattended Uses......................................................................... 9

Knowledge of the Parties................................................................................... 9

The House and Fire............................................................................................. 10

The Cause of the Fire...................................................................................... 15

The Evidence, Credibility and Reliability ......................................................... 18

The Losses from the Fire................................................................................. 19

Evidence of the Plaintiffs ................................................................................. 22

Evidence of Charlene Ferris ............................................................................ 26

Venmar’s Voir Dire Ruling................................................................................... 28

Evidence of Bart Beauchamp .......................................................................... 28

Analysis on the Voir Dire ................................................................................. 30

Analysis and Decision on the Damages Claim ................................................... 33

Venmar’s Estoppel Motion .................................................................................. 37

Analysis ........................................................................................................... 42

Liability ................................................................................................................ 47

Positions of the Parties.................................................................................... 47

Relevant Legal Principles.................................................................................... 48

Was Venmar negligent in its design and manufacture of its HRV?..................... 53

Applicable Standard in the Industry................................................................. 53

Venmar’s Evidence ............................................................................................. 58

Evidence of Daniel Forest................................................................................ 58

Production and Manufacturing ..................................................................... 58

Problems Arise............................................................................................. 62

Solution Found............................................................................................. 64

Page: 3

Evidence of Normand Juneau ......................................................................... 66

Evidence of Mark Joseph ................................................................................ 69

Evidence of Michael Rowen ............................................................................ 73

Was Fasco negligent in its manufacture or design of the motor? ....................... 74

Fasco’s Evidence ................................................................................................ 75

Evidence of Maurice Goldin............................................................................. 75

Evidence of Karyn Manley............................................................................... 78

Evidence of Gary Alexander............................................................................ 84

Evidence of Beth Anderson ............................................................................. 89

Evidence of Michael Flynn............................................................................... 95

Liability of the Defendants................................................................................... 98

Analysis............................................................................................................... 99

Venmar’s Liability............................................................................................. 99

Fasco’s Liability ............................................................................................. 107

Did Venmar take Sufficient Steps to Notify Customers?................................... 116

Overview........................................................................................................ 116

Evidence of Daniel Forest.............................................................................. 123

Evidence of Mr. Juneau................................................................................. 125

Evidence of Daniel Pellerin............................................................................ 126

Evidence of Marie-Soleil Anger ..................................................................... 127

Evidence of James Bennett........................................................................... 130

Responding Evidence.................................................................................... 132

Evidence of Michael Flynn............................................................................. 132

Analysis and Decision.................................................................................... 133

Did Fasco take Sufficient Steps to Notify Customers?...................................... 137

What were the terms of the Contract Between Venmar and Fasco?................ 140

Overview........................................................................................................ 140

Evidence of Daniel Forest.............................................................................. 141

Evidence of Daniel Pellerin............................................................................ 142

Evidence of Lynda Gaudreau ........................................................................ 143

Evidence of Gary Alexander.......................................................................... 145

Page: 4

Fact Finding................................................................................................... 145

Evidence of Michelle Corrigan Erikson.......................................................... 147

Evidence of Amy Schmitz.............................................................................. 149

Analysis and Decision.................................................................................... 151

Decision............................................................................................................. 155

Costs ................................................................................................................. 157

Introduction

[1] On November 5, 2012, the plaintiffs' house was heavily damaged by fire.

They were unable to return to live in it until July of the following year. They say that

either or both defendants, Venmar and Tecumseh, are liable to them for their

damages. Venmar disputes the damages claimed by the plaintiffs.

[2] There is no dispute that the fire originated in the heat recovery ventilator in

the plaintiffs’ home. I will refer to that product as the HRV or the unit. In particular,

the fire originated in the motor of the unit. Venmar manufactured the HRV;

Tecumseh manufactured the motor. Venmar and Tecumseh blame each other for

the fire.

[3] The problems with Venmar’s HRV has generated litigation throughout

Canada and the United States of America. I am asked to determine whether liability

between Venmar and Tecumseh has already been determined by a previous case

in Desjardins Assurances Générales Inc. c. Venmar Ventilation Inc., 2014 QCCS

Page: 5

3653. Venmar and Tecumseh dispute what principles of Quebec law applicable in

that case apply to this case.

[4] Venmar became aware of a risk of fire in its HRV’s in 2006. It then

commenced a program to alert purchasers of the risk of fire and provide a way to

reduce that risk. The plaintiffs did not become aware of that risk and solution until

after the fire. The plaintiffs and Tecumseh say that Venmar did not do enough to

warn the plaintiffs and other consumers of that risk of fire.

[5] Venmar and Tecumseh regularly carried on business by way of purchase

orders from Venmar to Tecumseh and corresponding confirmations and invoices

from Tecumseh to Venmar. That practice raises issues with respect to the

contractual terms between them. Tecumseh says that those terms require Venmar

to indemnify Tecumseh from the plaintiffs’ claims. Those terms may have to be

determined in accord with the law of Missouri. Tecumseh and Venmar dispute the

applicable principles of Missouri law.

[6] For the following reasons, I find that the plaintiffs’ damages are fixed in the

amount of $1,133,739.00 and Venmar is liable to the plaintiffs for those losses

because of Venmar’s negligent design of the HRV. The claim against Tecumseh

is dismissed. If I am wrong with respect to Tecumseh’s liability, Venmar is required

to indemnify Tecumseh pursuant to their contractual agreement. On this evidence,

I cannot find that Venmar is liable for failure to warn the plaintiffs of the risk that

Page: 6

materialized. However, I do find that Tecumseh had no obligation to warn the

plaintiffs.

The Parties

[7] The motor installed in the HRV in the plaintiff’s home was manufactured by

Tecumseh Industries Inc. By the time that this action was commenced, Tecumseh

had been purchased by Fasco Products Company. Presently, the parties agree

that the proper defendant is “Von Weis USA Inc., formerly known as Fasco

Industries Inc.” Von Weis accepts responsibility for any damages found against it.

The defendant, Tecumseh Products Canada is removed from the claim and

replaced by Von Weis USA Inc., formerly known as Fasco Industries Inc. As the

parties did through out the litigation, this defendant will be referred to as “Fasco.”

On consent, the claim against Tecumseh Canada is dismissed.

[8] Mr. Burr and Ms. Callister were insured by The Co-Operators General

Insurance Company of Canada. The bulk of the damages relates to Co-Operators’

subrogated claim for what they paid the plaintiffs pursuant to their insurance

contract. Mr. Burr and Ms. Callister have been paid most of their losses by Co-

Operators, but the couple have some other personal losses claimed in this action.

They also seek general damages for the upset to their lives caused by the fire.

Page: 7

The HRV and the Motor

The Unit

[9] A heat recovery ventilator is a metal box about 2’ by 2’ by 3’ in dimension. An

HRV transfers warm, stale air inside of a building and exchanges it for fresh, cooler

air from the outside. Although not part of a furnace, an HRV is usually located near

the furnace and uses the same ductwork. In that location, the unit would not be

regularly monitored by the homeowner.

[10] HRVs have several components: An insulated housing box; two blowers (for

air flow in and air flow out) which are driven by an electric motor; a heat recovery

module; electronic controls; and a defrost mechanism.

[11] HRVs are intended to operate on demand, depending on the setting selected

by the homeowner. They are also designed to be operated continuously, 24-hours

a day, and 365 days a year, if so required by the homeowner.

[12] As said, the exchange of air requires a fan, which requires a motor. In this

case, the motor was manufactured and supplied by Fasco. Simply put, Venmar

ordered and purchased the motor from Fasco.

The Thermal Protector

[13] As one can imagine, the electric motor also generates heat. Within Fasco’s

motor there was a thermal protector to prevent over heating. In this case, the

thermal protector was a “cycling thermal protector.” This means that if the motor

Page: 8

became too hot (over 130 degrees Celsius), the thermal protector should cut off

the flow of electricity to the motor causing it to shut down. Once the motor cools

down, the thermal protector allows the flow of electricity and the motor runs again.

In that way, it is expected that the flow of heat or electricity cycles through the unit

without finally stopping. These thermal protectors are also referred to as auto reset

thermal protectors.

[14] However, like all things, including HRV’s and motors, thermal protectors have

a life span. When the thermal protector comes to its end, it might do so while

allowing the electric current to flow or while interrupting it. If the thermal protector

fails when the current is interrupted, the motor will stop running. If the thermal

protector fails while allowing current, the motor will continue to run and could run

in an overheated condition; that is, exceeding130 degrees Celsius. If so, that could

lead to a fire as wiring insulation degraded. A failure of the insulation can lead to a

short and sparks. Sparks, with fuel, could lead to a fire.

[15] There are also “one shot” or “thermal cut off” thermal protectors; also referred

to as TCO’s. This kind of thermal protector cuts the flow of electricity as soon as

the motor overheats by permanently opening the electrical circuit and does not

allow any further flow of electricity. While a TCO is an effective thermal protector,

it is not usually used because it effectively brings the motor to the end of its life

when it first overheats, while a recycle would allow the appliance to continue to be

Page: 9

useful. As well, TCO’s may trip in error or prematurely and bring the appliance to

an early and unnecessary end of life.

Attended and Unattended Uses

[16] TCO’s are commonly used in what are called “unattended appliances.” These

appliances, such as attic fans, operate where the consumer cannot be expected

to know when the motor had stopped working or was overheating. “Attended

appliances,” such as toasters and hot water kettles, are those that the consumer

will immediately know if the appliance is not working. Attended appliances might

also include furnaces or air conditioners, as the consumer would immediately know

that the house was hot or cold when the opposite was needed. One of the issues

in this litigation is whether this HRV was an attended or unattended appliance and

which of the defendants should have known that.

Knowledge of the Parties

[17] When the plaintiff’s HRV unit was manufactured in 1998, Venmar knew of

overheating problems in the motor, but it was not until 2001 or 2002 that Venmar

found out that the overheating could lead to such a fire. Overheating in the unit

was one thing; an open flame leading to a house fire was another. Fasco had

known of fires in other motors that it manufactured since at least 1985.

Page: 10

[18] As one can imagine, this field of manufacturing is heavily regulated both with

respect to the final appliance and the motor within it. I will refer to those regulations

within this judgment.

[19] It is agreed that Venmar produced 232,000 units and put them into the market

in Canada. A further 75,000 were produced for the U.S. market. As of the time of

trial, approximately 112 house fires were caused by the units.

The House and Fire

[20] The plaintiffs’ evidence relating to the fire was not challenged in any

significant way. Some of the following was conceded in argument.

[21] At the time of the fire, Mr. Burr, Ms. Callister, and their son, Joshua, lived at

8545 Twiss Road in Campbellville.

[22] In 1987, the couple found and purchased the then vacant land. That year,

they cleared the property and formed the driveway. Construction of the home

commenced in 1988. Although the plaintiffs hired a contractor to lay the foundation

and subcontracted the plumbing and drywall work, the couple did the rest. They

moved into the home April 1989.

[23] The home is a two-story Cape Cod style of 2000 square feet. There were

three bedrooms and a finished basement that included four rooms. It also had a

Page: 11

two-car garage. From the evidence, I conclude that the family had a beautiful,

remote home in the country. Emotionally, it was irreplaceable.

[24] The house was heated with an electric forced air furnace and heat pump. The

home had moisture buildup on the windows, and the couple was advised that an

HRV would solve that problem. In December of 1994, the plaintiffs purchased the

HRV unit from, and had it installed by, Terry Rowley. The unit hung from the floor

joists beside the furnace in the basement but was not part of the furnace.

[25] Terry Rowley is the founder and principal of TRM Inc. Mr. Rowley is certified

in Ontario as a journeyperson in the heating, ventilation, and air conditioning trade.

Mr. Rowley holds a master plumber's license, a master heating technician licence,

a refrigeration licence, two electrician licences, and a gas one licence. Any claim

against Mr. Rowley was dismissed prior to trial.

[26] Mr. Rowley purchased and installed Venmar’s Flair Compact 3055 HRV in

December of 1994. The total cost of the HRV to the plaintiffs was $1,455.12

[27] The HRV had an instruction booklet in a pocket on the side of the unit which

provided instructions on the operation and cleaning of the unit. Mr. Burr

occasionally adjusted the settings on the HRV based on the season. Maintenance

involved a simple vacuuming of the unit which Mr. Burr did about one or two times

per year. When Mr. Burr maintained the HRV, he could not see the motor.

Page: 12

[28] On Thursday, November 1, 2012, Mr. Burr noticed a burning smell in the

house and became very concerned. He described it as "predominant" and

"unusual" and said that it was unlike anything he had smelled in the house before.

He went to the basement to look at the furnace and the unit; "all seemed to be

okay." Mr. Burr immediately called Mr. Rowley and arranged for a technician to

attend for an inspection.

[29] Mr. Rowley's son, Robert, a heating ventilation and air conditioning

technician, came to the plaintiffs’ home on November 2, 2012. At the time, Robert

Rowley had been employed by TRM Inc. for approximately ten years. When Mr.

Rowley arrived, Mr. Burr led him to the furnace. Mr. Burr complained that there

was not enough heat coming from the furnace and reported the burning smell

through the ductwork.

[30] On inspection of the furnace, Mr. Rowley determined that two of the

sequencers, or relays, in the furnace were not functioning properly. Mr. Rowley did

not detect any burning smell. He did not check for any other sources of the burning

smell. Mr. Rowley advised that potential sources of a burning smell include a

furnace motor that had burned out or the presence of foreign substances on a

furnace element. Mr. Rowley did not investigate or inspect the HRV.

Page: 13

[31] Mr. Burr recalls cleaning out the HRV while Mr. Rowley was present. Mr. Burr

could not see the motor, but it seemed to be operating. There was no smell of

smoke when he opened the HRV.

[32] On Monday, November 5, 2012, at about 9:30 pm, Ms. Callister arrived home

after a groceries-trip. She set the groceries on the island in the kitchen and told

Mr. Burr that she smelled something. She went into the living room where the

plaintiffs had a fireplace. Ms. Callister asked Mr. Burr to check to ensure that there

was no chimney fire. Ms. Callister went upstairs to check for any source of the

smoke smell and found nothing. At the same time, their son Joshua was in the

bathroom; he yelled out that there was smoke coming from the registers.

[33] Mr. Burr ran downstairs to the furnace room. There was smoke and fire

coming from the HRV. Mr. Burr opened the HRV and "it was blazing." He ran

upstairs to get a fire extinguisher but could not find it. He grabbed a pot, filled it

with water and ran back downstairs. By the time he got back to the basement, the

plastic parts of the HRV had melted and were dripping on the floor. The house was

filling with black smoke. He ran back upstairs and screamed at Ms. Callister and

Joshua to "get out."

[34] Ms. Callister said that she looked in the upstairs bathroom and saw nothing

but “pure black smoke” coming out of the vents that accumulated below the ceiling

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where it descended like “wall of smoke.”. Ms. Callister called 911. She grabbed

her camera bag and ran down the stairs and outside.

[35] Joshua brought their coats and the dog. Mr. Burr took both his and his wife's

computers. By that point, the house was filled with a black toxic smoke; they could

hardly see as they left the home.

[36] There is a fire station located about three kilometres from the home. The

volunteer members were engaged in a training session that evening, so they

arrived almost immediately. Several firetrucks arrived and the firemen went into

the house with hoses. They stayed to put out the fire until two or three in the

morning.

[37] When the fire department left, Mr. Burr went into the house and saw that the

kitchen floor had given way. It was dark and he was only using a flashlight, but

when he looked around there was black soot everywhere and something like a

“black syrup dripping down the walls.” The basement appeared to be flooded and

the drywall had been opened by the firemen to fight the fire behind it. Shelving was

turned over and windows were smashed out.

[38] Ms. Callister went into the house the following day. Although the house was

still standing, the interior was destroyed by both the fire and the water damage

from the firefighters. The walls were covered in soot and there was an "outrageous"

Page: 15

smoke smell. There was an oily black film dripping down her artwork on the walls.

There was black smoke damage above the vents and any light fixtures were black.

The Cause of the Fire

[39] At the outset of argument, the parties agreed that the fire was caused by the

failure of the Fasco motor in the HRV. The motor was in “locked rotor condition”

and had overheated for a prolonged period of time before the fire. The motor

eventually ignited the plastic material around the blower and then other

combustibles in the HRV. The thermal protector must have failed in a ‘closed

position’ which allowed the electric current to continue flowing through the motor

and allow it to overheat, causing the fire.

[40] The plaintiffs’ expert, Mazen Habash, examined the fire scene on November

7 and 12, 2012. He conducted a detailed forensic examination of the HRV at his

laboratory on December 12, 2012. The forensic examination was completed in the

presence of representatives of Venmar and Fasco. Mr. Habash was acknowledged

by all parties to be qualified to provide evidence in forensic electrical engineering

and fire investigation. His resume and report were filed in evidence on consent. I

agree with counsel that Mr. Habash is well qualified to render his opinions in this

matter.

[41] After completing his examination, Mr. Habash found "that the blower fan

motor has sustained an internal failure or malfunction and that this failure or

Page: 16

malfunction was an indication of the motor overheating and eventually igniting,

causing the fire initially within the HRV unit and then within the home itself."

[42] Mr. Habash opined:

Based on my observations, I identified no other potential sources of

ignition for this fire given the physical evidence recovered at the site,

not only in terms of damage sustained by the building and its contents

but also based on the physical evidence noted with obvious

indications of failures and/ore malfunctions within the motor housing

along its windings.

In my opinion, the fire that occurred within this home on November 5,

2012, as a direct result of a failure or malfunction of a blower motor

within the HRV unit.

Based on physical evidence observed during my examination of the

scene, as well as on available information, I have come to the

conclusion that the fire which occurred in this home on November 5,

2012, originated within a heat recovery ventilator (HRV). The HRV unit

was fastened to the underside of the basement ceiling in a utility room

located along the north end. It is further my opinion that the fire was a

result of an internal failure or malfunction of the HRV unit and in

particular of its blower motor. My opinion is that this motor overheated,

resulting in the ignition of combustibles within the motor and within the

HRV in general.

[43] At trial, Mr. Habash said that the automatic resetting thermal protector was

badly damaged. He explained that a forensic examination of the thermal protector

showed how the motor had operated historically. The more times that the motor

overheated, the more the thermal protector was activated and called upon to

interrupt power to the motor. The surface of this thermal protector was "deformed"

because every time the thermal protector separates the contacts, it degrades or

slightly melts the contacts. With repeated operation, the surfaces of the contacts

Page: 17

erode. On forensic examination, Mr. Habash concluded that the surfaces were

"heavily impacted by operation." Mr. Habash opined that the thermal protector was

called upon to operate numerous times due to the motor overheating. However,

he could not tell how long it was in a locked condition prior to the fire, but it was

weeks or months.

[44] Ultimately, according to Mr. Habash, the motor was in locked rotor condition

and was overheating for a prolonged period. Eventually the motor ignited the

plastic material around the blower, and then other combustibles in the HRV. The

fire escaped from the HRV, and once that happened, it was able to extend into

the utility room and through the home.

[45] Mr. Habash agreed on cross-examination that the most probable cause of the

failure of this motor is natural “end of life” of the appliance.

[46] Venmar’s expert, Michael Rowen, agreed with the essence of Mr. Habash’s

opinion. That is to say that “the fire started due to the catastrophic failure of the

ventilation motor” within the HRV.

[47] On the evidence, I find that the fire was caused by end of life failure of Fasco’s

motor within the Venmar HRV.

Page: 18

The Evidence, Credibility and Reliability

[48] The plaintiffs called four witnesses: Mr. Burr, Ms. Callister, the Co-Operators

adjuster Ms. Ferris, and Mr. Habash. All were accepted by the parties as truthful

witnesses. Much of their evidence was included in agreed statements of fact or

admitted in argument.

[49] Venmar called eight witnesses including three experts. On consent, those

experts’ opinions were filed in evidence subject to any weight that I might give to

those opinions, considering all of the evidence and the arguments of the parties.

[50] Fasco called seven witnesses including three experts. Those experts’

opinions were also filed in evidence on consent subject to any weight that I might

give to those opinions. I will consider those expert witnesses as their evidence

becomes relevant to the issue under determination in these reasons. Although the

parties consented to the admissibility of the expert evidence, I remained the gate

keeper of that opinion evidence. See: Parliament v. Conley 2021 ONCA 261. As

such, for reasons set out below, some of that evidence was not properly before

me.

[51] The lay witnesses for both defendants gave evidence about matters that had

occurred many years before these events. Frequently, it appeared that their best

recollection benefitted only their employer or the party who called them. I must be

cautious about their recollected evidence. Fortunately, there is substantial

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agreement on many of the facts and many objective documents were filed as

exhibits.

[52] In order to manage this trial during COVID, all counsel and their staff worked

collaboratively to have the trial completed efficiently, on time, and without

compromising the rights of their respective clients. Indeed, they appeared to work

co-operatively even when I sensed some friction that is expected in such high-

stakes litigation.

[53] The trial was carried out in the early days of Zoom litigation. A total of 169

exhibits were filed electronically and counsel were able to surmount substantial

technological hurdles.

[54] In the end, I have no doubt that I have received the evidence and argument

necessary to make my determinations. I am most grateful to counsel for their

exceptional work on this difficult undertaking.

The Losses from the Fire

[55] The plaintiffs claim a total of $1,041,758.73 for the subrogated interest paid

by Co-Operators. They also claim $31,980.28 for losses not covered by their

insurance policy. They seek $60,000.00 for general damages as a result of the

upset when they lost their residence for a period of time.

[56] Fasco does not dispute those damages.

Page: 20

[57] Venmar submits that the losses should be based on the actual cost value of

the losses calculated by depreciating some of the claims.

[58] The parties agreed that, for the purposes of this proceeding only, the following

facts were accepted as true.

[59] Co-operators, as the insurer for the plaintiffs, made payments on behalf of, or

to the plaintiffs in the total amount of $1,041,758.73, excluding litigation expenses.

The plaintiffs incurred direct out-of-pocket expenses in the total amount of

$31,980.28.

[60] In detail, Co-operators made twenty-one payments directly to the plaintiffs in

the total amount of $453,501.01 for contents replacement, additional living

expenses, out of pocket expenses, building costs, by-law expenses, and air quality

testing expenses.

[61] Co-operators made eight payments to Paul Davis Systems of KW Inc. in the

total amount of $432,845.55, for restoration services to the plaintiffs' home and its

contents.

[62] Co-operators made two payments to Brenton's Interiors in the total amount of

$28,425.15 for furniture refinishing services.

[63] Co-operators made three payments to Dsign Custom Artwork in the total

amount of $17,636.74 for artwork restoration services.

Page: 21

[64] Co-operators made one payment to EcoPure Cleaners Inc. on August 2,

2013, in the total amount of $20,000.00 for soft content cleaning services.

[65] Co-operators made eight payments to Homewood Suites by Hilton in the total

amount of $63,398.65 for the plaintiffs' lodging and living expenses.

[66] Co-operators made five payments to Biosense Environmental Inc. in the total

amount of $15,385.56, for treatment services to remove smoke odours from the

plaintiffs' home and the contents of the home including artwork.

[67] Co-operators made three payments to Moser Landscape Group Inc. in the

total amount of $624.33 for ploughing services to clear the plaintiffs' driveway.

[68] Co-operators made four payments to Campbell's Portable Toilets in the total

amount of $819.25 for toilet rentals.

[69] Co-operators made three payments to RJ Burnside & Associates Limited in

the total amount of $7,035.38 for engineering repair services.

[70] Co-operators made one payment to Wendell Motor Sales Ltd. on June 14,

2013 in the amount of $65.54 for replacement keys to the plaintiffs' vehicle.

[71] Co-operators made one payment to Arctic Spas Kitchener on September 15,

2013 in the total amount of $1,546.97 for hot tub repair services.

Page: 22

[72] Co-operators made one payment to BJD Water Systems Ltd. on February 11,

2014 in the total amount of $474.60 for well pump repair services.

Evidence of the Plaintiffs

[73] While the out of pocket expenses are acknowledged, I need to review the

impact of the fire on the plaintiffs for the purposes of the general damage claim

and the depreciation issue.

[74] Mr. Burr testified that Ms. Callister worked in the Waterloo region and his son

was at the University of Guelph; the location of the home was ideal for them.

[75] On the night of the fire, they informed their insurance company of the fire and

stayed the night with neighbours. While with the neighbours, the entire family

started to have a cough.

[76] They met with the adjuster, Charlene Ferris, the next day. She told them about

the process to be followed and reviewed the terms of the insurance policy with

them. She had arranged a hotel for them and gave them a $6,000.00 check to pay

for expenses.

[77] Over the next three days, Ms. Ferris and Ms. Callister carried out a detailed,

room by room, examination of the house to see what could be salvaged. Their

personal effects had been bagged; she and Ms. Ferris went through them to see

what could be salvaged and what needed to be discarded. Those items which

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could not be salvaged had to be valued. Ms. Callister described it as an "endless

job."

[78] The family lived at the Homewood Suites in Cambridge from November 6,

2012 to July 9, 2013. This location was appropriate for them because other

potential locations in Milton or Kitchener were too far away to be useful for Ms.

Callister’s work, their son’s education, and their frequent trips to the site of the fire.

[79] The building repair was started after the plaintiffs selected the contractor on

November 6. The contractor provided a detailed quote for each room and they

discussed it with him. They understood that any upgrades were at their expense

and told him to go ahead. Ms. Ferris also approved the quotation.

[80] They attempted to restore clothing, furniture and photographs but lost

irreplaceable items such as antiques, handmade family quilts, and family furniture.

They lost all the photographs of the building process. Ms. Callister described losing

her handmade wedding dress, family quilts, her father's desk, and other antiques.

[81] All items were removed from the home and some were trashed. When the

restoration was under way, the cupboards, the electrical systems, ducts, and floor

joists were removed. They attempted to use the same materials as previous and

as agreed by the plaintiffs and Ms. Ferris. Although the plaintiffs were required to

pay for any extras, by the time the various credits were granted to them, they were

not required to pay anything further.

Page: 24

[82] Although the plaintiffs moved back into the home in July 2013, they had

problems immediately upon arrival because, to their mind, the house was not yet

ready for occupancy. There were items in the garage that were still contaminated

with smoke. There was “chaos,” as the home was still a construction site and still

smelled of smoke. They were unable to bring in all their clothes and furniture and

had to move out from time to time for further repairs. Twice, the smoke detector

went off in the night yelling "fire, fire."

[83] Although a number of efforts were made to solve the smell of smoke, it was

not solved until February 2014 when the exterior sheeting and siding was removed.

[84] Mr. Burr kept a log of the time that was spent by him, Ms. Callister, and Joshua

picking out items, arranging permits, attending site visits, and attend other

meetings due to the fire. Between them, they worked on this project for 2,000

hours.

[85] They were, as Ms. Callister said, "just existing." When the house was rebuilt,

she was the designer to make some design changes. She coordinated the

redesign and picked things out for the house. She agreed that about 2000 hours

was logged with endless decision-making.

[86] Mr. Burr’s regular employment required long hours on the job. With the

demands of this project, it was almost impossible to manage. Through April and

Page: 25

May, Ms. Callister was doing most of the work and it was overwhelming to her. Mr.

Burr, therefore, retired in June of 2013 to alleviate his wife’s work.

[87] Ms. Callister described the loss, grief, trauma, disappointment, and sadness

that occurred as a result of the fire. She "lost [her] joy after the fire." In order to

deal with reconstruction, she used up her holiday and sick time and finally took a

leave of absence. Eventually, she also retired in August 2013. She did not return

to her hobby art projects until 2016.

[88] Joshua lost his school computer and was embarrassed at living in the hotel.

His education was delayed because he lost his texts and his laptop. They were all

"busy trying to cope." He left the home and “went west” in 2014.

[89] To manage his efforts on the home, Mr. Burr had to give up his mentorship in

Big Brothers and competitive mountain biking. Because of the smell of smoke in

the house they were unable to host gatherings their social life suffered as a result.

[90] Mr. Burr said that they sold the property in 2016 because they no longer

wanted to deal with it, but it was upsetting to sell their dream home. Ms. Callister

said that they sold the house because they had too many bad memories attached

to it. They sold the property for $1 million and have resided in Guelph since April

2016.

Page: 26

[91] The plaintiff’s insurance policy set out that they would recover 80% of the

value of those items that were not salvaged. To calculate the depreciated items’

claim, Mr. Burr considered the six payments for non-salvageable items and he

received 80% of that. This related to contents such as Ms. Callister's art, the

homemade quilts, an antique vinyl record collection, and other items that they

thought were priceless. They negotiated the value of those items and then received

80% of that from their insurer. In addition to what was paid by Co-operators, the

plaintiffs therefore seek $31,980.28 for depreciation on items that was not paid on

unsalvageable items.

Evidence of Charlene Ferris

[92] Ms. Ferris is employed by Co-Operators insurance. At the time of the fire, she

was a regional property claims adjuster. In November 2012, her role involved

adjusting larger claims including house and farm fires. To that end, she worked

with insureds to see what belongings could be cleaned or refinished or needed to

be scrapped. She also dealt with the client's immediate needs such as housing

and safeguarding the property. She determined the value of the contents.

[93] Ms. Ferris was assigned to this claim the day after the fire. When she attended

and spoke with them, she allowed the plaintiffs to remove their valuables and

important papers and arranged for them to stay at Homewood Suites. She then

Page: 27

arranged for emergency security and removing the contents of the house for

storage and assessment.

[94] There was no place for the family to stay in Campbellville. They tried to find

another home for accommodation, but the location was important for Ms. Callister’s

work, their son's school, and to be close to the property for meetings. They

therefore decided to stay at Homewood suites.

[95] She then met with Ms. Callister to see what could be salvaged and to consider

pricing the various items. She determined the amount to be paid with respect to

contents by working it out with the client, her common shopping experience, and

online pricing. They then paid the actual cost value which was replacement cost.

When items were replaced, they attempted to replace them as close as possible

to an equivalent. If items were not replaced, the insured received 80% of the value.

If they lost such as a family quilt, a quote was obtained to replace it but if it was not

replaced, the plaintiffs received 80% of that value.

[96] She agreed that there was a "bit of a smoke odor" that was finally solved by

removing the siding and sheeting at the front of the house. She agreed that when

the plaintiffs moved in in July 2013 when an occupancy permit was obtained, there

was still “touch-up work” to be done around the house but that the clients were not

at the house for an excessive amount of time.

Page: 28

Venmar’s Voir Dire Ruling

[97] In defence of the damages claim, Venmar sought to have Mr. Bart

Beauchamp qualified to give opinion evidence “regarding the plaintiffs’ damages,

and more particularly, the actual cash value of those damages.” The plaintiffs

objected to this evidence.

[98] On consent, Mr. Beauchamp’s evidence was led in a blended hearing to

receive the evidence related to both his expertise and his evidence, if he was

qualified to give it. After hearing his evidence and the submissions of the parties, I

found that Mr. Beauchamp’s evidence was inadmissible for written reasons to

follow. These are those reasons.

Evidence of Bart Beauchamp

[99] Venmar submits that the plaintiffs are only entitled to the actual cash value of

their lost items and not the replacement value paid by Co-Operators under the

insurance policy. To lead evidence on that issue, Venmar sought to have Mr.

Beauchamp’s expert opinion on the actual cash value of the loss.

[100] Mr. Beauchamp was asked by Venmar to review the plaintiffs’ subrogated

claim. He reviewed Mr. Burr’s transcript of his examination for discovery along with

the affidavits of documents and all of the documentation in those affidavits. Mr.

Beauchamp’s report and resume were filed as exhibits on the voir dire.

Page: 29

[101] Mr. Beauchamp has been an adjuster for 28 years. He has, in the past, acted

for subrogated insurers. In that role, he has calculated depreciation of an insured’s

loss using online tables to determine the cash value of various items. He uses the

program, “Claims Pages" to determine the appropriate depreciation rate but also

relies on his experience as an adjuster. To do that, Mr. Beauchamp took various

values of what Co-Operators paid and input those figures into the on-line program

to determine the depreciation and the actual cash value of the item. He considered

the age and condition of the contents to determine what he "feels what would be

fair" to value the items in question.

[102] Mr. Beauchamp is a claims adjuster with Crawfords in Ottawa. Mr.

Beauchamp lives and works in Ottawa. He has not worked in the Milton or

Campbellville area, although Crawfords has offices in the Kitchener area. He

agreed that those individuals had greater contacts in the area with respect to local

contractors. However, Mr. Beauchamp did not feel that he was any less aware of

local differences.

[103] Mr. Beauchamp opined that Co-Operators paid too much when they allowed

the plaintiffs to live in a hotel in Cambridge rather than rent a property in Milton. To

provide that opinion, he did not examine vacancy rates except to review one

document provided by the plaintiffs that showed a rental property in Milton. Mr.

Beauchamp’s opinion was that $2,500 per month living expense was reasonable

Page: 30

because the four-bedroom house in that listing was $1,799 per month plus utilities

and he rounded that to $2500. He had no other evidence to support rental costs.

He thought that was sufficient evidence for his opinion.

[104] Mr. Beauchamp was retained in 2020 and did not see the house before or

after the fire. Mr. Beauchamp had no idea what the value of the house was before

or after the fire. He did not see the actual contents of the home other than to review

the photos that were produced by the parties. Therefore, he was unable to carry

out a qualitative analysis of the contents. He does not know when the items were

purchased. He also did not send out for quotes to others. He had no idea what the

value of the contents was prior to the fire.

[105] Mr. Beauchamp did not know where the information for the "Claims Pages"

website came from. He agreed that he used only that online information rather than

any of his own experience to come to the values set out in his opinion. He agreed

that such a process was not in line with his employer’s policy.

Analysis on the Voir Dire

[106] This motion was brought as a request to permit Venmar to call more than

three expert witnesses. By the time the motion was heard, Venmar had already

called three experts without dispute. While framed as a request to call more than

three witnesses, the submissions focussed more on Mr. Beauchamp’s

qualifications as an expert, the necessity of his evidence, and whether his evidence

Page: 31

was otherwise admissible. See: White Burgess Langille Inman v. Abbott and

Haliburton Co. 2015 SCC 23, [2015] 2 S.C.R. 182.

[107] If Mr. Beauchamp’s evidence was otherwise admissible, I am satisfied that

Venmar could have called this fourth expert. The three experts called to that point

in the trial were for other important issues; there was no duplication of evidence.

The plaintiffs had notice of Mr. Beauchamp’s evidence and had elected not to

obtain their own expert on this issue; there was no prejudice to the plaintiff to allow

Venmar to call this witness. The evidence of Mr. Beauchamp was brief; there was

little time spent on the issue.

[108] The reason I rejected Mr. Beauchamp’s evidence related to the nature of his

evidence and not that he was a fourth expert for Venmar.

[109] As is well known, in order for expert evidence to be called, the witness must

be able to give evidence that is relevant and necessary. The proposed expert must

be properly qualified and there must be no evidentiary rule in play to otherwise

exclude the evidence. I am satisfied that Mr. Beauchamp is qualified to give his

relevant evidence but is otherwise inadmissible.

[110] Mr. Beauchamp’s evidence is arguably relevant for the defence as it related

to the damage claim brought by the plaintiffs. There are arguments for and against

the use of the evidence at the end of trial, but the evidence is relevant to Venmar’s

Page: 32

argument. Whether that argument has merit would have been decided later in the

trial and not at this admissibility stage.

[111] Mr. Beauchamp is a qualified insurance adjuster, even if he may not be as

qualified as Ms. Ferris. I agree with the plaintiffs that it seems odd to have the

opinion of someone who is not familiar with the geographical region of the claim

when another expert was apparently available. However, those factors relate to

the weighing of his evidence once admitted; they do not go to admissibility at my

gate keeping stage.

[112] With respect to Mr. Beauchamp’s opinion about the housing expense, I do

not see that his evidence is necessary. Mr. Beauchamp relied upon a single listing

for an unfurnished rental home in Milton. Had that document been placed in

evidence, I could rely on it along with the rest of the evidence at trial to make that

determination. Mr. Beauchamp does not appear to have applied any special

knowledge to render his opinion. His opinion of what should or should not have

been paid on that limited evidence will not help me with my determination of the

same question.

[113] Mr. Beauchamp testified that he could not give a complete opinion on the

claim related to the contents of the home because he did not have sufficient

evidence to render that opinion. I do not need an expert to tell me what evidence I

do not have; that is for counsel to submit in argument.

Page: 33

[114] With respect to his opinion on the depreciation on the home, Mr. Beauchamp

relied upon an online service without any knowledge of who prepared the

information or from whence it came. That is simply inadmissible hearsay from an

unproven website. It is unreliable and not the product of his independent judgment.

[115] I appreciate that an expert is entitled to rely on information that is widely

used, acknowledged as reliable within that field, and is employed as an accepted

means of making decisions within that area of expertise. R. v. Paszczenko, 2010

ONCA 615, 272 OAC 27. However, no such record was led to support the use and

reliability of Claims Pages. Indeed, Mr. Beauchamp acknowledged that such a

process was not Crawford’s policy. The evidence is therefore excluded by this rule

of admissibility.

[116] Accordingly, I dismissed the motion by Venmar; Mr. Beauchamp’s evidence

plays no role in my determinations.

Analysis and Decision on the Damages Claim

[117] With respect to the subrogated claim and the plaintiffs’ out of pocket

expense, for the following reasons, I find that those amounts are a reasonable

assessment of the damages and fix them accordingly.

[118] Many courts have concluded that damages may properly be fixed at the cost

to repair the deficiencies in a home or rebuild a home: Nan v. Black Pine, 55 BCLR

(2d) 241 (C.A.); Fors v. Overaker & Mallon, 2014 ONSC 3084; Galan v.

Page: 34

Finch, 2015 ONSC 2455,; Gemeinhardt v. Babic, 2016 ONSC 4707, 68 RPR (5th)

232, Jarbeau v. McLean, 2017 ONCA 115, 78 RPR (5th) 91.

[119] Here, the repairs have been completed and there is no evidence of a windfall

to the plaintiffs. The house was repaired but not demolished and rebuilt; the

exterior walls remained in place and the basement footprint was not changed.

Even if had I accepted Mr. Beauchamp’s evidence, Venmar’s position that the

plaintiffs are entitled to cash value and not replacement value is unreasonable.

See: Watt v. TD Insurance 2019 ONSC6454; Carter v. Intact Insurance 2016

ONCA 917.

[120] The funds as paid by Co-Operators are admitted. There is no evidence or

objection to the contractor’s bills as unnecessary or inflated.

[121] Even if I had accepted Mr. Beauchamp’s evidence with respect to the

accommodation expense, I am satisfied that the plaintiffs had good reason to

reside in the hotel for the duration. I have no reason to reject the testimony of the

plaintiffs that this was a reasonable solution to their housing needs. Indeed, their

evidence was that this was not an ideal arrangement for them but the best that

could be found to match their needs.

[122] With respect to the contents claim, Nan and the others set out above, only

apply to the loss of the building and not the contents. Pennefather v. Pike Estate,

Page: 35

[2004] O.J. No. 271 (S.C.) lends assistance with respect to contents. See also

Galan.

[123] In Pennefather, Justice Spence assessed the damages for a loss of contents

claim following a total loss fire. He held that the proper measure of damages for

lost contents was the replacement cost less 15% for depreciation. There, he said

at para. 34:

It is reasonable enough to allow a percentage reduction in respect of

the contents for depreciation. There is no scientific basis available to

determine the appropriate percentage. Based on the submissions and

on the cases referred to by counsel, it would be reasonable to apply

a factor of 15% against the replacement amount of $136,471.00.

Subject to that deduction, the amounts set out in the Summary of

Damages are satisfactory.

[124] In this case, I do not have sufficient detailed evidence to know what items

are to be depreciated or their values. Co-operators did not pay the full cost of items

that were not replaced but did pay full replacement value of those that were

replaced. On that basis, I do not know if the plaintiffs received more than

Pennefather supports.

[125] With respect to the items that were not replaced, I do not have any evidence

of an appropriate rate of depreciation on those items except that the plaintiffs’

insurance policy applied a 20% deduction. Perhaps some should have a reduction

of 15%; perhaps 50% for others. I do not know.

Page: 36

[126] The agreed statement of facts sets out amounts paid to the plaintiff for

contents, but those payments also include amounts paid for items such as

“contents and out of pocket expenses,” “contents and building costs,” and “others

combined with contents”. On that evidentiary record, I cannot determine what the

appropriate claim might be.

[127] However, the agreed statement of facts sets out that:

The plaintiffs incurred direct out-of-pocket expenses in the total

amount of $31,980.28.

[128] In argument with respect to Mr. Beauchamp’s evidence, counsel for Venmar

did not take issue with this uninsured part of the claim.

[129] Accordingly, I find that the plaintiffs suffered a loss of $1,073,739.00 being

the subrogated claim of $1,041,758.73 and the plaintiffs special damage claim of

$31,980.28.

[130] With respect to the general damages claim, there are few cases of

assistance. See: Ward v. Cariboo Regional District, 2021 BCSC 1495 - $35,000

for flooding; Weenen v. Biadi, 2017 ONCA 533 - $250,000 for flooding;

Gemeinhardt - $85,000 for loss of use and enjoyment. Most fire loss cases appear

to deal only with the subrogated losses without consideration of general damages.

Page: 37

Galan v. Finch, 2015 ONSC 4067; Birbank Farms v. Superior Propane Inc., [2002]

O.T.C. 235 (S.C.); Hansen v. Bellefeuille, 2011 SKQB 8,

[131] The plaintiffs lost the house they had dreamed of, built themselves, and lived

in. They lost sentimental items of irreplaceable value. They lived in cramped

circumstances for eight months. Even when they moved back into the property,

their life was difficult. Reconstruction had not been completed. They had to move

out from time to time. The fire alarm continued to go off. The strong smell of smoke

in the house continued until February of the following year. While the smell

lingered, guests were unable to remain in the home. Meetings and decisions

related to renovations and recovery were “endless.” These circumstances and their

tarnished memories drove them out of the property. For those loses, I find their

request as reasonable and assess $60,000 in general damages.

[132] On that basis, I assess the plaintiffs’ loss at $1,133,739.00. If I have made

an error of arithmetic, counsel may advise in writing.

Venmar’s Estoppel Motion

[133] At the end of evidence, Venmar sought a declaration that “Fasco is

estopped from re-litigating issues, facts, and/or findings of mixed fact and law

already adjudicated by the Québec Superior Court and the Québec Court of

Appeal in Desjardins Assurances générales inc. c. Venmar Ventilation inc., on the

basis of issue estoppel or abuse of process.”

Page: 38

[134] Venmar also asked that certain paragraphs of Fasco’s Defence be struck on

the basis that they ought to be barred by the operation of the doctrine of issue

estoppel and/or abuse of process and are frivolous, vexatious or otherwise an

abuse of the process of the Court.

[135] Generally speaking, the common law doctrines of cause of action estoppel,

issue estoppel, and abuse of process are designed to balance the finality of

litigation against the fairness to litigants. Duplicative litigation leading to potentially

inconsistent results, undue costs, and inconclusive proceedings are to be avoided.

[136] These principles are set out in Hoystead v. Commissioner of Taxation,

[1925] All ER 56 (H.L.), as adopted by the Supreme Court of Canada in Maynard

v. Maynard, [1951] S.C.R. 346, at page 359, as follows:

Parties are not permitted to begin fresh litigation because of new

views they may entertain of the law of the case, or new versions which

they present as to what should be a proper apprehension by the Court

of the legal result either of the construction of the documents or the

weight of certain circumstances. If this were permitted litigation would

have no end, except when legal ingenuity is exhausted. It is a principle

of law that this cannot be permitted, and there is abundant authority

reiterating that principle.

[137] To summarize the factual background of this application, I take substantially

from Venmar’s pleadings on the motion.

[138] On April 11, 2007, a fire occurred at the Québec City home of Tracey Martin

and Rejean Bouchard. The fire was determined to have started inside a Venmar

Page: 39

HRV installed in their home. Venmar’s HRVs, including the one in this action and

the Bouchard HRV were designed, manufactured, and assembled at Venmar’s

plant in Drummondville, Québec. Like the Burr HRV, the Bouchard HRV also

incorporated a Fasco motor.

[139] As a result of the April 11, 2007, fire Ms. Martin and Mr. Bouchard’s insurer,

Desjardins Assurances Générales, brought a subrogated action in the Québec

Superior Court against Venmar and Fasco.

[140] At the conclusion of trial, Justice Godbout of the Québec Superior Court held

that the fire started inside the Fasco motor as a result of overheating of the Fasco

motor and the failure of the thermal protection. The facts that Justice Godbout

noted in support of this finding included:

(a) The motor overheated on a number of occasions;

(b) The thermal protection did not function as it should have;

(c) The overheating motor and thermal protection resulted in the interior of

the motor catching fire;

(d) The failure of the thermal protection resulted in the circulation of electrical

current inside the motor despite the fire; and,

(e) A number of short-circuits on the windings and conductors inside the

motor demonstrated the presence of an electrical current at the time of the

fire.

Page: 40

[141] Justice Godbout held that, as the motor was manufactured by Fasco, and

the failure of the motor was the cause of the fire, Fasco should bear full

responsibility for the plaintiffs’ damages.

[142] On appeal, the Québec Court of Appeal held that, while Venmar might have

anticipated that the Fasco motor would reach the end of its life and stop operating,

the contention that Venmar should have expected the motor would overheat and

catch fire when it came to the end of its life was “unsupportable.”

[143] The Court of Appeal held that, while Justice Godbout ruling did not address

Fasco’s allegation that Venmar failed to inform consumers once Venmar became

aware of the Fasco overheating problems, Justice Godbout concluded that

Venmar had committed no fault after making the following findings:

(a) Toward the end of 1998, Venmar was informed that a few motors

installed in its HRVs were overheating.

(b) Venmar’s engineers contacted those of Fasco and an investigation

ensued to determine the cause or causes of that overheating.

(c) In 1999, the type of thermal protection installed in the motors was

changed.

(d) In cross-examination, Venmar admitted that by 2006, it knew that an

overheating problem could cause a fire in the Fasco Motor.

Page: 41

(e) In the second half of 2006, Daniel Forest caused a Fasco motor to

overheat and it then caught fire.

(f) According to Mr. Forest, different initiatives taken by Venmar to inform

the public and the measures put into effect pursuant to the 2006 Safety

Upgrade Program (including press releases and talks) resulted in eliminating

70% of the risk in Canada in 2013.

(g) The Safety Upgrade Program was particularly intended for sellers and

installers of the product, as well as building contactors and inspectors.

[144] Without determining whether the common law “learned intermediary” rule

applied in Québec Law, the Québec Court of Appeal held that it was of no

assistance to Fasco who had not established that Venmar’s knowledge

approximated that of Fasco’s which was required to make a finding that Fasco had

discharged its duty to the consumer.

[145] The Québec Court of Appeal held that, while it was necessary to find Venmar

and Fasco jointly and severally liable as neither defendant had rebutted the

presumption of liability established by Québec’s no fault products liability regime,

as between the two defendants Fasco was 100% liable for the plaintiff’s damages,

including interest.

[146] The decision of the Québec Court of Appeal was rendered on November 25,

2016 and has not been appealed.

Page: 42

[147] Venmar seeks to rely upon the result in that case or, at least, the factual

findings to support its defence in this case. It submits that Fasco and the plaintiff

ought not be allowed to go behind those findings.

[148] Further, Venmar and Fasco are also named as defendants in the Hamilton,

Ontario, case of Dosen v. Meloche Monnex Financial Services Inc. (Security

National Insurance Company). In that action, on October 4, 2019, Venmar brought

a similar motion to strike Fasco’s defences to Venmar’s claims for contribution and

indemnity based on res judicata and abuse of process. While that motion was

successful, it was subsequently overturned by the Ontario Court of Appeal on

March 5, 2021, cited as 2021 ONCA 141.

[149] In allowing that appeal, the Court of Appeal specifically held that it was open

to a trial judge to strike portions of Fasco’s defence that sought to put specific facts

already litigated in the Desjardins action back in issue in the Ontario litigation as

that judge would be in a better position to define the factual issues in respect of

which issue estoppel may apply.

Analysis

[150] In Dosen, at paras 30 – 37, Justice Coroza summarized the law to be applied

as follows:

The law recognizes a number of doctrines to prevent the abuse of the

decision-making process. One of the doctrines is res judicata.

In Danyluk, Binnie J. described the doctrine, at para. 18, as follows:

Page: 43

The law rightly seeks a finality to litigation. To advance that objective,

it requires litigants to put their best foot forward to establish the truth

of their allegations when first called upon to do so. A litigant, to use

the vernacular, is only entitled to one bite at the cherry…. An issue,

once decided, should not generally be re-litigated to the benefit of the

losing party and the harassment of the winner. A person should only

be vexed once in the same cause. Duplicative litigation, potential

inconsistent results, undue costs, and inconclusive proceedings are

to be avoided.

Res judicata has two main branches: cause of action estoppel and

issue estoppel. Cause of action estoppel prohibits a litigant from

bringing an action against another party when that same cause of

action has been determined in earlier proceedings by a court of

competent jurisdiction. Cause of action estoppel also prevents a party

from re-litigating a claim that could have been raised in an earlier

proceeding.

Issue estoppel is narrower. It applies to prohibit the re-litigation of an

issue that has already been decided in an earlier proceeding, even

where the cause of action is different in the two proceedings.

The overall goal of the doctrine of res judicata, and therefore of both

cause of action estoppel and issue estoppel, is judicial finality.

The re-litigation of issues that have been before the courts in a

previous proceeding may create an abuse of process. That is because

re-litigation carries serious detrimental effects and should be avoided

unless the circumstances dictate that re-litigation is in fact necessary

to enhance the credibility and the effectiveness of the adjudicative

process as a whole.

The law seeks to avoid re-litigation primarily for two reasons: first, to

prevent overlap and wasting judicial resources; and second, to avoid

the risk of inconsistent findings.

A court may decline to apply res judicata or abuse of process where

its application would work an injustice. This might occur where the first

proceeding denied a party a full and fair hearing, even though that

party exercised reasonable diligence. Additionally, even if the first

proceeding was conducted with scrupulous fairness, it might still be

unfair to use the results of the first proceeding to preclude re-litigation

of an issue.

Page: 44

It may be appropriate to exercise discretion to decline to apply the

abuse of process doctrine when (1) the first proceeding is tainted by

fraud or dishonesty, (2) fresh, new evidence, previously unavailable,

conclusively impeaches the original results, or (3) fairness dictates

that the original result should not be binding in the new context. The

list of relevant factors to this discretion is not closed. The discretionary

factors for whether to decline to apply the abuse of process doctrine

may also apply in the context of deciding whether to apply the doctrine

of res judicata. [Citations removed].

[151] In this action of many issues, I can simplify my analysis on this issue by

moving directly to my exercise of discretion to dismiss this motion. Even if estoppel

can arise on this record, I dismiss this motion for the following reasons.

[152] This motion, for a variety of reasons, has only been brought at the end of

the case. The parties dispute whether that timing was on consent. In the end, that

does not matter; this is when Venmar brought its motion. Only now can I decide

the motion; it does not matter whether the parties agreed to that timing or not.

Adding this motion at the end of the evidence does not reduce the issues or the

time involved in the trial; it only adds to them. The record for the motion included

much of the Quebec trial transcript. Adding most of a first trial at the end of a

second trial to determine whether the first trial determined the second trial is not a

sign of judicial economy.

[153] I appreciate that Justice Coroza said “[t]he judge hearing the matter will be

in better position to define the factual issues in respect of which issue estoppel

Page: 45

may apply.” That may be correct in many cases; however, the process is

unworkable at this stage of the trial.

[154] Further Justice Coroza went on to say, at para. 74:

Similarly, in this case, the benefits of hearing and resolving Venmar’s

r.21.01(3) (d) motion, in terms of judicial economy or trial efficiency,

were marginal. It appears that much of the same evidence and similar

issues will nonetheless be considered at trial. For example, even if

Fasco’s defences were properly struck because the issue of Fasco

and Venmar’s relative fault was finally determined in the Quebec

Actions, a judge in the Ontario Actions would nonetheless have to

hear issues concerning Venmar’s potential liability for failure to warn

or negligence in assembly or testing of the HRV, in relation to the

Dosens and their insurer’s claims. The motion judge should have

considered this fact and looked at the litigation as a whole. In my

opinion, it should have weighed heavily in the analysis as to whether

the discretion to dismiss the motion or to refuse to apply the doctrines

should been exercised. [Emphasis added].

[155] The circumstances in Dosens is very similar to this case and I have placed

similar weight on the principle of trial efficiency.

[156] The Quebec Civil Code applied to the Bouchard action. It is “not plain and

obvious” that those legal principals would not result in a different determination to

this action. The Quebec Court of Appeal applied Québec’s no-fault products

liability regime to find Fasco 100% liable for the plaintiff’s damages. Ontario does

not use no fault liability in this area.

[157] Applying the findings in the Quebec action will not determine the issues of

Venmar’s duty to warn, or the contractual issues between the defendants here.

Page: 46

[158] Removing Venmar at this stage of the litigation will result in an injustice to

the plaintiffs; they were not parties to the Quebec action. They may be unable to

continue against Venmar and will have spent many days in trial awaiting the

dispute between the defendants on their issues.

[159] Many of the factual findings in the Quebec action are not in dispute here.

The Quebec action was related to whether the fire was caused by the capacitor or

the motor. As set out above, in this action, there is no dispute that the fire started

in Fasco’s motor which led to the fire in the house. That is only the start of the

analysis here.

[160] The claim of an abuse of process cannot succeed. The Supreme Court of

Canada explained that doctrine in Toronto (City) v. C.U.P.E., Local 79, 2003 SCC

63, [2003] 3 SCR 77, at para. 53 as follows:

The discretionary factors that apply to prevent the doctrine of issue

estoppel from operating in an unjust or unfair way are equally

available to prevent the doctrine of abuse of process from achieving

a similar undesirable result. There are many circumstances in which

the bar against relitigation, either through the doctrine of res

judicata or that of abuse of process, would create unfairness. If, for

instance, the stakes in the original proceeding were too minor to

generate a full and robust response, while the subsequent stakes

were considerable, fairness would dictate that the administration of

justice would be better served by permitting the second proceeding to

go forward than by insisting that finality should prevail. An inadequate

incentive to defend, the discovery of new evidence in appropriate

circumstances, or a tainted original process may all overcome the

interest in maintaining the finality of the original decision. [Citations

removed].

Page: 47

[161] The Quebec action was about a $86,000 claim. Here, the claim exceeds

$1,000,000. Accordingly, the stakes in the original proceeding were such that they

did not generate a full and robust response, while the subsequent stakes here are

considerable. Fairness dictates that the administration of justice is better served

by permitting this second proceeding to go forward than by insisting that finality

should prevail.

[162] Given the vast difference between the two actions in the parties, the issues,

and the amount in dispute, I find that it would, in fact, be an abuse to grant the

motion for Venmar.

[163] For those reasons, the motion was dismissed.

Liability

Positions of the Parties

[164] In brief, the plaintiffs submit that Venmar was negligent in its design of the

HRV. While the motor chosen was not defective, it was the wrong motor for the

purpose. They say that Venmar should have been aware of the fire risk at the end

of the life of the thermal protector.

[165] Further, the plaintiffs say that Fasco should have known of the use the motor

was to be put and should have warned Venmar that it needed a different motor

and thermal protector. Between the two defendants, they should have realized that

Page: 48

the unit was an unattended use that required one shot thermal protection.

Accordingly, liability should be divided between them.

[166] Venmar submits that the plaintiff purchased the unit in 1994 and Venmar

was not aware of the potential fire risk until 2006. Venmar decided against

establishing an “expertise” in motors for its HRV and relied on Fasco to tell Venmar

of that risk. Venmar says that it was reasonable to use the auto reset thermal

protector and that they knew of no other failing in its HRV. Venmar submits that

they did not put their mind to an attended or unattended use and relied on Fasco

to properly advise them of the importance of the difference.

[167] Fasco submits that it supplied an appropriate motor without defect as

requested by Venmar. It was up to Venmar to understand the motor and thermal

protection it needed for its appliance. Venmar’s failure to design and manufacture

a safe appliance is the failure of Venmar, not Fasco.

Relevant Legal Principles

[168] The onus of proof is on the plaintiff to prove negligence on a balance of

probabilities. Res ipsa loquitor does not supplant that basic principle See: Fontaine

v. British Columbia (Official Administrator), [1998] 1 S.C.R. 424; El Dali v.

Panjalingam, 2013 ONCA 24. The simple fact of the fire does not prove

negligence.

Page: 49

[169] In Mustapha v. Culligan of Canada Ltd., 2008 SCC 27, [2008] 2 S.C.R. 114

the Supreme Court of Canada confirmed that to be successful in negligence, Mr.

Burr and Ms. Callister must demonstrate on a balance of probabilities (1) that the

defendants or one of them owed the plaintiffs a duty of care; (2) that the

defendants’ behaviour breached that standard of care; (3) that the plaintiffs

sustained damage; and (4) that the damage was caused, in fact and in law, by the

defendants’ breach.

[170] There is no dispute that Venmar owed the plaintiffs a duty of care and that

the plaintiffs sustained damages. Fasco disputes a duty of care to the plaintiffs and

I will deal with that below.

[171] For the defendants to be liable, the damage that was caused must be

foreseeable. Mustapha confirms, at para. 14, that:

[T]he law of tort imposes an obligation to compensate for any harm

done on the basis of reasonable foresight, not as insurance. The law

of negligence seeks to impose a result that is fair to both plaintiffs and

defendants, and that is socially useful. In this quest, it draws the line

for compensability of damage, not at perfection, but at reasonable

foreseeability. [Citations removed].

[172] In Ryan v. Victoria (City), [1999] 1 S.C.R. 201, it is said:

28

Conduct is negligent if it creates an objectively unreasonable

risk of harm. To avoid liability, a person must exercise the standard of

care that would be expected of an ordinary, reasonable and prudent

person in the same circumstances. The measure of what is

reasonable depends on the facts of each case, including the likelihood

of a known or foreseeable harm, the gravity of that harm, and the

Page: 50

burden or cost which would be incurred to prevent the injury. In

addition, one may look to external indicators of reasonable conduct,

such as custom, industry practice, and statutory or regulatory

standards.

29 Legislative standards are relevant to the common law standard of

care, but the two are not necessarily co-extensive. The fact that a

statute prescribes or prohibits certain activities may constitute

evidence of reasonable conduct in a given situation, but it does not

extinguish the underlying obligation of reasonableness. Thus, a

statutory breach does not automatically give rise to civil liability; it is

merely some evidence of negligence. By the same token, mere

compliance with a statute does not, in and of itself, preclude a finding

of civil liability. Statutory standards can, however, be highly relevant

to the assessment of reasonable conduct in a particular case, and in

fact may render reasonable an act or omission which would otherwise

appear to be negligent. . . .

[173] In Farro v. Nutone Electrical Ltd. (1990), 68 D.L.R. (4^th) 268 (Ont. C.A.), the

Ontario Court of Appeal confirmed at p. 271 that:

A manufacturer has a duty to take reasonable care in the

manufacture of his product, including all its component parts, and

failure to take such reasonable care can result in liability to the

ultimate user or consumer.

[174] With respect to negligent design, I have found the summary of the necessary

principles set out in St Isidore Co-Op Limited v AG Growth International Inc, 2019

ABQB 763, to be helpful. There, at paras. 35 – 44, Justice Friesen confirmed that

manufacturers have a duty of care to avoid safety risks and to make products that

are reasonably safe for their intended purposes. A manufacturer cannot make an

inherently dangerous article when a method exists of manufacturing the same

article without risk of harm.

Page: 51

[175] To prove negligent design, the plaintiff must identify a design defect,

establish that the defect created a substantial likelihood of harm, and establish that

an alternative design exists that is both safer and economically feasible to

manufacture.

[176] Industry standards can be relevant in determining the question of whether a

particular product is “reasonably safe.” 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. 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.

[177] 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.

[178] In Rentway Canada Ltd/Ltée v Laidlaw Transport Ltd (1989), 49 C.C.L.T.

150(Ont. H.C.), at para. 55 Justice Granger found that the court may, in balancing

a product’s risks against its utility and cost, consider factors including:

(a) the utility of the product to the public and the individual user;

Page: 52

(b) the likelihood that the product will cause injury;

(c) availability of a safer design;

(d) potential for designing the product so that it is safer but remains

functional and reasonably priced;

(e) ability of the plaintiff to have avoided injury by careful use of the

product;

(f) degree of awareness of the product’s potential danger that can be

attributed to the plaintiff; and,

(g) the manufacturer’s ability to spread out any costs related to improving

the safety of the design.

[179] 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.

[180] 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

Page: 53

was manufactured in assessing negligence in design so as not to fall into the trap

of assessing the issue with the wisdom of hindsight.

[181] 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. 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. See also Enslev v.

Challenges Unlimited Inc. 2007 CanLII 45408 (Ont. S.C.) at paras. 65 – 69.

[182] With those principles in mind, for the reasons set out below, I find that the

plaintiffs have proven Venmar is liable to them as a result of Venmar’s negligent

design of the HRV. However, that negligent design is Venmar’s failure. I find that

Fasco has not been shown to be negligent in any manner with respect to the design

of the HRV. I now consider the evidence at trial.

Was Venmar negligent in its design and manufacture of its HRV?

Applicable Standard in the Industry

[183] The unit, the motor, and the TCO could not be sold in Canada or the United

States without certification by the Canadian Standards Association (“CSA”) or

Underwriters Laboratory (“UL”) respectively. Those standards are quite similar.

There are separate standards for the motor and for the HRV. It is agreed that the

thermal protector, motor and HRV met the required certification. To understand

some of the evidence from witnesses to follow, it is important to know the standards

Page: 54

in play at the relevant times. It should be remembered that Venmar’s HRV’s were

first put on the market in the late 1980’s or as late as 1991. The plaintiffs’ unit was

purchased in 2004 and likely manufactured the same year. The fire was in 2012.

[184] The certification standards for thermal protection in the motor are set by

regulation UL 211159 and CSA 77. These standards require that the motor

undergo ‘locked-rotor’ testing such that the motor and thermal protection will cycle

for a minimum of 18 days in a locked rotor condition. Mr. Habash’ evidence was

that the Fasco motor in issue appears to have cycled many times longer than that;

it could have been weeks or months. The Ontario Fire Marshall suggested

something in the area of three months.

[185] The standards applicable to Venmar’s HRV are CSA 113 and UL 1812. The

CSA 113 standard applicable to air exchangers and heat recovery ventilators

applied as early as 1984. It referred specifically to the locked rotor tests required

for motors with auto-reset thermal protection with the same 18-day requirement.

[186] The UL standard applicable to an HRV is UL 1812. Prior to the manufacture

of the Plaintiffs’ HRV in 1994, it had provisions referring to locked rotor testing, “or

motor overload tests” that were required to continue for 72 hours.

[187] Although there was evidence about UL 507, that standard did not apply to

the HRV. Rather, UL 507 applied only to built-in electric fans, which included

rangehoods and air-to-air exchangers (without heat recovery).

Page: 55

[188] Beginning in 1985, an ad hoc committee was formed made up of

manufacturers and representatives of industry participants associated with

appliances certified under UL 507 standard. Its mandate was to address concerns

relating to fires arsing from bathroom fans and other appliances using similar

motors as the one in question. Fasco had a representative on that committee.

[189] The committee was to determine how to ensure a safer appliance standard

for fans built into walls and ceilings. The purpose of the committee was “to discuss

and advise UL on the proposal that burnout be allowed on motors in permanently

installed fans and blowers.” All representatives agreed that a motor in locked rotor

condition could result in flames.

[190] Some of the members were concerned that the 18-day test period was too

short and that solutions such as one-shot thermal protectors were needed for fire

safety. Appliance manufacturers were concerned about “premature failures”

associated with one-shot thermal protection. They did not want the added expense

of unnecessary failures. In the end, there was no consensus about how the UL

507 standards should be revised to address the concerns at that time.

[191] However, the UL 507 standard was eventually modified to address the

industry concern for fire risk in bathrooms and other fans in 1992, to become

effective in 1994. That standard is entitled Fans for Use in Unattended Areas. The

relevant wording required that:

Page: 56

[…] for motors used in fan products which are built into or within the

building structure, and which are likely to operate unattended or in

situations in which the operator may not detect a locked rotor condition.

Examples include: wall-insert fans, in-wall fans, ceiling-insert fans, attic

exhaust fans, whole house fans, and duct fans. Rangehoods and

ceiling-suspended fans are not included.

Exception: These requirements do not apply to thermally protected

motors employing a thermal cutoff or a manual reset protector if the

device opens during the normal locked rotor testing in accordance with

the Standard of Thermal Protectors for Motors, UL 547.

[192] This meant that for unattended fans in such as in-wall fixtures, a one-shot

thermal protector was a proper solution rather than a cycling thermal protector.

[193] At the time the changes were made to UL 507 in 1994, no change was made

to any other standard, including UL 1812 and CSA 113, which applied to the

Venmar HRV. Which is to say that, as of 1994, the Venmar HRV did not require

one-shot thermal protection; a cycling thermal protector was satisfactory.

[194] What I primarily take from this evidence is that those in the motor and fan

industry were aware, or should have been aware, of these certification

requirements and issues related to those requirements. That includes both Venmar

and Fasco.

[195] Fasco’s “Field Facts” provided to its sales representatives included

references to this concern even before the 1992 amendment. I will discuss this

later in these reasons.

Page: 57

[196] Fasco’s 1995 replacement products catalogue included a warning with

respect to unattended uses. Even though this document was to be used by

individuals purchasing parts rather than for OEMs such as Venmar, it clearly shows

Fasco’s knowledge of the issue.

[197] The evidence is also clear that Venmar was or should have been aware of

these issues. Mr. Juneau, a Venmar electrical engineer, agreed that Venmar was

certifying range hood products pursuant to UL 507 prior to his arrival at Venmar in

1993. Mr. Forest, Venmar’s project engineer in the mid 1980’s, testified that his

responsibilities included strategies for ventilating attics and carried on to air

exchangers and HRV’s. Mr. Joseph, Venmar’s expert witness, agreed that both

UL and CSA make changes known to the industry with "plenty of notice.". He

expected that Venmar should know of the change to the 507 UL standard.

[198] Despite Venmar’s evidence (referred to below) I find that Venmar knew, or

aught to have known, of single-shot thermal protectors before the plaintiffs’ unit

was built and sold.

[199] Since UL 507 was amended in 1992 to be effective in 1994, I find that those

in the industry were alive to the issues of attended or unattended uses, types of

thermal protectors and related risks and requirements. Long before that, Venmar

was manufacturing their products with a UL 507 certification.

Page: 58

[200] However, I also find that the industry standard did not require one-shot

thermal protectors in HRV’s as those in issue here. To the extent that the

certification requirements applied to the thermal protector in question, the HRV in

issue was provided with far more than the UL and CSA standard required. Instead

of 18 days, it protected the plaintiffs for weeks or months.

Venmar’s Evidence

Evidence of Daniel Forest

[201] Mr. Forest was employed by Venmar as a mechanical engineer from 1983

until his retirement on January 1, 2020. Mr. Forest started with Venmar as a project

engineer and eventually ended his career as Global Vice President for engineering

kitchen ventilation products. He was a shareholder of Venmar from 1991 to 1995

but has had no direct contact with the company since he retired.

Production and Manufacturing

[202] When he started at Venmar, he was the only engineer but by the 1990s he

headed a team of four mechanical and electrical engineers.

[203] Venmar hired consultants to assist with the design of its appliances and

usually outsourced that work, although when it did so, Venmar oversaw that work.

He agreed that Venmar needed to make sure that the unit was safe, effective, and

compatible. Sometimes, Venmar did some of its own certifications but usually hired

contractors to do the work or approached the CSA to certify its products.

Page: 59

[204] Mr. Forest testified that he expected that the design team would understand

the basics of the components of the motor. However, Venmar would rely on

suppliers where it did not have the necessary competency to understand the

motors themselves. This had been Venmar's policy for decades. The CSA would

then ensure that the final appliance met its standards.

[205] The HRV was one of Mr. Forest’s special projects starting in 1985 or 1986.

He had also worked with air exchangers in 1983 and 1985. The only difference

between the two is that there is heat transfer with heat recovery ventilators and not

with air exchangers. Both used blowers from Fasco that were thermally protected.

[206] Venmar has never manufactured motors for any of its appliances. Mr.

Forest’s team knew little about motors. Although some members were electrical

engineers, none had any specialization with electric motors.

[207] In 1983 through to 1987, Mr. Forest met with representatives from Fasco

who visited Venmar three to four times a year to see the research and development

department, the assembly line, and other locations to consider what Venmar was

manufacturing. The Fasco representatives also answered Venmar’s calls and

faxes in respect to questions or needs. The Fasco representatives were members

of its sales department. Although Mr. Forest is not sure whether they were

engineers, he believed that they all had good technical backgrounds.

Page: 60

[208] When Fasco's representatives came to Venmar's facilities, they were given

full access to the plant. Mr. Forest believes that they saw the motors being installed

in the HRV before 1984.

[209] In 1987 or 1988, Venmar sent an HRV and an air exchanger to Fasco's

facility in Missouri to show how the motors were used and to “fine tune” the motors.

This was to assess the possibility of developing more quiet air exchangers but not

in relation to the HRV. Mr. Forest also went to Missouri on a two-day trip to speak

with its representatives.

[210] The design process for the HRV took five steps and about 18 months to

complete. That process included the time to source and manufacture components

for the unit. In this case, Fasco only provided the motor for the unit and not the

blower or the capacitor.

[211] Fasco initially provided motors as requested by Venmar from Fasco’s

catalogue. The requested motor may have been in stock on occasion but more

often it was a custom motor. The prototype was ‘off the shelf’ and then tailored to

Venmar's needs. Venmar tested its choice and then told Fasco if there were gaps

in its needs and Fasco made corrections. Venmar then integrated the motor into

its unit.

[212] Fasco’s sales representatives also came to Venmar's offices in

Drummondville. Mr. Forest did not know if any of them were engineers and did not

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know who they spoke to at Fasco when they returned. The sales representatives

had suggestions to solve any problems, but they were not “hands-on solvers.”

[213] The reason that Fasco's representatives came to Venmar was to see how

Venmar was using the motor and to inspect rejected motors for reimbursements.

The research and development team at Venmar relied on Fasco for its expertise

in respect to the motor. There was ongoing dialogue and question-and-answer

between them.

[214] Venmar bought sheet-metal to make the HRV box and assembled the

pieces and components inside it. At the end of the assembly line, each unit was

operated to make sure that it was functioning. The unit was then boxed and

shipped.

[215] The life expectancy of the unit was to be 15 years and ought to require only

one major repair, such as the replacement of the motor. After an investigation and

based on their experience, Venmar chose a Fasco motor that was expected to last

60,000 hours or roughly seven years. Venmar could not find a better or longer

lasting motor and was satisfied with this arrangement. The selected motor was

certified by CSA and UL.

[216] When Venmar tested the lifespan of the unit, it assumed that the unit would

eventually simply stop running. Only in 2006, did they realize that the unit could

remain in an energized condition when the motor failed and then catch fire. They

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did not carry out ‘end of life’ testing in the 1990s. There were no visual alerts on

the units themselves to give notice of malfunction, although there was sometimes

a visual alert on the wall operating panel. There were no audio alarms on the unit

if the unit malfunctioned.

[217] Generally speaking, Venmar expected that owners would notice almost

immediately if the unit stopped working when condensation formed on their

windows. For example, an owner might smell something from the unit or notice

that the wheels were not turning during maintenance. Alternatively, the owner

might hear a noise like electrical humming or no noise at all if the rotor was locked.

[218] The automatic reset thermal protection used in the 1990s was the industry

standard in motors at the time. The first production was in the spring of 1991.

Problems Arise

[219] Mr. Forest said that towards the end of the 1990s through 2006, Venmar

started to have difficulties with the unit; they began to overheat.

[220] Because of problems in 1994, Venmar tested the product for end-of-life.

They found problems with spot welding and the manner in which wires were

connected to the capacitor and Fasco was able to fix those. However, there were

other problems in the late 1990s.

Page: 63

[221] In August of 1998, Venmar wrote to Fasco about concerns with respect to

those overheating concerns and asked for help to understand what was going on.

At that point, Venmar thought that it was a "public safety matter.” However, there

were no house fires at that time, only internal damage to the unit from overheating.

[222] Venmar did not test the life span of the HRV’s thermal protector. Prior to

1998, Venmar was not aware of the types of thermal protectors. Mr. Forest was

not aware of whether other Venmar staff knew about them, but he was not aware

that the reset protectors could fail.

[223] In 1998, Venmar sent some burnt out motors to Fasco for its investigation

but did not send the complete unit. At that time, Fasco suggested that Venmar

could solve the overheating by adding a fuse to the unit but not what kind of fuse.

Fasco also did not tell Venmar that the unit could catch fire. Venmar did not think

that Fasco’s solution would prevent overheating and proceeded with its own

solution, contrary to Fasco’s advice.

[224] After 2000, Venmar continued to investigate the cause of the overheating.

Mr. Forest denied that Venmar was not being cooperative with Fasco. He was not

aware that Fasco was using an employee's personal Venmar unit to test.

[225] In 2001, Fasco then installed a one-shot thermal protector at Venmar’s

request. As of August 2001, Venmar used a one-shot or "self-hold" for temperature

protection. The self-hold method required human intervention by unplugging the

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unit and then plugging it back in. Mr. Forest denied being advised by Fasco of the

availability of one-shot thermal protectors as far back as 1986. If he had received

that information, “actions would have been taken” by Venmar.

[226] Venmar first became aware of a motor fire in its HRV in 2002, in Yellowknife.

However, that fire occurred because of the manner that the unit was installed

rather than this equipment failure.

[227] Venmar was told of other fires in its HRV’s after that, but the cause of the

fires was not clear. For instance, one was in a machine shop rather than the

expected and required residential use. Venmar did not understand the cause in

some other cases between 2002 and 2006 but they were advised of 17 home fires

in Canada and the US. Venmar then conducted its own forensic examination to

figure out the cause of the fire.

Solution Found

[228] Venmar was finally able to make a unit catch fire in its laboratory in the fall

of 2006. They found that when the rotor locked, the thermal protector might turn

on and off around 130°C. At that point, the thermal protector could fail. If it failed

with the system open, more heat would be produced. That would lead to the

windings deteriorating which could lead to short circuit and result in a fire. At that

point, Venmar started a safety upgrade program. The details of that process are

set out below.

Page: 65

[229] The solution that Venmar created was for an external plug to be added to

eliminate the fire risk. The “power plug adapter” could be manufactured quickly,

cheaply, and did not require a technician to install it. This solution was developed

by Venmar's engineers, but the plug was manufactured by another company.

[230] Mr. Forest was of the view that it was Fasco's obligation to warn Venmar of

the potential problem; if Venmar had known, it would have used another thermal

cut-off method, or it could have used other methods such as an enclosed motor to

avoid fires.

[231] When Venmar’s fuse solution was attached to units starting in 2009, that

solved most of the problems unless the fuse was attached improperly. Mr. Forest

agreed that Fasco had recommended such a fuse but not any particular fuse or

other matter of selecting one. He agreed that if the unit had an in-line fuse, as

recommended by Fasco, that would have prevented the fire as well as Venmar’s

power plug adapter. While a TCO reduced the risk of fire, there were also fires

when the single shot was not properly wired. The fuse or second overcurrent

protector stopped the fires.

[232] Mr. Forest agreed that there was other litigation between Venmar and other

motor manufacturers.

Page: 66

Evidence of Normand Juneau

[233] Mr. Juneau is now a forensic engineer but was employed by Venmar from

1993 to September 2009. He is a professional engineer in the province of Québec.

He is trained as an electrical engineer but knows nothing about small motors or

thermal protection. During his career, he learned about short-circuits in large

motors but not small motors. It was not until his second year at Venmar that he

became aware that motors were thermally protected.

[234] In 1993, he started with product development for electronic controls on

range hoods for ovens, HRV's, and air exchangers. He was involved in the

electronics for fan speed controls and defrost controls. From 1993 to 1998 he was

involved with more advanced controls and during the time between 1995 and 1996,

he worked on range hood controls. Until 2009, there were no other electrical

engineers at Venmar.

[235] Mr. Juneau reported to Mr. Forest who was the director of research and

development. When Mr. Juneau started with Fasco, he knew nothing about HRV's.

[236] Between 1993 and 1998, Venmar outsourced motors to Fasco and other

companies. The motors were designed before Mr. Juneau arrived at Venmar. In

that period of time, he did not examine a motor, nor did he know about thermal

protection other than what was on the product name plate. Before 1998, he

“probably” knew the type of thermal protector that was in the motors. Before 1998,

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Venmar did not know what would happen if the motor failed. Venmar did not

question the motor or type of thermal protector that was provided.

[237] Mr. Juneau agreed that Venmar was certifying range hood products under

UL 507 standards prior to his arrival at Venmar in 1993.

[238] Around 1998, Mr. Juneau became aware that the HRV motors could

overheat because its units came back from the field with extreme overheat damage

in 1990: “They were almost charred.” He believes that the motors were returned to

Fasco but cannot remember how they looked from overheat damage and he does

not remember seeing the unit itself.

[239] In 1998, Mr. Juneau wrote to Fasco, trying to draw Fasco's attention to the

problem and to understand the cause. He needed to understand what had

happened in order to apply the proper corrective action. At the same time, he sent

a burned-out motor to Fasco. Fasco examined it but could not determine the root

cause of the fire. Venmar pushed Fasco for solutions. In his view, it was Fasco's

motor and its problem. At the time he was not afraid of a fire occurring but was

concerned as to why the unit was overheating.

[240] Mr. Juneau suggested to change the circuits because that was the cause

that he could see - it was his "best guess." He felt strongly about that, however,

Fasco’s representatives thought that a temperature sensitive device would not

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solve the current sensitive problems. Mr. Juneau did not think that changing the

location for the heat protector would necessarily solve the problem.

[241] Correspondence in evidence sets out Fasco’s proposals and Venmar’s

rejections of the them. In Mr. Juneau’s view at the time, a fast-acting fuse would

not solve the problem but would shut down the motor. He wanted to know how to

solve the problem in the first place. Although Fasco had suggested a fuse, they

did not say what kind of fuse. He wanted a thermal protector that would work in the

motor rather than a plug to stop the motor. Eventually, Fasco made the changes

that Venmar requested, despite Fasco’s reservations.

[242] Although this was the only change, Venmar was concerned that it still did

not know the root cause of the overheating and Mr. Juneau still wished to find out

the exact cause. Despite that concern, Venmar conducted no failure tests, no end

of life tests, did not send the unit for third party testing, and made no public warning.

It also did not add an alarm if the motor overheated. Mr. Juneau said that Venmar

made no public warning because he was still guessing about the cause and did

not have enough information to come to a definite conclusion.

[243] In the fall of 1999, Mr. Juneau met again with representatives of Fasco. At

that time, the Fasco team proposed a one-shot thermal protector for the first time;

there was no explanation why Venmar had not been told about such a thermal cut

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off previously. In April 2000, Venmar changed the thermal protection to a one-shot

but there was still no indication from Fasco that the motors could catch fire.

[244] In 2001, there was a fire in the Northwest Territories and Venmar first

became aware of the potential for a fire. Mr. Juneau saw the burned HRV but

cannot remember the details as to the cause of the fire within that unit.

[245] After that, Mr. Juneau examined several units that were involved in house

fires. He cannot remember the details of those examinations. Venmar’s

management did not receive a formal report of the cause of the fires.

[246] Mr. Juneau was able to determine the cause of overheating after testing

several units between the spring and December 2006. He examined three different

types of Fasco motors and finally found a fuse that would solve the problem.

Evidence of Mark Joseph

[247] Mr. Joseph gave evidence for Venmar. The parties agreed that he was able

to give expert opinion evidence on design and manufacturing standards, and

product development in the small electrical motor industry in the 1970, 1980’s, and

1990’s.

[248] In Mr. Joseph’s opinion, a one-shot thermal protector was the correct

thermal protector for appliances with an unattended use. Further, he opined that it

was the responsibility of Fasco to know the use to which its motor would be put. In

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his view, Fasco had the obligation to ensure that a one-shot thermal protector was

used by Venmar for its HRVs.

[249] Mr. Joseph has been involved with the building of similar small motors since

the late 1970s. His experience convinced him that a one-shot thermal cut off must

be used in motors for some unattended applications. Even though he was

convinced of that, he testified that there was a reluctance among many of his

customers to use single-shot thermal protectors because of the possibility that the

motor would be brought to the end of its life by premature or what he called “infant”

openings. In the early 80s, Mr. Joseph formed a company to sell TCO’s and he

was the principal and technical director of that company until 2011.

[250] Mr. Joseph agreed that Fasco used a Texas instrument cycling thermal

protector and that it was state-of-the-art thermal protector at the time.

[251] Because of his experience, he joined the above-mentioned UL 507

subcommittee hoping to change the certification standards. As he said, “I

continued to advocate for the TCO as the safest and most practical solution.”

Although he was eventually successful and the UL 507 standard changed, Mr.

Joseph did not get involved with changing the CSA standards. Further, he agreed

that HRV's and air exchangers were not part of his consideration as he did not sell

motors to the manufacturers of such products.

Page: 71

[252] Mr. Joseph agreed that the UL and CSA standards in place at the time of

the production of this unit did not specify what should occur after the 18 days of

locked rotor duration. In his view, UL and CSA standards must only be considered

as minimum safety standards.

[253] In particular, Mr. Joseph stated (grammar and spelling as in the original):

The Fasco motor in question probably had a well designed bearing

system, and with a reasonable total running temperature would result

in long life. This long life [10, 20, 30,000 hours or more] resulted in a

long time lag between the time this product was put in the field and a

large enough number of motors developed bearing system failure to

provide Venmar and Fasco with what was going to develop.

A TCO safely takes the motor permanently and safely off the line during

a locked rotor events, whereas a motor protected with a recycling type

thermal protector cycles until the winding insulation fails or the protector

fails closed and the winding temperature goes up until the winding

insulation fails. Winding insulation failures cause fires.

The existing UL and CSA standards at the time for motors and motor

operated appliances did not address winding failures or what happens

after 18 days in a locked rotor condition.

In my opinion, there is no way that Fasco could not have known about

the operation and use of an HRV by the end user, and the fact that it

was an unattended product. […] this was the wrong place to use an

automatically resetting thermal protector.

Considering it took some years for the fires to occur, a switch to a TCO

for lock rotor protection should have occurred as soon as the first motor

fires were examined.

[254] Given Mr. Joseph’s apparent experience, I accepted the parties’ agreement

and allowed him to provide his opinion, however, upon hearing his evidence, I am

not persuaded that I should rely on his evidence.

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[255] As set out above, expert evidence, to be admissible, must be relevant,

necessary, and not subject to an exclusionary rule. However, the evidence also

needs to be proffered by an expert who is impartial, independent, and unbiased.

See: White Burgess and Parliament.

[256] Mr. Joseph was not an unbiased expert; he was a well-meaning advocate

for the use of TCO’s; an industry where he had spent most of his career. In 1982,

he formed a company to sell a particular brand of TCO’s. He testified that sales of

those TCO’s went from 5000 pieces per month to over a million per month within

a few years. He was on the UL subcommittee proposing the use of TCO’s. His

view was ahead of his time on that committee and, until the early 1990’s, he was

apparently in the minority. He agreed that he was “passionate” about thermal

protectors, and on a “crusade" to change UL 507. As such, he is not of great

assistance to me.

[257] Further, Mr. Joseph has given his opinion on what Fasco knew or did not

know about the Venmar HRV and which entity had the responsibility for the loss in

this case. However, he was not provided with any history of the relationship

between Fasco and Venmar. Those are matters of my domain and not of an expert

witness. As such, much of his evidence was unnecessary for me to consider.

[258] However, Mr. Joseph’s evidence is helpful to determine what was known in

the small motor industry from the 1980’s forward. I find that a manufacturer of an

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HRV in Venmar’s position should have been aware of the need to consider whether

the unit was attended or unattended and what type of thermal protector was best

for its product. Both then and now, Venmar cannot hand that responsibility to

Fasco.

Evidence of Michael Rowen

[259] Venmar called expert Michael Rowen. He was qualified on consent to opine

on evidence on forensic electrical engineering and fire investigation.

[260] Fasco relies on White, Burgess and alleges that Mr. Rowen lacks impartiality

as he has carried out many such investigations for Venmar and because he now

employs Mr. Juneau through his firm. That may have been an issue if Mr. Rowan

gave evidence that was contradictory to any other evidence that I heard from other

sources. However, he repeated Mr. Habash’s evidence which was conceded by

the end of trial and gave some evidence that was helpful to all parties. I did not find

Mr. Rowen to be unfairly biased in his evidence towards Venmar.

[261] Mr. Rowan agreed that the unit in issue in this action was manufactured in

1994 and that none of its component parts had been replaced. The life expectancy

was 8 to 10 years and this motor operated as expected. By 2012, it was therefore

already beyond its life expectancy. He agreed that the motor was chosen by

Venmar.

Page: 74

[262] When the motor eventually overheated, it was not due to a defect. This was

an end-of-life motor event. Mr. Rowan agreed that there was nothing in the owner's

manual about end-of-life events nor an alarm on the unit to warn the consumer of

such an event and the need to replace the motor.

[263] Mr. Rowen was familiar with attended and unattended appliances. He does

not know how Venmar classified the appliance, but in his mind, the customer would

not normally see the HRV and therefore could not know if it was working properly.

working. However, the customer could know when it was not working at all by

moisture accumulating on the windows. Therefore, if the rotor was locked, that is

the fan was not running, the owner would notice the problem when condensation

appeared on the owner’s windows.

Was Fasco negligent in its manufacture or design of the motor?

[264] The issue between Fasco and Venmar turns on which company has the

ultimate responsibility for the selection of the motor used in the HRV. For the

following reasons, I find that Venmar bears that responsibility.

[265] Some of the facts are not in contention:

1) Venmar’s HRVs had fires with other motors and with single shot

thermal protectors.

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2) The motor in question was not defective and Fasco was not negligent

in its production of that motor. The complaint is that it was the wrong

motor for Venmar’s use;

3) No one alleges that the thermal protector was defective in any way; it

was the “best product” available at the time;

4) In 1998, Venmar rejected Fasco’s proposal to fix the problem and

Fasco’s suggestion to use a fuse turned out to be a correct answer;

5) The relationship between Venmar and Fasco was, as Venmar

specifically stated, “always a clear-cut customer, supplier

relationship.” Venmar was a purchaser and Fasco delivered what was

ordered.

Fasco’s Evidence

Evidence of Maurice Goldin

[266] Mr. Goldin was employed by Fasco since 1963 and retired in 2006. In 1998,

he was employed as product safety coordinator. All of Fasco’s motors were UL

and CSA certified and Mr. Goldin was tasked to ensure that the motors were

following UL and CSA certification. Fasco had more than 100 model types. Mr.

Goldin interacted with both engineers and sales representatives to be sure that the

certification was not affected by customers requests to modify the motors. If there

were any modifications to the motor, it could change the certification.

Page: 76

[267] In the early 1990s, there were 800 UL standards for the components and a

similar amount for appliances. The CSA standards were fewer or about three

quarters of the American standards.

[268] In 1990, Fasco sold millions of motors to their customers per year and 90%

of those had automatic reset thermal protection.

[269] Venmar became a customer in the early 80s. It asked for UL recognized and

CSA certified motors. It did not ask for one-shot thermal protectors.

[270] In Mr. Goldin’s view, it was up to Venmar to review its mechanical and

electrical requirements. Once Fasco’s plans were accepted and returned signed

to Fasco, a bill of materials was prepared along with a production schedule. That

would take 4 to 6 weeks for delivery.

[271] Mr. Goldin was involved in training external salespeople. There were

approximately 30 at the time. That training including spending time at each Fasco

plant, on the floor, in the quality control and inspection area, and meeting with

engineering specialists.

[272] “Fasco Field Facts” were pamphlets used by salesmen to speak with

customers. There were more than 250 of those documents and they could be given

to customers by sales agents. Mr. Goldin authored some of them.

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[273] Mr. Goldin acknowledged that he knew that thermal protectors could fail

after too many interruptions and that they could fail in an open or in a closed

position. Fasco made its own thermal protectors from 1952 onwards and was

aware in the 1950’s or 1960’s of overheating problems if the thermal protector

failed. Fasco did not relay that information to manufacturers.

[274] In his view, appliance customers would tell Fasco what they needed, and

Fasco would respond to those requests. As a result of the amended UL, Fasco

changed some of its motors; however, there was no change to the Venmar HRV

because this change did not relate to the motor in that unit.

[275] The Fasco 1995 replacement products catalogue referred to the need for

one-shot thermal protectors, but that catalogue was for individuals who wanted

new parts for old motors; it did not target large manufacturers. Manufacturers were

expected to know what they were purchasing. Therefore, while labels were

required to be on packaged motors for distributors, they were not on the motors

sold to manufacturers because the manufacturers would be conversant with the

appropriate UL standard.

[276] In Mr. Goldin’s view, it was the responsibility of the manufacturer to be sure

what the motor could do and could not do. The testing would be carried out by the

appliance manufacturers after the motor was installed in the respective appliance.

Page: 78

[277] Fasco did some sound and air testing of the Venmar unit, but Mr. Goldin

knew very little about the application of the HRV and relied on Venmar to know its

requirements. He knew that the unit was going to be installed in the basement or

some sort of utility room.

[278] When Fasco carried out sound testing, Venmar brought a unit but Mr. Goldin

remembers only one unit. Fasco was successful in reducing the sound, but it did

no safety testing at the time. The unit was at the Fasco plant for a couple of days

and he did not receive any design documents with the unit; he cannot remember

any other discussions. The unit was returned to Venmar at the completion of the

testing.

[279] He next spoke with representatives of Venmar with respect to overheating

problems and the CSA and UL certification. He agreed that in 1998, there was

correspondence about an overheating problem. However, it was Fasco’s view at

that point that the electrical protection did not need to change.

Evidence of Karyn Manley

[280] Ms. Manley has a degree in electrical engineering from Washington

University and was an electronic intelligence officer with US Air Force from 1986

to 1991. She was employed by Fasco as a senior motor design engineer from

1995 until 2000. After she left Fasco, she had two other periods of employment

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making similar motors for two other companies. In 2005, she started with Ford

Motor Corporation in Kentucky as a wiring engineer.

[281] In Ms. Manley’s role at Fasco, she applied customer requests to Fasco

motors, created motor samples, created and reviewed production prints, and

helped out on the floor in Ozark, Missouri. At that time, there were three or four

application engineers at the Ozark plant.

[282] Before Ms. Manley started at Fasco, she knew generally about electrical

mechanical devices and how they worked. She understood that motors could

overheat and could catch fire. She knew about thermal protectors but not how they

worked. When she started, she had a very basic understanding of thermal

protectors. In effect, she learned about thermal protectors on the job. She

understood that thermal protectors could fail in an open or closed state, but only

after she had started working with Fasco.

[283] When she started with Fasco in 1995, Ul 507 was either already in force or

became effective shortly thereafter.

[284] Ms. Manley was not aware of the commercial history between Fasco and

Venmar, except that it had been going on for a long time. She was not aware of

what information had been passed between the two companies about the

products.

Page: 80

[285] She had no specific training about Venmar’s products. Fasco had too many

customers to allow her to focus on one client and Fasco was not geared to know

the applications for thousands of customers. She was not expected to know all of

the applications. She was not usually involved with a customer directly. Rather,

sales representatives were to be the conduit for information to Fasco’s engineering

department. Some of the salespeople, like Mr. Alexander, knew UL’s but some did

not. Mr. Alexander’s role will be referred to below.

[286] When Ms. Manley first started as an application engineer at Fasco, she

worked on sample motors as they came to be developed but was not assigned to

any particular customer. At a later point, she was assigned to a particular inside

sales representative who had particular customers. Those customers, including

Venmar were typically appliance manufacturers.

[287] As part of the design process, she knew as much about the customer as she

was provided by the sales representative or what she could obtain from the

“sample data sheets” forms that she received from the customer by way of the

sales representative. Typically, Ms. Manley might be told about the unit to be

manufactured, but she usually took her information from the data sheets provided

by the customer. It was rare for her to look at the product itself.

[288] When the sample motor was created, the sales representative followed up

with the customer. Thermocouples were attached to at least one sample motor to

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allow the manufacturer to test and record the temperature of the motor while

running it in its own product. The motor would then be ordered by the manufacturer

or it might request that further changes be made. Once the motor was approved

by the manufacturer, Fasco would then build it.

[289] Between 1995 and 2000, the majority of Fasco motors had an auto reset

thermal protectors which was the industry standard at that time. Fasco had a

blanket certification to install auto resets in its motors.

[290] In 1995, Ms. Manley knew that a motor in an unattended location would

possibly have to meet UL 507 certification, but she expected to be advised of that

requirement from the customer. If the motor was subject to UL 507 certification,

that changed the type of thermal protector from an auto reset to a one-shot. In

1996, less than 5% of the motors had one shot protection. These were for attic

fans or other uses that required a UL 507 certification. No one from Venmar told

her that it had to meet the UL 507 requirements.

[291] Mr. Alexander was the outside sales representative for Venmar, and so it

became a customer of Ms. Manley in the late 1990’s. She was aware that at the

time Fasco produced four or five different motors for Venmar. She knew that

Venmar manufactured an HRV but did not know where that would be kept in the

home. As Fasco did not have nondisclosure agreements with Venmar, Ms. Manley

knew only what Venmar told her or from Venmar’s response to her questions. Ms.

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Manley found out that the unit was for residential use during the later discussions

about the motor overheating. However, she did not know the details of the HRV,

or its attended or unattended use. She only knew that Venmar wanted the same

motor with requested changes.

[292] Ms. Manley was aware that there were phone calls and letters from and to

Mr. Alexander concerning overheating Venmar motors. She acknowledged that

she was provided with a burned-out motor from Venmar. Although she could

confirm that it had overheated, she could not determine why it had done so as

there was no evidence of a locked rotor in this motor. Ms. Manley asked for more

burnt out motors, but she did not receive any. She also did not receive a complete

HRV.

[293] She was aware that, as of July 3, 1998, Venmar’s concern was that the auto

reset was not wired in the correct position. From what she had examined, it was

her opinion that this rewiring would not solve the concern. Instead, she thought

that an external fuse should be used. She could not recommend what kind of fuse,

as that was outside her area of expertise. She was aware that in August 11, 1998,

Venmar set out the solution that they wished to have. Although she was not in

favour of this change, Fasco agreed to Venmar’s request.

[294] Ms. Manley remembered a trip to Venmar. She does not recall specifics of

the discussion she had with Venmar’s representatives, although she recalls

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meeting in the conference room and seeing the products on the floor. She has no

recollection of her involvement in the change of the thermal protector from auto

reset to the one-shot protection.

[295] She did not typically discuss end-of-life analysis with a customer except in

the circumstances of a locked rotor incident. As Fasco’s motor was a component,

the end-of-life testing would be for the manufacturer to carry out in its appliance.

She only discussed the certification of the Fasco motor and not the certification of

the customer’s product.

[296] Occasionally, Fasco received a customer’s unit and mechanical blueprints

and tested the unit at the customer’s request. This only occurred a handful of times

while she was there. Otherwise, Ms. Manley never gave advice on design. Fasco

built motors for Venmar according to the printed specifications provided by

Venmar’s engineering team rather than as a partner working together on a motor

as they did in other circumstances with other clients. This was a different

relationship and Fasco was not contracted to give such advice.

[297] Ms. Manley did not remember any conversations with Mr. Alexander about

an unattended use of the unit. Although she knew that the motor was for an HRV,

all she knew was what was on the sample data sheet. She did not know that the

unit involved moving hot air, although she knew that it was an air moving device.

She agreed that it could have been a UL 507 device but was not told of that.

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[298] Ms. Manley agreed that there was nothing on the sample data sheet about

whether Venmar’s unit was an attended or unattended use appliance. There was

nothing on the sheet that stated what the applicable UL was. If the customer did

not tell Fasco of the specific UL, Fasco provided the standard motor with a cycling

thermal protector.

[299] Ms. Manley did not speak with Venmar about the life expectancy of the

motors or the thermal protectors. She expected that Venmar knew the end-of-life

possibilities, that the thermal protector could fail in a closed position, and that the

motor could overheat or catch fire.

[300] She believed that Fasco’s engineering team had assumed that the Venmar

engineering team constructed the unit to protect against fire in the motor. Fasco

did not require Venmar to acknowledge or waive that responsibility. There was no

one at Fasco who knew if Venmar was aware of those responsibilities.

Evidence of Gary Alexander

[301] Mr. Alexander has been employed by Fasco since 1993. He has a college

degree in sales and marketing; he is not an engineer. Mr. Alexander sold motors

and blowers in Canada to “Original Equipment Manufactures” such as Venmar

from 1996 to 1997.

[302] There were three Fasco offices in Missouri. He was part of the outside sales

team. His office was in Canada along with another representative in Montréal. His

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sales manager was in Missouri. As part of Mr. Alexander’s job, he made customer

visits to Venmar. When there, he spoke with Venmar’s materials department,

engineering department, and quality assurance department.

[303] Mr. Alexander had no training in motors when he started with Fasco and did

not receive any after he started. He knew that motors had thermal protection but

did not know much about it otherwise. He did not know the life span of thermal

protectors. He first heard of a one-shot thermal protector around 1998 when the

overheating issue first came up with Venmar.

[304] If he was asked questions about thermal protection, he sent that question to

Fasco’s engineers. Mr. Alexander did not know where the HRV would be located

in the consumer’s house and did not ask Venmar about that. His own HRV was in

the basement suspended from ceiling joists.

[305] When Mr. Alexander received technical questions, he sent the questions

back to the Fasco engineers, predominantly Ms. Manley. On some occasions, he

could speak with Fasco’s engineers directly or have the engineers of both

companies speak together. Alternatively, faxes or email were transferred between

the businesses.

[306] When Mr. Alexander started selling to Venmar in 1997, he met with both the

materials and engineering departments at the Venmar offices in Drummondville,

Quebec. He attended quarterly but also any time that he was called by Venmar.

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When he was at Venmar’s offices, he spoke to their representatives about

materials, pricing, engineering, and quality assurance dealing with warranty

review. He did not inspect an HRV and was never shown the designs for an HRV.

[307] At the time that he was selling, the motors cost approximately $20-$24 a

piece depending on the model.

[308] Mr. Alexander described the purchasing process between Venmar and

Fasco. Venmar’s engineering department provided specifications and information

either to him or Fasco’s engineering department. He then requested a sample to

be built by the engineering department. The engineering department might ask for

further information and then a prototype motor would be designed, built, and

shipped to the customer. If Fasco’s engineering department was satisfied, they

provided a written approval. The motor would then be produced and provided with

a model number. A quote would be obtained and sent to the customer’s purchasing

and to its engineering department for approval.

[309] If the customer were using an existing motor as a prototype, the customer

sent a request for a change to order an updated motor. Fasco’s engineering

department then made a sample and had it shipped to the customer for testing and

review. The customer could also order from the stock product catalogue.

[310] Initially, Fasco produced a blower including a motor, impeller, and capacitor

for Venmar. After that, Venmar decided to purchase only the motor from Fasco.

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[311] “Fasco Field Facts,” an information sheet, was generally used to provide an

overview of electrical motors as entry-level information “at a very high view”. Mr.

Alexander could provide that information to customers but would not do so very

often because original equipment manufacturers like Venmar already knew this

information.

[312] Fasco Field Facts dated January 28, 1986 states:

Fasco has adopted a new motor safety policy regarding shock hazard

and fire prevention with particular emphasis on motors intended for

use in remote, inaccessible locations.

1. All vented or open construction Fasco motors will be

impedence protected or equipped with suitable thermal

overload protection as the application requires (automatic,

manual, or one-shot fuse types). These designs are not for use

in remote inaccessible locations.

2.Motors intended for, designed for, or known to be used in

remote, inaccessible locations shall be one of the following:

a. totally enclosed

b. equipped with a one-shot protector

c. equipped with a manual reset protector

d. installed in a suitable fireproof enclosure in the end

use application.

3. Parts sets and special OEM applications shall be

investigated by engineering to assure suitable protection has

been provided by Fasco or the customer in accordance with

agency requirements and safe operation.

[313] No representative of Venmar asked Mr. Alexander about the safety of the

motor but they did ask about the life expectancy of its bearings. Mr. Alexander

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turned these types of questions over to Fasco’s engineers to respond. Venmar’s

representatives also did not ask him about design issues. Mr. Alexander was

familiar with the term ‘attended or unattended use’, but did not ask, nor was he

told, of Venmar’s use for the unit. Most of the thermal protectors were auto reset

which provided at least two weeks of protection. Mr. Alexander did not provide that

information to Venmar. He had no knowledge of end-of-life information.

[314] Mr. Alexander was of the view the onus is on Venmar to test and be satisfied

that they have what they want in the way of a motor.

[315] On June 2, 1998, Mr. Alexander had been advised by Venmar that there

was an extreme overheating problem with the motors in its HRV. He sent that

information to Ms. Manley and Mr. Goldin.

[316] On June 23, 1998, he met with the Venmar team. They wished to have a

heat sensing device installed in the motor because they could not find the root

cause of the overheating. Neither could Fasco and, therefore, Fasco engineering

suggested a solution using an external fuse if it sensed an over current event. This

idea was immediately rejected by Venmar because such a fuse would be costly

and make the unit uncompetitive. At the time, the fuse cost approximately $.30-

$.35 US.

[317] In August 1999, Venmar suggested a one-shot thermal device; however,

Fasco did not think it was required. Fasco still did not know the root cause of the

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overheating problem which may have come from the unit and it was their view that

a one-shot thermal protector would not solve the problem.

[318] In October 1999, Mr. Alexander and two others from Fasco met with

members of Venmar. Fasco still did not agree with one-shot protection as the best

solution. Instead. Fasco believed a one-shot thermal protector would not make the

unit safer because the problem may be somewhere else in the system. A one-shot

thermal protector was also not required for certification under the UL and CAS

standards. Venmar declined to pay for the cost to certify this change.

[319] Mr. Alexander was first aware of fires in Venmar’s HRV’s in late 1998 or

early 1999. He was aware that there were subsequent fires in 2001 or 2002. Fasco

tried to determine the cause of the fires and wanted to get a motor back with a

whole unit but Venmar only sent the burnt-out motor. Fasco could not determine

the cause of the fire without the entire unit but did not get one from Venmar. Mr.

Alexander eventually used his own HRV from his home in 2005 and gave it to

Fasco’s engineering team.

Evidence of Beth Anderson

[320] Ms. Anderson was accepted, on consent, as an expert able to give opinion

evidence in the area of electrical engineering, the origin and cause of fires, the

industry standard for design of an appliance, the responsibility between

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manufacturers and component part suppliers, and the addition of electrical over

current protection of an appliance.

[321] Ms. Anderson is a professional engineer and trained as an electrical

engineer. She is qualified as a professional engineer in eight states. Her curriculum

vitae is extensive, and she has a great deal of related work experience. I agree

with counsel that she is well qualified to give opinion evidence.

[322] Her opinion was that the Venmar HRV failed and caused the fire at the

plaintiff’s residence because it was defective in its design. In her opinion, Venmar

did not incorporate appropriate electrical safety mechanisms given the type of

device it was and how it would be used. She opined that Venmar’s initial design

depended on an auto reset thermal protector as the only protection for the fan

motor but should have incorporated overcurrent protection for the motor as well.

The Venmar design should have anticipated the unattended use of the HRV in its

residential applications, which makes the lack of overcurrent protection even more

dangerous.

[323] In her opinion, Fasco’s motor was not defective. It was therefore Venmar’s

responsibility to incorporate overcurrent protection to prevent electrical failures in

the motor as part of the appliance as a whole.

[324] The most significant part of her report states:

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The industry standard for appliance manufacturers is to produce an

appliance that when used as designed will operate in a safe manner.

While it is expected that all appliances will fail when they reach their

end of life, it is also expected that the appliance will fail in a safe

manner and will not produce a hazard to the consumer. In the case of

an electrical appliance the safety hazards include the possibility of

shock, electrocution, and fire. For example, when the fan motor in an

electric space heater quits running, the heating elements heat up

sufficiently to cause the high limit thermal cut out to open. When this

happens, the heating elements and the motor are de-energized and

the risk of fire due to an inoperable fan motor is reduced. The space

heater quits working, but it does so in a safe manner.

In the case of the Venmar HRVs several factors must be considered

in the design phase to ensure the appliance will operate in a safe

manner. Since the main moving part in the HRV is the motor, it is

important to understand how motors can fail and how equipment

manufacturers must protect against those failures. My comments in

this regard are applicable to appliances manufactured in the 1990s,

including the Venmar HRV. It would be the responsibility for the

appliance manufacturer to understand all failure modes that may

result in a hazardous condition. The appliance manufacturer would

have to determine how to mitigate the risks of a failure mode given the

type of appliance it is manufacturing.

Motors in electrical equipment can fail in a number of ways. The two

most common occur when the motor rotor becomes locked for some

reason. This can happen due to a physical blockage in the motor or it

can happen at the end of motor life when the motor stops turning. An

appliance manufacturer would be expected to know that the motor is

designed to last a certain number of hours, after which the oil or

lubrication will be consumed, and the motor will stop turning. When

the motor rotor locks, the current drawn by the motor increases and

causes the windings to heat up. This condition results in an

overtemperature condition in the motor. If unchecked, the winding

insulation will degrade causing off-gassing that produces a flammable

vapor. At the same time, the degrading insulation allows for the

Page: 92

possibility of an electrical arcing event internal to the motor. An

electrical arcing event can result in the ignition of a fire at the motor.

Because of these well-known motor failure modes, the industry

standard at the time the Venmar HRV was manufactured was for

equipment and appliance manufacturers to have two types of motor

protection, overload protection and overcurrent protection. These two

types of motor protection are well known to appliance manufacturers.

First, the overload protection, such as the auto-reset thermal

protector, or a single action thermal protector (TCO), stops current

flow to the motor if a gradual overtemperature condition exists, such

as occurs when the motor is in a locked rotor condition.

Appliance manufacturers would be expected to understand the type

of thermal protector the motor has and should appreciate that the

auto-reset thermal protector will also reach end of life. When the

thermal protector fails, it may fail in the closed position, which could

result in the continued and uncontrolled heating of the motor windings

as I discussed above. An appliance manufacturer would be expected

to understand this failure mode and the danger that it poses. The

appliance manufacture could choose to use a TCO or any number of

system level protections, such as homeowner notification or automatic

shutdowns to prevent a hazardous condition in the HRV.

Second, the overcurrent protection, either a fuse or circuit breaker,

stops current flow to the motor if a short circuit occurs in the motor.

Overcurrent protection would protect against an arcing failure or

sudden overheating event such as what can occur when a short circuit

or ground fault occurs in the motor windings.

The [Venmar unit] has no appliance level overcurrent protection for

the motor. It relies on the circuit protection provided by the residence’s

electrical distribution system. The [Venmar unit] is a cord connected

appliance that plugs into a receptacle. The circuit in the residence that

feeds that receptacle is protected from an overcurrent condition by a

circuit breaker, so anything plugged into the receptacle is also

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protected by that same circuit breaker. There is no separate appliance

level overcurrent protection for the motor internal to the Venmar HRV.

The problem with this design is that most receptacles in a residence

are protected by a 15 or 20 amp circuit breaker. The Tecumseh

motors used in the HRV are fractional horsepower motors with typical

motor currents of less than 2 Amps, even under locked rotor

conditions. Therefore, a 15 or 20 amp circuit breaker is unlikely to

detect a short circuit in the motor. In essence, the Venmar HRV did

not provide proper overcurrent protection for the motor.

The expectation is that the appliance manufacturer will know that a 15

or 20 amp circuit breaker is not protective against an overcurrent

condition in a fractional horsepower motor. The appliance

manufacturer must either add appropriate overcurrent protection at

the appliance level or rely on some other type of system level

protection to prevent an arcing failure internal to the motor. The

responsibility to include overcurrent protection lies entirely with the

appliance manufacturer, in this case Venmar.

[325] In short, she says that although the motor overheated, Venmar should have

protected for that in the design of its HRV.

[326] Further, Ms. Anderson opined that Fasco was only supplying component

parts and that the ultimate responsibility lies with the manufacturer of the

appliance.

[327] Ms. Anderson described her current business of designing and

manufacturing transformers as a component manufacturer. As such, if the

component manufacturer knew about dangers within the component, she

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expected that it would let the end-user know about that and warn them of dangers.

She thought that that was a reasonable practice.

[328] In 1994, other appliances, such as furnaces, had both overload and

overcurrent protection. She agreed that the TCO being used as an overload

protection was required when the standard changed in 2010 or 2011 but that

standard did not apply in 1994. The CSA certification for the unit changed in 2009

but still did not require a backup for overcurrent protection.

[329] Some of what Ms. Anderson tells me is of assistance and some is not.

[330] To the extent that she opines on whether the component supplier or the

appliance is ultimately responsible for liability, that is my purview and not hers. Like

Mr. Joseph’s opinion on that point, it is not relevant or admissible.

[331] Ms. Anderson relieves Fasco of liability because it was “not in the appliance

design business.” That is a finding of fact for me to make and not for Ms. Anderson.

Ms. Anderson finds that Fasco was reasonable in its conduct; that too is for me

and not her.

[332] Ms. Anderson is of the opinion that Fasco is without error since it met the

required codes while Venmar is in error for not providing an appliance that exceeds

the minimum safety standards. I am hesitant to accept her opinion in that regard.

Page: 95

[333] In sum, Ms. Anderson was able to explain what caused the fire in the HRV

in this action and how Venmar’s eventual solution was better than it had in the

initial manufacturing design. She was able to assist with providing me with an

explanation of the technical aspects of the motor and the appliance.

[334] Ms. Anderson was fair and objective. She provided evidence that was not of

assistance to Fasco although she was called by them. I accept her evidence for

the purposes of my determinations and place great weight on the quoted section

above.

Evidence of Michael Flynn

[335] Mr. Flynn testified for Fasco and was accepted, on consent, as an expert in

the field of mechanical engineering and a certified fire and explosion investigator.

He was qualified to give opinion evidence with respect to origin and cause of fires.

On consent, it was agreed that he was also able to give opinion evidence with

respect to industry standards in appliance and design, the supply of component

parts to appliance manufacturers, the certification of motors and appliances -

including the certification of attended and unattended devices. Finally, he was

accepted on consent as an expert in the adequacy of Venmar’s safety upgrade

recall program.

[336] That alone is an impressive list, but Mr. Flynn goes on in his resume to allege

expertise in steel manufacturing, aircraft manufacturing, robotics, construction

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disputes, oil spills, slip and fall incidents, oil escape losses and “a wide range of

engineering disciplines.” He has advised manufacturers with respect to their

consumer electronic product certification agencies. Mr. Flynn has so much

expertise in so many areas, that I start with serious doubts about Mr. Flynn’s

“expertise” in anything. At best, he is a generalist in many fields of engineering.

[337] Mr. Flynn is a professional engineer and a certified fire investigator and an

instructor of fire investigation. In his forensic employment, he has investigated

thousands of fires and a “high hundred” number of electrical appliance fires. His

opinion with respect to the cause of the fire did not challenge the evidence of Mr.

Habash or Mr. Rowen.

[338] Mr. Flynn has investigated more than fifty cases related to design defects

but has not been qualified in other proceedings as an expert in the fields of design,

the supply of component parts, the certification process, or to provide opinion

evidence with respect to a safety upgrade program.

[339] The most obvious failing in Mr. Flynn’s expertise is the suggestion that he

could offer an opinion on safety upgrade programs. I will come to discuss Venmar’s

safety recall program later, but Mr. Flynn’s opinion on that issue is instructive as to

his qualifications to provide an opinion.

[340] Mr. Flynn’s expertise in the safety upgrade program comes from one case.

He recalls being involved with a safety upgrade program following his own

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investigation in approximately 2005. He became aware of a refrigerator fire and

contacted other forensic firms and the Ontario Fire Marshal about the problem.

When there was no action, he was interviewed for a television program. Eventually,

a safety recall came about and that led to a voluntary retrofit. He monitored that

one safety recall by following media reports and, apparently, believes that he is

qualified to come to court and provide his opinion.

[341] He agreed that he was not “in the loop” with that recall program and does

not know how much was spent or the number of employees involved in it. He was

not aware of what steps were taken by the manufacturer in that instance.

[342] This experience does not make Mr. Flynn an expert in safety recall

programs. He has no special or peculiar knowledge through study or experience.

As we know from social media, having an opinion does not make one an expert.

Rather, it makes Mr. Flynn a well-intentioned advocate for fire safety. To the extent

that he holds himself out as an expert in safety recall programs, I do not find that

he has the prerequisite qualifications. His failure to understand the requirements

of his role undermines all else to which testified.

[343] Mr. Flynn gave his opinion about Venmar’s design. I do not need his opinion;

I have Ms. Anderson’s.

[344] Mr. Flynn gave his opinion about the normal industry process for the supply

of component parts. I do not need his opinion; I have the witnesses in this case.

Page: 98

[345] Mr. Flynn gave his opinion about the definition of “unattended” devices, but

I cannot rely upon his alleged expertise in this area for the reasons set out above.

[346] Mr. Flynn gave his opinion about how ventilator manufacturers gave notice

to consumer about risks. I make that decision on the facts of this case. I do not

need his opinion.

[347] My rejection of most of Mr. Flynn’s evidence in the face of the parties’

consent should not be taken as a criticism of counsel. One of the ways that counsel

made this trial fit within the time available was to agree that all experts’ reports be

admitted as evidence subject to my assessment. I remain the gatekeeper for

opinion evidence regardless of the parties’ consent. See: Parliament. That

agreement allowed the trial to proceed without lengthy voir dires. That was a

courageous and valuable decision in this case. Although not always a practice to

be recommended, I commend counsel for that resolution in this case.

Liability of the Defendants

[348] It is important to keep in mind the facts that are not in dispute:

1) The unit in this action was purchased by the plaintiffs in 1994.

2) Venmar was not aware of the risk of the motor overheating until 2003 and

not aware of a fire risk until 2006. At that time, it was aware of only 16

house fires and was not aware of the circumstances of all of those.

Page: 99

3) Venmar was able to discover the cause of the fire in its own facilities by

October of 2006.

4) At all times, the unit, the motor, and the thermal protector were compliant

with the appropriate certification.

5) The motor, thermal protector, and the unit as a whole, outlived their life

expectancy as required by their respective certifications.

6) 300,000 units were manufactured, and 114 fires were attributed to the

motor by the time of trial. That is an effective malfunction rate of .04%.

7) At the relevant time, ninety percent of motors in North America used

cycling or auto reset thermal protectors.

8) The applicable UL and CSA standards for HRV’s in 1994 did not require

one shot thermal protectors in an HRV.

Analysis

Venmar’s Liability

[349] Simply put, Venmar’s defence is first, that it relied on Fasco to provide the

right motor because Venmar did not care to obtain any expertise in motors.

Second, having made that policy decision, Venmar faults Fasco for not telling

Venmar about one-shot thermal protectors. The first proposition is wrong in law;

the second is wrong in fact.

Page: 100

[350] From all of the evidence, I find that Venmar’s use of the cycling thermal

protector was a design defect and the use of a fuse and TCO was a safer design.

[351] I have little evidence of whether that change was economically feasible, but

it appears that both thermal protectors were similar in design and, therefore, cost.

I have no reason to think otherwise. Similarly, the use of overload and overcurrent

protection would not have made the unit uncompetitively priced since that was the

solution that Venmar eventually applied. Mr. Alexander testified that the cost to

add the proposed fuse would have been about 45 cents.

[352] Venmar knew that its unit was expected to last longer than its motor and that

the motor would likely need to be replaced. Yet it failed to provide mechanical

warnings, advice to customers of this expected event, or what customers should

be mindful of to protect themselves in case of a motor malfunction. Without proper

end of life testing or seeking express advice from Fasco, Venmar simply used its

own assumptions of how the unit would fail.

[353] Further, I find that the use of the cycling thermal protector was negligent and

created a substantial likelihood of harm. When one compares Venmar’s abdication

of its responsibilities with respect to the motor with Ms. Anderson’s explanation,

one can easily see Venmar’s failing in its design process. I accept Ms. Anderson’s

evidence over that of Mr. Joseph. The use of the cycling thermal protector and the

failure to have overcurrent protection was Venmar’s choice of an inappropriate

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component for the HRV into which Venmar chose to incorporate it. See:

Mississauga (City of) v. Keifer Recaro Seating Inc., 2001 CanLII 4098 (Ont. C.A.).

[354] Mr. Juneau wrote to Fasco on April 3, 2000. There, he said:

The issue of motor overheating was discussed again at a meeting held

last fall with you, Karyn Manley and June Bilyeu. The use of a one time

thermal cutoff was brought-up. We were explained that his type of cutoff

was used for unattended fans, which is the case for all of our products.

We have selected Fasco as our motor supplier since 1983, so why has

the use of a One Shot Thermal Protector never been suggested before

by Fasco?

[355] The better question is for Venmar to ask its own design team why it did not

use this form of thermal protection from the outset.

[356] It is true that most manufacturers used cycling thermal protectors and the

certification standard did not require one-shot or similar protection for HRV’s.

However, the explanation given by Ms. Anderson shows that it was insufficient for

Venmar, at the systems level of the appliance, to simply attach the certified motor,

move the unit past the certification process, and make sure the fans turned

satisfactorily at the end of the production run. In this case, the minimum standard

does not provide a defence to Venmar given the knowledge that it had or should

have had with respect to thermal protectors, unattended uses, and end of life

circumstances. I accept Ms. Anderson’s evidence of what the industry practice

required at the time.

Page: 102

[357] For the unit to catch fire, many factors had to line up to form a “perfect

storm.”. First, of course, the motor had to go into locked rotor condition. Then it

had to overheat. Then the thermal protector had to fail. And it had to fail in a closed

position. The overheating had to find fuel. And, in the plaintiffs’ case, it had to do

so over weeks or months. Even the representative of the Ontario Fire Marshall,

Mr. Bennett (referred to below) did not think that such a house fire could occur. Mr.

Habash agreed that it is not normal for an electric motor to reach the end of its life

and cause a fire. The number of resulting fires shows that this outcome was

unlikely to occur. The evidence shows that fires occurred even in cases where a

one-shot thermal protector was used.

[358] Be that as it may, Venmar could have discovered this turn of events in its

design phase prior to the point in time where the first fire occurred. It had a design

team and supervised outsourced advice to address these very issues. There is no

explanation of why the unit was not properly designed at the outset.

[359] Venmar provided no evidence from its design and engineering team from

the late 1980’s or early 1990’s. The choice of motor was already made by the time

Mr. Juneau arrived and Mr. Forest had no knowledge of how the decision was

made. That silence is deafening from Venmar. I am left without any information as

to how Venmar chose the motor and what inquiries it made about end of life other

than to make unsupported assumptions.

Page: 103

[360] Venmar rejected Fasco’s advice for a fuse that turned out to be correct.

Once Venmar decided to rely on its own efforts – as it should have from the start

– it quickly found the cause and a solution.

[361] I agree with Venmar that it makes sense to think that the homeowner would

know when the unit quit working. That view is supported by the certification terms.

This was not a use that was in-wall or in an attic that could not be known to have

malfunctioned. That is not to say that the plaintiffs have any role in the fire; no one

suggests any contributory negligence on their part. I simply say that the

circumstances here appeared to be unlikely to occur. However, Venmar’s

obligations to build a safe unit go further than making such assumptions.

[362] Venmar submits that manufacturers are not required to test each component

part but may “rest content on the sub-contractor having done his job properly.”

See: Farro, at paras. 11-13. That is true but unhelpful. There is no dispute that the

motor chosen by Venmar was without fault; Venmar simply chose the wrong motor

without fault. Further, Venmar was provided with sample motors with thermal

couplets attached to carry out its own testing within its HRV. It was open to

Venmar, and required of it, to test the components to be sure that they fit safely

within its design. Venmar failed to do so.

[363] From the evidence, it is also clear that other motors were used in the same

application and fires resulted. No Fasco motors have by themselves been the

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subject of a safety recall. The only common denominator for a fire in the Venmar

HRV is the appliance and the design, not Fasco’s motor.

[364] There was much contested evidence about the discussions between

Venmar and Fasco through the involvement of Mr. Alexander, Ms. Manley, and

Mr. Juneau. I am hesitant to rely on any of their memories of who said what or who

relied on whom. Mr. Alexander kept notes of those meetings; however, they appear

to have only reminded him of things that benefitted Fasco. He then provided other

equally important evidence to assist Fasco that did not appear in his notes but that

he still remembered. I cannot rely on that evidence. From the correspondence,

however, the one point that I can be sure of is that Fasco provided an answer that

Venmar did not follow and that it then relied on its own investigations and solutions.

[365] Venmar submits that many of the experts who testified are forensic analysts

and are using hindsight to find the cause of the fire, but that does not mean that

the problem was apparent at the time. Hindsight analysis is something that I must

avoid. The answer to that submission is that Venmar’s own engineers found the

problem when they put their mind to it. It did not take hindsight, just foresight.

[366] On the evidence, Venmar knew or ought to have known that there were

different types of thermal protectors for different settings. A manufacturer of a

product is held to the same level of knowledge and expertise as an expert in the

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field. Venmar was not entitled to rely on a corporate policy that it was not going to

be an expert on the component parts of its appliances.

[367] It is not appropriate for Venmar to blithely say that it did not put its mind to

whether the HRV was an attended or unattended use appliance. 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. At best, once Venmar put its mind

to it, in April of 2000, it realized that the HRV was an unattended use.

[368] More likely, Venmar is not being honest when it denies that it thought that

the unit was attended. There is much evidence to support the view that Venmar

believed that the unit was attended since it did not apply the necessary certification

for an unattended use. The evidence is also that, in this case, the plaintiffs were

clearly unaware that the unit was not operating. Effectively, the unit was

unattended.

[369] Whether Venmar put its mind to it or not, such consideration would have

alerted it to the one-shot thermal protection (or other forms of fire protection) at the

initial production process. While I have found that it was an understandable

assumption that the consumer would know of the failure of the motor, testing was

required on Venmar’s part to determine if that was a safe assumption.

[370] I find that Venmar failed to design a product that could safely come to the

end of its life. A proper investigation before the HRV was placed on the market

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would have discovered the possibility of fire. Mr. Habash and others agreed that

the application of a fuse would have prevented this fire. The unit itself could have

had some other means of containing any fire and external notification to the

homeowner that the motor was not functioning properly.

[371] Those failures in design led to the reasonable foreseeability that a fire could

occur at end of life of the unit. Others in the industry knew of the risk of fire. That

foreseeable fire resulted in the plaintiffs’ losses.

[372] Following Rentway, I balance Venmar’s risks against its utility and cost. I

find that while the HRV was a valuable appliance, the risk of fire could have been

easily and cheaply reduced or eliminated with the use of a one-shot thermal

protector or fuse without affecting its place in the market.

[373] On the evidence, I find according to the Statement of Claim that Venmar

failed:

a) to establish a design that was reasonably free from fire hazard;

b) to monitor and test the design;

c) to manufacture the HRV in a reasonable and proper fashion;

d) to test the HRV as constructed in a reasonable and proper fashion;

e) to test the component parts used in the HRV.

[374] I find Venmar liable to the plaintiffs for their losses; they would not have

occurred but for that negligence of Venmar.

Page: 107

Fasco’s Liability

[375] I find that Fasco was not negligent in the manufacture and design of the

motor. The motor was without defect. As set out above, the manufacturer has a

duty to take reasonable care in the manufacture of its product including its

component parts.

[376] I do not find that this motor was “inherently dangerous.” Certainly, in

hindsight, it turned out be dangerous to these plaintiffs. However, to classify this

electric motor to be inherently dangerous, would be to elevate most electrical

household appliances to the level of pharmaceuticals and medical devices.

[377] Venmar submits that only in 1999 did Fasco suggest the use of a one-shot

thermal protector to Venmar. However, I have found that Venmar knew, or ought

to have known, of the availability of one-shot thermal protectors many years before

that. UL 507 was amended in 1992 and went into effect in 1994. UL 507 promoted

the use of one-shot thermal protectors and, therefore, Venmar knew of single-shot

thermal protectors before the plaintiffs’ unit was built and sold. Venmar should

have been able to rely on its own engineers rather than attempt to download that

to Fasco.

[378] Venmar explicitly concedes that it was a purchaser of the motors and that

Fasco was merely the producer. There is no evidence of any consulting contracts

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between the parties or that Fasco was tasked to review the design prints of the

HRV such that Fasco would bear the responsibility of a “design partner.”

[379] That said, I do understand how Venmar presumed a greater degree of

responsibility on Fasco’s part. Fasco’s witnesses agreed that it did not advise its

customers that it was aware that motors could catch fire. In Fasco’s brochure, the

cover page proudly declares:

For over 50 years, OEM design engineers have utilized Fasco’s

unmatched expertise in FHP motors by consulting with our sales

engineers early in the design process. Co-engineering, partnering,

simultaneous design and other terms are now applied to the same

thought: getting the OEM supplier involved early in product design to

minimize development time and maximize use of the supplier’s unique

knowledge. It is a process familiar and comfortable to Fasco.

[380] Further:

At Fasco, we take a very advanced approach to design and

manufacturing, but our commitment to customer service is a time-

honored one that will continue. Our hands-on support team incudes

comprehensive design assistance and rapid prototyping. In addition,

facilities are equipped with a certified UL testing laboratory designed to

perform tests including acoustic and vibration analysis.

[381] Fasco’s sales representatives and engineers were available to Venmar at

its call.

[382] However, as summarized in Fasco’s factum, the evidence establishes that

Venmar treated Fasco as a parts supplier only and did not involve Fasco in its

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design or manufacturing process. Apart from the occasional correspondence

about performance issues described above, Venmar did not relay any design or

testing documentation or any communications to Fasco, or receive anything from

Fasco, that shows that Venmar:

(a) was expecting advice about anything to do with the design of the HRV;

(b) asked Fasco for advice on the safety of its HRVs;

(c) sought Fasco’s assistance on its HRV design;

(d) provided Fasco with any design documents for its HRVs;

(e) asked Fasco about appliance standards under UL or CSA applicable to

the HRV;

(f) asked Fasco to test the motor in the HRV;

(g) requested that Fasco do any end-of-life testing or other tests on the motors

used in its HRVs;

(h) discussed with Fasco whether Venmar believed its HRV was in an

unattended location;

(i) communicated that it was relying on Fasco’s expertise; and,

(j) communicated that it knew very little about motors;

[383] Venmar purchased and received what it asked for. Venmar expressly

submits that it was a “always a clear-cut customer, supplier relationship”.

Page: 110

[384] Accordingly, I reject the plaintiffs’ argument that Fasco negligently designed

the Venmar HRV. Fasco is not responsible for Venmar’s design process. Fasco

produced motors with both one-shot and cycling thermal protectors, it did not

assemble the HRV. Ninety per cent were cycling and state of the art components.

There is simply no evidence that Fasco was negligent in the design or manufacture

of this motor.

[385] Were I to find otherwise, Venmar could successfully turn a blind eye to how

the components would safely operate within its appliance. I agree with Fasco that

“otherwise the component part manufacturers would have to supervise the

production, manufacture and testing of end use appliances.”

[386] Finally, it is difficult to find that Fasco was negligent when the advice that it

gave Venmar in 1998, with respect to a fuse, was the correct solution but Venmar

did not accept that advice. Indeed, even the use of a one-shot thermal protector

was not the end of the fires. There is no reason to believe that Venmar would have

taken the same advice at the outset. By 1998, Venmar was relying on its own

advice without the input from Fasco. That conduct breaks the chain of causation

that could lead to Fasco.

[387] With respect to the plaintiffs’ claims in negligence against Fasco, there is no

evidence that Fasco was negligent in the production of its motor. The only

argument is that Fasco was part of the design process of the HRV and negligent

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in that role. I have already found that Fasco was not part of the design process;

those arguments fail.

[388] The final argument is common to both Venmar and the plaintiffs. Is Fasco

liable to the plaintiff for its failure to advise Venmar that the motor could catch fire?

I find that it is not.

[389] Before I can find liability upon Fasco for the plaintiffs’ claim, I must find a

duty of care owed to the plaintiffs. As discussed in Deloitte & Touche v. Livent Inc.

(Receiver of), 2017 SCC 63, [2017] 2 S.C.R. 855, I must first consider whether the

circumstances disclose reasonably foreseeable harm and proximity to establish a

duty of care. If so, I must then determine whether policy reasons exist for denying

liability. See also: Viridian Inc. v. Bovar Inc. 2002 ABCA 173, 216 D.L.R. (4th) 122.

[390] Given Fasco’s responsibilities and duty to the plaintiffs, I cannot find that

Fasco’s failure to warn Venmar caused reasonably foreseeable harm to the

plaintiffs. Venmar had an intermediate examination of the motor it purchased. That

is not to say that Venmar was required to examine each motor to see if it was

defective. It is not obliged to and would not have found any defect if it had. The

inspection that it needed to carry out was how the motor interacted within its HRV.

It should have done that, and Fasco could rely on that expected inspection. If

Venmar had done that, it would not have mattered what Fasco told Venmar;

Venmar would have found that fire risk on its own as it finally did in 2006.

Page: 112

[391] From a policy point of view, it is commercially impractical for Fasco to carry

out testing for every potential use of their motors. From the evidence of Ms.

Manley, Fasco had far too many customers and too few engineers to take on that

role unless it was specifically contracted for and could become economically and

operationally feasible.

[392] Generally speaking, Venmar only communicated with Fasco through

Fasco’s sales representatives. A visit by non-sales representatives to the Venmar

plant was exceptional throughout the many years of their relationship. When a visit

occurred, it focussed on one particular issue. While there is a dispute whether

Fasco asked for a complete unit to test, there is no dispute that Venmar sent only

motors to Fasco to investigate the overheating problem. It should have been

obvious to Venmar that Fasco was not in a position to provide design advice.

[393] The plaintiffs submit that Fasco is negligent in its failure to operate its

business to ensure that Venmar was aware of all motor options. I have no evidence

that such a mode of business was negligent or contrary to usual business

practices, both then and now. As set out below, Fasco managed that risk in its

contracts with Venmar such that any such liability lies with Venmar.

[394] However, on the evidence, Fasco failed to warn Venmar of the risk of fire.

Mr. Goldin agreed that “it is important to know where the motor is going to be used

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in an attended or an unattended location.” Does that failure fix liability on Fasco

through Venmar? For the following reasons, I find that it does not.

[395] Fasco was admittedly aware since the 1950’s of the potential of fires in its

motors if the thermal protector failed in the closed position. It admittedly did not tell

customers of that possibility.

[396] Fasco Field Facts dated January 28, 1986 states:

Fasco has adopted a new motor safety policy regarding shock hazard

and fire prevention with particular emphasis on motors intended for use

in remote, inaccessible locations.

1. All vented or open construction Fasco motors will be impedence

protected or equipped with suitable thermal overload protection as

the application requires (automatic, manual, or one-shot fuse

types). These designs are not for use in remote inaccessible

locations.

2. Motors intended for, designed for, or known to be used in

remote, inaccessible locations shall be one of the following:

a. totally enclosed

b. equipped with a one-shot protector

c. equipped with a manual reset protector

d. installed in a suitable fireproof enclosure in the end use

application.

3. Parts sets and special OEM applications shall be investigated

by engineering to assure suitable protection has been provided

by Fasco or the customer in accordance with agency

requirements and safe operation. [Emphasis added]

Page: 114

[397] It is agreed that this policy and information was not shared with Venmar and

Mr. Goldin agreed that it should have been.

[398] Fasco’s corporate policy was to understand OEM applications and to warn

of the respective risks that it foresaw accordingly. Fasco’s expert, Ms. Anderson,

testified that this was a good policy. Mr. Goldin said that this policy did not change

until 1994 when the UL changed. His evidence was that this information would not

be shared with OEM’s because they would be expected to know the use to which

the motor would be put. However, that is not what the policy says. It is clear that

Mr. Alexander, Fasco’s sample information sheets, and Ms. Manley were not

following the corporate policy at the relevant time.

[399] I need not concern myself whether it was standard in the industry for

component part suppliers to be responsible for the manufactured appliance. That

is primarily a matter of law, but it could also turn on the facts of the case. For

example, Ms. Anderson opined that “[i]t was reasonable for Fasco to assume that

Venmar understood how a motor works and how a motor should be protected in

its circuits.” However, in this case, Fasco’s policy was to make sure OEM’s were

aware of the risk of fire and their choices for thermal protection. Fasco’s own policy

was contrary to what Ms. Anderson professes.

[400] Venmar submits that had Fasco followed its policy, which it admittedly did

not, Venmar would have changed its design to use a motor that was either

Page: 115

a. totally enclosed;

b. equipped with a one-shot protector;

c. equipped with a manual reset protector; or,

d. installed in a suitable fireproof enclosure in the end use application.

[401] Despite Mr. Forest’s evidence that Venmar’s design would have changed, I

cannot make that finding. Before 2006, Venmar was using the industry standard

cycling thermal protectors. Venmar had changed to Fasco from a previous motor

manufacturer because of reliability issues with the motors that they had received

from that previous supplier. It is unlikely that Venmar would have used a one-shot

thermal protector when others in the industry were concerned about premature

motor failure.

[402] The UL and CSA standard for Venmar’s HRV did not require such safety

precautions for what Venmar determined was an attended use appliance. There is

no evidence to suggest that Venmar would have used a different and less reliable

means of thermal protection.

[403] As I have found, Venmar was aware, or should have been aware, of the

need for one-shot thermal protectors in other Venmar products. It decided not to

do so in this application.

[404] More importantly, when Fasco provided Venmar with a solution to its

problems, Venmar rejected that advice even when it then knew of overheating

Page: 116

issues. Only when Venmar did its own investigations did it apply the fuse that

Fasco recommended.

[405] While Fasco’s conduct towards Venmar, in light of its own policy, is

regrettable, I cannot find that it caused the losses to either Venmar or the plaintiffs.

Did Venmar take Sufficient Steps to Notify Customers?

Overview

[406] Adam v. Ledesma-Cadhit, 2021 ONCA 828, recently summarized the

principles of warnings in the area of medical products at paras. 19 – 20. I take

those principles to apply in this case as well.

[19]

The general principles governing the duty to warn by

manufacturers of medical products are well known, not in dispute, and

were summarized by the Supreme Court in Hollis v. Dow Corning Corp:

(i)

A manufacturer of a product has a duty in tort to warn

consumers of dangers inherent in the use of its product of which it

has knowledge or ought to have knowledge;

(ii)

The 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;

(iii) All warnings must be reasonably communicated and must

clearly describe any specific dangers that arise from the ordinary

use of the product;

(iv) The nature and scope of the manufacturer’s duty to warn

varies with the level of danger associated with the ordinary use of

the product. Where there are significant dangers, it will rarely be

sufficient for manufacturers to give general warnings concerning

those dangers. Instead, the warnings must be sufficiently detailed

Page: 117

to give the consumer a full indication of each of the specific

dangers arising from the use of the product;

[407] It is important to remember that the unit had already been purchased when

Venmar realized the problem. Although I have found Venmar to be negligent in its

design, the reality is that, until 2006, it was not aware of the failing that caused the

fire. The plaintiffs allege that the defendants were obligated in 2012 to implement

a program of notification. Accordingly, Venmar did not know to put warnings on the

packaging or manuals. Here, I am not reviewing the warnings on the unit or the

owner’s manual or the box around the unit. I am looking only at the after-market

process.

[408] The plaintiffs and Fasco rely on Nicholson v. John Deere Ltd (1986), 58 O.R.

(2d) 53 (S.C.) to submit that Venmar, in its safety upgrade program, “had a duty

to devise a program that left nothing to chance.” That, to me, sounds like strict

liability which is not applicable. I note that Nicholson has not been followed on that

point. On appeal, the Ontario Court of Appeal made no comment on that point.

[409] I prefer the rule in Buchanan v. Ortho Pharmaceutical (Canada) Ltd., (1986),

, 25 D.L.R. (4^th) 658 (Ont. C.A.), at pp. 667, 672:

Once a duty to warn is recognized, it is manifest that the warning must

be adequate. It should be communicated clearly and understandably in

a manner calculated to inform the user of the nature of the risk and the

extent of the danger; it should be in terms commensurate with the

gravity of the potential hazard, and it should not be neutralized or

Page: 118

negated by collateral efforts on the part of the manufacturer. The nature

and extent of any given warning will depend on what is reasonable

having regard to all the facts and circumstances relevant to the product

in question.

...

The duty to warn clearly necessitates a warning comprehensible to the

average consumer which conveys the nature and extent of the danger

to the mind of a reasonably prudent person.

Agreed Evidence on this Issue

[410] During argument, it was agreed by all parties that the Venmar HRV user

manual did not contain any instructions or warnings about the eventual failure of

the motor. Venmar did not include any instructions about what to look for or how

to detect a motor failure. There were no alarms, buzzers, lights, or other indicators

to notify users of motor failure.

[411] At the time of service call, neither the plaintiffs nor the Rowleys had any

knowledge of any risks related to the HRV nor any knowledge of a safety upgrade

program.

[412] Mr. Burr was completely unaware of any dangers, risks, or concerns with

the HRV prior to the fire. He had not received any notices or information about the

risks from Venmar or any other source prior to the fire. He did not see any

information in newspapers, magazines, print, or other media regarding the risks

associated with HRVs. He had never heard of Venmar's safety upgrade programs.

Page: 119

[413] Mr. Burr frequented retail stores including, but not limited to, home

improvement stores, but he did not see any flyers indicating that the Venmar HRV

was subject to a safety upgrade program.

[414] Mr. Burr had never received any communication from the local fire

department, Venmar, Health Canada, or any other governmental or regulatory

agency or safety authority regarding warnings pertaining to HRVs.

[415] When asked if he had any concerns with the operation of the Venmar HRV

prior to the fire, Mr. Burr answered, "absolutely not."

[416] In the course of his employment with a medical diagnostics manufacturer,

Mr. Burr became very familiar with recalls and how to reach consumers about a

recall. When he was asked if he would follow instructions from a company to

eliminate a risk of fire from a product at his home, Mr. Burr replied "absolutely."

[417] Between 1994 and 2012, Ms. Callister was completely unaware of any

defects, safety issues, product safety upgrades or recalls regarding the HRV. She

received no notice from Venmar, saw no notice in a newspaper or other media,

had no information from a government agency and received no information from

Terry Rowley Mechanical Inc.

[418] It is Ms. Callister’s practice to look through all of the mail. If she had seen a

notice about a safety upgrade or product recall, she would have brought it to her

Page: 120

husband's attention. If there were instructions to call the manufacturer, she would

"absolutely" have called.

[419] Through Ms. Callister’s involvement in the community, her work, and from

all other sources, she was not aware of any issue with Venmar or HRVs and had

not heard of the Venmar safety upgrade program. She did not see any notice or

flyer at any commercial or retail stores. She watched the news, and talked about

the news with colleagues, but did not hear about the risks or the safety upgrade

program on the radio, TV, or from colleagues. If she had been made aware of an

issue, the HRV "would have been out of there."

[420] Charlene Ferris was dispatched by Co-operators to adjust Mr. Burr and Ms.

Callister's loss. Prior to her investigation of the fire on November 5, 2012, Ms.

Ferris was unaware through her personal life or through her work as an insurance

adjuster of issues with Venmar HRV's or of Venmar's product safety upgrade

program. Ms. Ferris learned after the fire that none of the other adjusters at Co-

operators were aware of the issues with Venmar HRV's or of Venmar's product

safety upgrade program.

[421] On November 2, 2012, Mr. Rowley was not aware that HRV units could

smoke or catch fire and he was not aware of any HRV recall notices. Mr. Rowley

expected that if he or TRM Inc. had purchased any of the products subject to a

recall, the manufacturer would send him or TRM Inc. a notice of the recall.

Page: 121

Venmar Evidence

[422] Filed in evidence were:

(a) Venmar’s phone call scripts to unify the message;

(b) Venmar's recall notice;

(c) Ontario Fire Marshall’s notice that was put in the Burlington newspaper in

December 2006;

(d) Venmar’s Press release dated December 17, 2006;

(e) Venmar’s notice to the CSA, ESA, and OFM dated December 17, 2006:

It has come to Venmar’s attention that an unlikely series of

circumstances could lead to a motor overheating in certain HRV

models, that may result in a potential fire hazard. We do not

believe that these units are a substantial product hazard. As a

precautionary measure, Venmar Ventalation is voluntarily and

immediately implementing a safety upgrade program for certain

heat recovery ventilators (HRV’s) that it manufacturers. Venmar

is asking owners of heat recovery ventilators that are covered by

this program to immediately turn their unit off and unplug it, and

contact us as soon as possible. Please refer to the attached

press release.

The purpose of the safety upgrade is to add a third level of

protection to the heat recovery ventilators. The first level of

protection is provided by the branch circuit protection. The

second level is provided by thermal protectors in the motors. The

third level of protection that we are implementing is an ultra-fast

acting overcurrent circuit interrupter.

In the vast majority of the affected units, a power plug adapter

will be directly sent to the consumer. The simple power plug

Page: 122

adapter will be easily installed by the consumer himself to the

heat recovery ventilator power supply cord. Some models will

require a service technician to install a special adapter.

We are crucially concerned with the public safety and we intend

to fully cooperate and contribute to any questions or

investigations that may arise. Further, any assistance to retrace

the affected units will be significantly appreciated.

(f) Venmar’s letter to its distributors dated December 18, 2006. (This

generated a list of customers and sometimes entire geographic regions

from particular builders;

(g) Venmar’s letter to the U.S. Consumer Product Safety Commission dated

December 19, 2006;

(h) Webpages for the safety upgrade dated December 19, 2006. Canadian

Press advertisement dated December 21, 2006;

(i) Venmar’s notice to its service centre for repair customers dated December

20, 2006;

(j) Globe and Mail article December 22, 2006;

(k) CSA’s press release dated January 11, 2007;

(l) ESA’s notice dated January 19, 2007 that was prepared jointly with the

Ontario Fire Marshal;

(m) The transcript of a Hamilton tv station episode related to the recall; and

Page: 123

(n) A summary of all media reports.

Evidence of Daniel Forest

[423] With the determination of the cause of the fire in its HRV, Venmar was able

to invent a solution referred to as a Power Plug Adapter by November of 2006.

This adapter was to be connected between the HRV unit and the house electrical

system to cut the power to the motor if it overheated. This adapter could be sent

directly to the homeowner and installed without the need for a service technician.

It was sent to the homeowner free of charge. The plan for notice to Venmar’s

customers was also in place with the expectation that 25 - 45% of the units could

be retraced.

[424] Mr. Forest testified that Venmar’s safety program to send out the adapter

was voluntary. It had been launched before any warnings came from the various

officials that soon arrived. He agreed that Venmar’s program, if “good”, would get

25% of the units traced. Others would be eliminated by other means.

[425] Venmar advised CSA and UL of the problem; however, in December 2006,

the Ontario Electrical Safety Authority contacted Venmar that the ESA wished to

have the adapter certified or it would stop its supply to consumers in Ontario. The

ESA contacted Venmar about their concerns on December 15, 2006. Venmar’s

safety program was already underway to start on December 17, 2006.

Page: 124

[426] Although Venmar did not believe that the adapter needed to be certified, the

ESA held up the correction until June of 2007. The ESA applied to Ontario and

there was also a complaint in New Brunswick but no other jurisdiction, including

the United States, required such a certification.

[427] Venmar and ESA had a meeting towards the end of February 2007 at the

ESA offices. At that time, Venmar explained the theory behind the power plug

solution. However, the solution was not certified and there was no standard to

certify it. Venmar, therefore, tested the items themselves with the certifying agency

to prove that the adapter worked. This was not resolved until early June 2007. The

safety upgrade program was stopped by the ESA in Ontario until that time.

[428] On December 15, 2006, Venmar received correspondence from the Ontario

Fire Marshal with respect to concerns from the Burlington fire department. This

notice did not affect Venmar's program as it was already underway.

[429] Representatives of Venmar met with the Fire Marshal after the program was

launched. Venmar did not hear later from the Fire Marshal if it was satisfied with

the program.

[430] Although some units were available at Home Depot and Rona, Venmar

usually sold to dealers, wholesalers, or mechanical contractors.

Page: 125

[431] Venmar kept track of the number of adapters that were sent out and that

totalled 75,927 units. Mr. Forest agreed that was less than 25% of the total number

units that were manufactured and sold to the consumers. Of the remaining 75% of

the, some may not have been a risk because the motor was replaced or because

they could have worn out and discarded for other reasons.

[432] The cost of the safety upgrade was "well over $100,000." He did not know

the numbers in detail and the cost was ongoing. As at the time of trial, he had no

idea of the total cost.

[433] Mr. Forest was not aware of any notices that went to the Insurance Bureau

of Canada or to other insurers. He does not remember sending any notices to

insurers. He believes that Venmar sent notices to municipalities but was not sure

if that was in Venmar’s affidavit of documents. There are no door hangers, posters,

or postcards in his affidavit of documents.

[434] There is nothing recorded after March 2008 with respect to reports to the

media.

Evidence of Mr. Juneau

[435] Mr. Juneau said that the safety upgrade program was put into place because

the public needed to be aware of the number of cases in the field.

Page: 126

[436] After the adapter was added to the unit, there were no further problems with

over heating.

[437] Mr. Juneau testified that although the ESA were concerned about the small

number of customers contacted, that was only in the early 2007 and Venmar had

barely started with its own program.

Evidence of Daniel Pellerin

[438] Mr. Pellerin was part of the team guiding the safety upgrade process. That

team made all of the important decisions. They first met near the end of 2006. They

did not have a budget because he did not know how much the program would cost

but there were also no budgeted limits. The safety upgrade program is still in place

and although it now has a projected budget within the company budget, it has no

limitation on what could be spent. The top priority was to replace and fix the units.

[439] As part of the program, Venmar set up a management team, prepared an

action plan, carried out communications, certified the plug solution, communicated

with legal and marketing consultants, researched the population and geography of

customers including countries involved. The committee involved human resources

and the IT department. They arranged a web facility and prepared necessary

documentation for communications and messages to be sent to each group of

customers. The effort required teams and sub teams.

Page: 127

[440] The process required them to hire 8 to 10 employees and take other

employees from other departments. The data entry process required extra labour

as well. In his view, they were relatively successful in their efforts, but Mr. Pellerin

does not know the number of responses to consumer requests.

[441] He provided reports to the ESA, Health Canada and CPSC.

[442] If the units had been manufactured in 1995, they would be part of the safety

upgrade program but there were some units that were not included because they

were not equipped Fasco motors.

Evidence of Marie-Soleil Anger

[443] Ms. Anger was employed by Venmar from 2007 to 2016 as a safety upgrade

program agent. She has been employed by Venmar since January 2021 as a

project manager.

[444] When she started with Venmar, she had not been involved in any product

recalls in the past and had no prior education in that area. Instead, she was trained

by Venmar. She was told, more or less, that there was a failing in the field that was

causing fires. She was not aware of the number of fires. She was not part of the

making of the safety plan but was part of implementing it. When she started with

the Venmar program, there were only three others in the division but that ramped

up to twelve employees by 2009. Everyone on the team worked closely together.

Page: 128

There were emails between the members and weekly meetings. She testified that

the program continues to date.

[445] As a member of the safety upgrade program, she placed calls to customers

and replied to customers calls. She spoke with customers who had made direct

purchases from Venmar and consumers who were the end-users similar to the

plaintiffs.

[446] The team members had the same responsibility in the program as she had.

They made phone calls to customers and received calls from them. There were

eight numbers for customer calls. The team prepared and sent letters, completed

files, contacted and replied to customers, and computerized information.

[447] When Ms. Anger started in 2007, she and her colleagues prepared

information for TV, door hangers and postcards, newspaper, and radio notices.

They sent out bulk letters to those who had provided warranty cards. They

contacted fire departments in Ontario and Québec and provided letters with

instructions and a poster to give further notice.

[448] A lot of effort went into finding consumers and searching records. There was

always an urgency to get the work done. Whenever the team made contact with

purchasers, they used that information to make contacts in those postal codes and

areas that were building at the same time as the units were sold. This practice

continued throughout Canada and the US.

Page: 129

[449] The team was able to contact service centres that Venmar was aware of

from warranty work to provide other customer names. They contacted wholesalers,

retailers, builders’ associations, and real estate agents. They monitored Kijiji to see

if units were being sold throughout the country.

[450] She believes that approximately 300,000 consumers called them between

2006 and 2012 as part of the program. (Although that dealt with other recalls than

strictly related to this product.) She believes that they sent out approximately

150,000 letters to the US and Canada. As far as she knew, the wording for those

letters was chosen by Venmar but she recalls that Venmar had met with outside

consultants to discuss the product recall and the language of the letter.

[451] Ms. Anger and her team were not asked to do anything different by the ESA,

the Ontario Fire Marshal, or the Canadian Standards Association.

[452] Venmar had challenges contacting consumers since those who were

contacted thought that they were contacted for publicity or sales rather than a

safety warning.

[453] Her team did not have budgetary restraints and there were no limitations on

their requests from the company. They had direct IT assistance.

[454] They did not find the plaintiffs’ address in their database nor the address of

Mr. Rowley.

Page: 130

[455] Each serial number of a unit became a file and the information obtained was

saved in that file. She was told that it was important work and that she should track

the records and document everything that she was doing. Information that was

obtained was put in an information database. This was a system created for the

customer relationship management program. Warranty cards from customers

were also put into the database. The paper cards were then archived. She agreed

that the computerized system was important to the process. She used it last in

2016 but it is still around today. The addresses for letters and door hangers was

also placed in that database.

[456] From her review of Venmar's affidavit of documents, there is nothing in it

about this database.

Evidence of James Bennett

[457] James Bennett is employed with the Ontario Fire Marshal. Mr. Bennett was

called by Fasco but there is little doubt that he was an impartial and objective

witness. He had evidence that assisted each party. One of the parties had to call

him to give evidence; I place no weight on the fact that he was called by Fasco.

[458] Mr. Bennett graduated as a civil engineer in 1990 and is a professional

engineer in Ontario. In 1997, he started work for a forensic fire investigator. In

2005, he joined the Ontario Fire Marshal as a forensic engineer in the fire

investigation services. He has been there throughout.

Page: 131

[459] In his fire investigations, he seeks to find out what caused a fire in order to

improve safety. Out of 6000 annual fires, the Fire Marshal might investigate 600

fires where there is an issue of public interest, a large loss of property, deaths, or

gas explosions.

[460] The Fire Marshall first became aware of a fire related to a Venmar HRV in

Burlington in 2006. At the time of this investigation, he was not aware of any other

fires from Venmar HRVs.

[461] When he examined this unit on November 1, 2006, representatives of

Venmar and Fasco were there. Venmar’s representatives said that they were not

aware of any other fires; however, Mr. Goldin said that he was aware of 22 fires,

but they were not necessarily Venmar units and he did not provide further details.

After Mr. Goldin told him about other fires, Mr. Bennett spoke with Venmar’s

representatives. They told him that they were aware of Venmar fires but were

uncomfortable providing information about other fires to other parties at the time.

[462] Mr. Bennett was otherwise content that Venmar was voluntarily collaborating

with the OFM and the ESA.

[463] In mid-December 2006, the Burlington fire department and the Office of the

Fire Marshal sent out a news release even though they were not sure of the cause

of the fire. That was sent out on a Friday and he was aware that Venmar advertised

Page: 132

on Monday about its adapter. As a result of notices sent by Venmar to the

Burlington neighbourhood, there were other reports of motors overheating.

[464] Mr. Bennett discussed the adapter solution with the ESA and the CSA, but

the ESA did not approve; it wanted the adapter to be certified. He was aware that

in February 2007, Venmar agreed to proceed with the certification. By that time,

he was aware of 18 field reports naming similar fires. On June 1, 2007, the ESA

approved the adapter.

[465] Mr. Bennett carried out his own examination of the adapter in September of

2007 to satisfy the Ontario Fire Marshal. He found that the adapter functioned

properly before the fire occurred.

Responding Evidence

[466] There was no evidence led by the plaintiffs with respect to the standard in

the industry as to what type of warning was required in these circumstances.

[467] Fasco called only Mr. Flynn on this topic.

Evidence of Michael Flynn

[468] Mr. Flynn was accepted on consent as an expert in the adequacy of the

safety upgrade recall program of Venmar. Fasco elected not to rely on his evidence

in argument. For the reasons set out above, his evidence is rejected.

Page: 133

Analysis and Decision

[469] The plaintiffs submit that Venmar failed “dismally” in its notifications to the

public in general and the plaintiffs specifically. On this evidence, I cannot make

that finding.

[470] There is, of course, no doubt that the plaintiffs did not receive notice but that,

in and of itself, does not show negligence on Venmar’s part.

[471] The plaintiffs have provided no evidence to show that Venmar fell below a

required standard. While both the plaintiffs and Fasco make argument about what

evidence Venmar failed to produce, it must be remembered that the onus falls on

them to show that Venmar fell below the standard of care; it is not up to Venmar

to prove its efforts.

[472] I cannot fault Venmar for failing to notify the community until it knew what

the problem was. It would be unworkable for Venmar to have an obligation to warn

customers of what it saw as Fasco’s failings. Once the problem was found, Venmar

acted quickly and forcefully. A delay was caused by the cautiousness of the ESA.

It eventually approved Venmar’s solution; neither the ESA nor Venmar can be

faulted for that delay.

[473] It is true that there is evidence that the Ministry of Community Safety and

Correctional Services wrote to the ESA September 18, 2007, saying that “in the

past 16 months [Venmar] have only been able to address 7% of the 55,000 units

Page: 134

in Ontario” and asks for the ESA’s “assistance in taking action against Venmar to

have them accelerate and improve its repair and replacement program.” However,

there is no evidence that the ESA made any further complaints to Venmar. As can

be seen, the repair and replacement could not start in earnest until the solution

was accepted by the ESA in June of 2007.

[474] Further by April 28, 2009, the US Consumer Product Safety Commission

stated that it had reviewed the corrective action plan of Venmar and “determined

that no further monitoring on the part of the staff is warranted” and closed its file.

That letter threatened that the Commission would reopen the file “if it finds that

[Venmar’s] corrective actions do not adequately protect the public from the risk of

injury presented by this product.” There is no evidence that it did so.

[475] I find that the notices as set out above sent out were fair to both Venmar and

the public.

[476] There is no doubt that Venmar has failed to provide a great deal of

documentary evidence to support its defence. It failed to live up to its obligations

to provide a complete Affidavit of Documents. Much of that evidence, such as the

computer records of Ms. Anger’s department, is obvious. An itemized budget of

what was spent would have been helpful. Undisclosed documents arrived mid-

examination of Venmar witnesses and mid-cross examination of Fasco witnesses.

Page: 135

Some evidence was contrary to answers given at examination. And of course,

Venmar was not candid with the Ontario Fire Marshall.

[477] Fasco and the plaintiffs submit that I should be doubtful of the credibility of

Venmar’s witnesses on this point. They submit that I should draw an adverse

inference against Venmar for its failure to provide more evidence on his issue

[478] . Fasco relies upon the case of 2152222 Ontario Limited v. 2173435 Ontario

Inc. 2016 ONSC 2978. There, Justice Quinlan summarized the law with respect

to adverse inferences at paras. 40-41:

In Parris v. Laidley, the Court of Appeal considered when it is

appropriate to draw an adverse inference:

Drawing adverse inferences from failure to produce evidence is

discretionary. The inference should not be drawn unless it is warranted

in all the circumstances. What is required is a case-specific inquiry into

the circumstances including, but not only, whether there was a

legitimate explanation for failing to call the witness, whether the witness

was within the exclusive control of the party against whom the adverse

inference is sought to be drawn, or equally available to both parties, and

whether the witness has key evidence to provide or is the best person

to provide the evidence in issue.

In the Law of Evidence in Canada, the test for drawing an adverse

inference is described as follows:

In civil cases, an unfavourable inference can be drawn when, in the

absence of an explanation, a party litigant does not testify or fails to

provide affidavit evidence on an application, or fails to call a witness

who would have knowledge of the facts and would be assumed to be

willing to assist that party. In the same vein, an adverse inference may

be drawn against a party who does not call a material witness over

whom he or she has exclusive control and does not explain it

away. Such failure amounts to an implied admission that the evidence

Page: 136

of the absent witness would be contrary to the party’s case or at least

would not support it. [Citations omitted].

[479] While there is no explanation for Venmar’s failure to produce the expected

evidence, there is still ample evidence to support its position. I do not accept that

an adverse inference can be used to negate other admissible evidence. There is

no reason to reject Ms. Anger and Mr. Pellerin’s evidence or the objective exhibits

that confirm the efforts put forth by Venmar. There is no evidence contrary to that

evidence that needs to be negated by the evidence that has not been disclosed.

In this case, I do not find that such an inference can be made against Venmar.

[480] The plaintiffs suggest that Venmar should have produced evidence of whom

it informed about the risk of fire. That argument fails for two reasons. First, had

such evidence been called, the plaintiffs would have quite properly responded with

the argument that such evidence was limited and more should have been provided.

Second, and more importantly, there is no reason to reject Venmar’s evidence that

75,927 adapters were sent out to notified consumers. Mr. Bennett confirms that

notices in the Burlington area brought forward other units and exposed more

overheating concerns. Globe and Mail readers were notified. Hamilton television

watchers were notified. The relevant regulatory agencies were notified.

[481] Both the plaintiffs and Fasco make much of evidence that was not called but

did not confront the evidence that was called by Venmar and that they did not reply

to. I reject the plaintiffs’ submission that Venmar “failed dismally” to send notice to

Page: 137

consumers of its product. To say that is to simply ignore the evidence that is before

me.

[482] Accordingly, there is no evidence before me of how this program fell below

any standard. No regulatory agency faulted the program other than in its early

stages. I am in no position to fault Venmar.

[483] In Dickson v. Broan-Nutone Canada Inc., 2008 ONCA 734, the Ontario

Court of Appeal dismissed the plaintiff’s appeal because, inter alia, the appellants

led no evidence about the industry standard or what an acceptable warning should

have been.

[484] I decline to find any negligence with Venmar’s efforts to warn the plaintiffs.

That is not to find that Venmar did all that it could. I simply decline to make a

finding of negligence on this allegation by the plaintiffs and Fasco.

Did Fasco take Sufficient Steps to Notify Customers?

[485] Venmar and the plaintiffs rely on Bow Valley Husky (Bermuda) Ltd. Saint

John Shipbuilding Ltd., [1997] 3 S.C.R. 1210, at p. 1229, to submit that Fasco had

a duty to warn the plaintiffs of the risk of fire. I agree with Fasco that Bow Valley

does not assist. There, all parties were closely related and aware of their

involvement in the drilling rig in issue. Here, Fasco had no knowledge of the

plaintiffs. The only customer that Fasco was aware of was Venmar.

Page: 138

[486] In Bow Valley, the Supreme Court described the law on duty to warn as

follows:

The law may be simply stated. Manufacturers and suppliers are

required to warn all those who may reasonably be affected by

potentially dangerous products. This duty extends even to those

persons who are not party to the contract of sale: The potential user

must be reasonably foreseeable to the manufacturer or supplier-

manufacturers and suppliers […] do not have the duty to warn the

entire world about every danger that can result from improper use of

their product.[ Citations removed].

[487] Venmar was the only reasonably foreseeable user to Fasco and, as set out

above, Venmar had the responsibility to ensure that its unit was safely designed

for use. Fasco had no need to send out a safety recall notice; 100% of its

customers, Venmar, knew of the problem.

[488] Further, Fasco was entitled to rely upon Venmar as a “learned intermediary”

between it and the plaintiffs. In Hollis v. Dow Corning Corp., [1995] 4 S.C.R. 634,

the Supreme Court of Canada described this principle when discussing whether it

could remove a manufacturer’s duty of care, at paras. 27-29:

As a general rule, the duty to warn is owed directly by the manufacturer

to the ultimate consumer. However, in exceptional circumstances, a

manufacturer may satisfy its informational duty to the consumer by

providing a warning to what the American courts have, in recent years,

termed a "learned intermediary.

. . .

Generally, the rule is applicable either where a product is highly

technical in nature and is intended to be used only under the supervision

of experts, or where the nature of the product is such that the consumer

Page: 139

will not realistically receive a direct warning from the manufacturer

before using the product. In such cases, where an intermediate

inspection of the product is anticipated or where a consumer is placing

primary reliance on the judgment of a "learned intermediary" and not the

manufacturer, a warning to the ultimate consumer may not be

necessary and the manufacturer may satisfy its duty to warn the ultimate

consumer by warning the learned intermediary of the risks inherent in

the use of the product.

However, it is important to keep in mind that the "learned intermediary"

rule is merely an exception to the general manufacturer's duty to warn

the consumer. The rule operates to discharge the manufacturer's duty

not to the learned intermediary, but to the ultimate consumer, who has

a right to full and current information about any risks inherent in the

ordinary use of the product. Thus, the rule presumes that the

intermediary is "learned", that is to say, fully apprised of the risks

associated with the use of the product. Accordingly, the manufacturer

can only be said to have discharged its duty to the consumer when the

intermediary's knowledge approximates that of the manufacturer. To

allow manufacturers to claim the benefit of the rule where they have not

fully warned the physician would undermine the policy rationale for the

duty to warn, which is to ensure that the consumer is fully informed of

all risks. Since the manufacturer is in the best position to know the risks

attendant upon the use of its product and is also in the best position to

ensure that the product is safe for normal use, the primary duty to give

a clear, complete, and current warning must fall on its shoulders.

[489] As I have set out above, Venmar had an obligation to be as knowledgeable

as Fasco and Fasco could rely upon that. Fasco had no obligation to warn the

plaintiffs of the risk of fire.

[490] Even if Fasco had an obligation to warn the plaintiffs, it is not clear as to how

that could be done. The evidence shows that Fasco did not have a list of Venmar’s

customers. It would be a significant obligation for component suppliers to become

“whistle blowers” with respect to manufacturers who are its own customers. As set

Page: 140

out above, there is no authority to suggest that Fasco had a duty to warn the entire

world about every danger that can result from the improper use of its product.

[491] I find that Fasco was not negligent with respect to a warning to Venmar or

the plaintiffs.

What were the terms of the Contract Between Venmar and Fasco?

Overview

[492] Venmar and Fasco dispute the terms of the purchase and sale contract

between them. Fasco submits that the parties were bound by the terms and

conditions set out in its confirmations and invoices to Venmar. By those terms,

Venmar is to indemnify Fasco with respect to any liability relating to Fasco’s motor.

Venmar denies that it is bound by those terms.

[493] Although I have found no liability on the part of Fasco, I must still determine

this contract issue in case I am wrong on the tort/negligence issues.

[494] The significant terms and conditions in dispute are as follows. I have

replaced “Buyer” and “Fasco” in the original with Venmar and Fasco respectively.

10. INDEMNIFICATION Venmar shall defend, indemnify and hold

harmless Fasco and its shareholders, directors, officers, affiliates,

predecessors, successors and assigns, from and against any and all

claims, actions, causes of action, liabilities, liens, losses and costs

(including, without limitation, the costs of litigation and attorney's fee),

relating to the Goods or any device, material or thing to which the Goods

or attached or of which the

Page: 141

Goods are made a part of or within which the Goods are enclosed,

regardless of whether Fasco may be wholly, concurrently, partially,

jointly or solely negligent or otherwise at fault.

11. LIMITATION OF LIABILITY IN GENERAL Except as provided

herein, in no event whatsoever shall Fasco or any of its shareholders,

directors, officers, affiliates, predecessors, successors and assigns, be

liable to Venmar or any of its shareholders, directors, officers, affiliates,

predecessors, successors and assigns, for any loss or damages of any

kind, whether direct, incidental, consequential, exemplary, special or

otherwise relating in any way to this Agreement or acts or omissions in

connection herewith (including, without limitation, the performance or

non-performance of this Agreement and the use of or the loss of use of

any of the Goods or other property), regardless of whether the Fasco

and/or others may be wholly, concurrently, partially, jointly or solely

negligent or otherwise at fault.

[495] The terms and conditions also confirmed that the contract was to be

construed and interpreted in accord with the laws of the state of Missouri and the

courts of Missouri have the exclusive jurisdiction to decide the case.

Evidence of Daniel Forest

[496] Mr. Forest had no role in negotiating a contract with Fasco and was not

aware of any contract with Fasco. He worked with the purchasing department but

did not authorize any of the purchases himself. He had not seen the general terms

and conditions before the litigation commenced but he agreed that those terms

and conditions were provided by Fasco on either its acknowledgement form or

invoice.

[497] When Venmar ordered parts, he placed an order and Fasco acknowledged

that order. Within six to eight weeks, Venmar was invoiced when the part was

Page: 142

ready and Venmar then paid the bill. Although the two companies negotiated price,

they did not otherwise negotiate terms.

Evidence of Daniel Pellerin

[498] Mr. Pellerin has been the Vice President of Finance for Venmar since July

1985. In 1985, Venmar had 75 employees and generated approximately 7 million

in revenue from sales. It presently has 400 to 450 employees. As VP Finance, he

is responsible for all financial issues for the company, but he is not involved with

procurement.

[499] Within his responsibilities, he ensures that transactions are properly carried

out in accord with internal controls such that all proper documentation for payment

of invoices is obtained.

[500] It is also part of his responsibilities to maintain the contracts in one place.

On three occasions, he has been involved in due diligence necessary to find the

contracts between Venmar and others. The first time he conducted this due

diligence was in 1987 when the company went public for a short time. In 1995, the

company was bought by another corporation and in 2016 it was purchased by yet

another. During those investigations, Mr. Pellerin did not find of any contracts with

Fasco. He is presently in yet another process of due diligence and is not aware of

any present contracts with Fasco.

Page: 143

[501] He was aware that Fasco was the motor supplier when he started with

Venmar. While he had no direct contact with Mr. Alexander, he was aware that Mr.

Alexander was Fasco’s sales representative.

[502] Mr. Pellerin was not aware of the Fasco terms and conditions until this

litigation was under way. Although he had looked for contracts with suppliers, he

did not look at purchase orders for those terms because that was not his

department.

Evidence of Lynda Gaudreau

[503] Ms. Gaudreau is presently the director of supply at Venmar. She was a

senior buyer from 2000 to 2007 and then returned to Venmar in 2013. At that time,

she was once again a senior buyer. As part of her job, she negotiated prices and

supported other buyers. She was involved with the purchase of many component

parts including motors, capacitors, circuit board, boxes, etc. but she had no

authority to sign contracts. At present, she is the most senior person in Venmar’s

purchasing department.

[504] When she started at Venmar in 2000, she was trained by the outgoing buyer

as to the processes that had been followed in the past. She was not aware of any

changes in the process. To purchase an item, she needed a requisition and then

she would issue a purchase order. She was, of course, not involved with Fasco at

the time of the purchase and sale of this motor in 1994.

Page: 144

[505] With respect to Fasco motors, the sales and forecasting team would forecast

what would be produced in the future. Minimum orders were then made for

inventory. Requisitions were issued, and purchase orders were forwarded.

Venmar then received a confirmation from Fasco by fax.

[506] Purchases were made by a purchase order in all cases. The purchase order

was then confirmed by Fasco. There were no other steps in the order process.

These were the only documents that she saw surrounding a purchase from Fasco.

She was unaware of any master contract between the two companies.

[507] Ms. Gaudreau was shown an acknowledgement from Fasco to Venmar for

an order. This was not a form that she received at the purchasing department and

she did not recognize the document. It states at the bottom:

We have received your order for the goods described above. Your

order is accepted conditionally on the terms and conditions of sale

appearing above and on the reverse side of this form. You (referred to

on the reverse as “Buyer”) shall be deemed to have accepted such

terms and conditions if you fail to specifically reject in writing any such

terms and conditions with five (5) days of the date of this

acknowledgment.

[508] She had not seen the general terms and conditions of sale from Fasco and

thought that was for a different department. She had not been told of any terms or

conditions for the purchase and sale of Fasco motors.

Page: 145

Evidence of Gary Alexander

[509] Filed in evidence were documents outlining the correspondence between

the two companies. Mr. Alexander described the Fasco order process for Venmar.

[510] Venmar provided specifications and information relating to the motor either

to him or Fasco’s engineering department. Venmar then requested a sample motor

to be built by the Fasco’s engineering department. Fasco might then ask for further

information but the motor would then be designed and built. Fasco’s prototype was

then shipped to Venmar. If Venmar was satisfied with the motor, it provided a

written approval. The motor was then produced and sent for a quote. The quote

was then sent to Venmar’s purchasing and engineering department with an order

acknowledgement and invoice which included the terms and conditions. Those

terms and conditions have been the same throughout his time at Fasco. He was

not aware of any changes to the terms and conditions prior to his employment.

[511] In 1997 or early 1998, Venmar requested a change to these terms from a

30-day payment to 45-day payment period. He passed that request on to Fasco

and it was granted. The terms and conditions on the document, except the 45-day

extension that was added to Venmar’s account, remained the same.

Fact Finding

[512] I must first resolve a factual issue with respect to the purchasing process. I

accept Mr. Alexander’s evidence about the order of documents and approvals.

Page: 146

Venmar’s evidence on this point is unhelpful. None of the Venmar witnesses had

direct involvement with all of the documents in issue. No witnesses that were

involved with the process were called from the engineering department. Combined,

Venmar’s witnesses could not testify as to the entire process or flow of documents

involved in such a purchase. Here, I draw the adverse inference that Venmar’s

witnesses would have confirmed Fasco’s evidence that the terms and conditions

attached to the acknowledgment were to be accepted before Fasco accepted the

contract to create the motor as requested by Venmar.

[513] I find that the order of processing purchases and sales was:

(a)Venmar sent Fasco a purchase order;

(b)Fasco sent Venmar an acknowledgment of the purchase order with the

terms and conditions set out above;

(c) If the purchase order was for a new or modified motor, Fasco sent the

acknowledgement along with the production drawings. In order for the motor

to be constructed, Venmar had to sign and send back the production

drawings to confirm what Fasco was producing;

(d)Fasco invoiced Venmar and the invoices included the terms and conditions;

and

(e)Venmar paid the invoice.

Page: 147

[514] The evidence from all parties is that this flow of documents carried on for

years without comment or complaint from Venmar’s representatives. The parties

discussed the payment terms on one occasion, but the evidence is otherwise silent

on any other discussion about these terms.

Evidence of Michelle Corrigan Erikson

[515] Ms. Corrigan Erikson gave evidence on behalf of Venmar. On consent, she

was allowed to give expert opinion evidence with respect to Missouri contract law,

commercial transactions, and supply chain agreements. I agree with that she is

qualified to give that evidence.

[516] Ms. Corrigan Erikson is a practising lawyer focusing on products liability.

She also writes supply chain agreements and warranties. About 60% of her

practice is commercial litigation and about 40% is what she refers to as "regulatory

work." She has been in practice since 1997.

[517] She explained the U.S. Uniform Commercial Code. She explained that

Missouri adopted the entire Code in 1990. This Code therefore applies to Missouri

contracts as of 1990.

[518] She explained that while contracts do not have to be written, they do, as in

Ontario, need to include an offer, acceptance, and consideration. The terms of a

contract may be determined by written terms, conduct, or circumstances.

Additional terms may be added to a contract, but those additional terms could be

Page: 148

considered a counteroffer and require affirmative acquiescence to be added to the

original contract.

[519] Affirmative acquiescence to those new terms can be found by other written

documents, verbal terms, or a course of dealing. However, if there is no affirmative

acquiescence to the new terms, they do not form part of the contract.

[520] If the new terms are unconscionable or materially alter the initial contract,

affirmative acquiescence becomes even more significant. If those terms are not

understood or unconscionable, they would not be added to the contract. This

particularly relates to warranties and indemnities because there is already an

implied warranty of merchantability in the UCC.

[521] In Ms. Erikson’s opinion, the terms and conditions as set out above:

would likely be found by a Missouri court to materially alter the

agreement between the parties, because they would cause an unfair

surprise to Venmar to which Venmar did not expressly consent.

Therefore, it is my expert opinion that such terms and conditions in the

acknowledgement would not be interpreted as part of the contract

between Fasco and Venmar absent an express agreement by Venmar.

[522] In Ms. Corrigan Erikson’s view, the initial offer is in the purchase order from

Venmar and not the acknowledgment form from Fasco. Accordingly, the contract

is the purchase order and its acceptance by Fasco, and the additional terms and

conditions were not accepted by Venmar. Since those terms and conditions were

not sufficiently conspicuous, they would not form part of the contract. She did agree

Page: 149

that they might be added to the contract depending on the sophistication of the

parties.

[523] Ultimately, it was Ms. Corrigan Erikson’s opinion that even if these

acknowledgment and invoice forms had been used between 1984 and 1994, the

terms were on both the invoice and the confirmation, and the parties were

sophisticated entities, there would still need to be an express acceptance by

Venmar for the terms and conditions to be part of the contract.

[524] In her view, conspicuous terms need to be discussed in some way over the

course of the party’s conduct. She did agree that the cases she relied upon were

all determined by their individual facts. Whether a particular course of conduct was

sufficiently conspicuous to uphold a warranty could depend on the conduct and

sophistication of the parties. She did not disagree that the duration and number of

transactions could also be a factor as to whether the terms and conditions would

be added to the contract. In her opinion, the courts would look to the UCC first and

then the case law as illustrations to explain the law in its application.

Evidence of Amy Schmitz

[525] Ms. Schmitz was also consented to be an expert to give opinion evidence in

the field of Missouri contract law. I agree with that assessment.

Page: 150

[526] Ms. Schmitz has been a professor of contract law at the University of

Missouri School of Law since 2016. She was a professor of law at the University

of Colorado School of Law since 2011. She has taught contract law since 2000.

[527] Ms. Schmitz’ opinion is also based primarily on the UCC and how it relates

to business relations and the course of conduct between two businesses. In her

opinion, these terms and conditions would apply to this contract. She says that the

terms and conditions became part of the contract particularly because there was

a continuous practice in the inclusion of these terms.

[528] In her view, Fasco’s terms and conditions follow the law when they were

drafted. They are bolded and time limited. In a business-to-business situation,

these terms are conspicuous. Even if Venmar was not aware of the terms and

conditions, because the terms are sufficiently conspicuous, Venmar would be

deemed to have known of them.

[529] Ms. Schmitz opined that Missouri generally enforces indemnification clauses

in business-to-business transactions. Missouri law allows parties that are on equal

footing to agree to indemnify the other against the results of the other's own

negligence but only if this intent is clear and unambiguous. Missouri courts

nonetheless aim to read contracts in context and are more prone to enforce

indemnification clauses in contracts between sophisticated businesses.

Page: 151

Analysis and Decision

[530] I agree with the parties that both witnesses were well qualified to give their

opinions; however, I prefer the evidence of Ms. Schmitz over that of Ms. Corrigan

Erikson for the following reasons.

[531] Ms. Corrigan Erikson is primarily a litigator. I do not believe that she fully

understood that her role as an expert was to assist the court. Rather than providing

me with the law that I needed to apply, she appeared to argue the case for Venmar.

She was helpful in providing the principles that were in play but then she chose the

facts best for Venmar to argue the result. Much of her opinion rested on what she

assumed to be oral agreements between the parties but there was no evidence of

those discussions before me.

[532] Ms. Corrigan Erikson was not conversant with the cases relied upon by both

experts. In cross-examination, she hesitated and needed to review cases relied

upon by Ms. Schmitz. Ms. Schmitz was conversant and appeared comfortable with

the various factors in play in the caselaw analysis.

[533] Ms. Corrigan-Erikson’s opinion changed over the duration of her evidence.

At first, she was clear that “it is my expert opinion that such terms and conditions

in the acknowledgement would not be interpreted as part of the contract between

Fasco and Venmar absent an express agreement by Venmar." However, by the

Page: 152

end of the day, she agreed that there are a variety of factors to consider and it

would be up to the court as a matter of factual interpretation.

[534] In contrast, I found Ms. Schmitz more able to focus on the law and the factors

to be considered rather than provide a definitive position on the result. That said,

she was certainly supportive of Fasco’s position.

[535] Where Ms. Schmitz differs from Ms. Corrigan-Erikson, I accept the views of

Ms. Schmitz.

[536] In the end, however, there was not much difference between the two as to

the legal principles to apply. They both agreed that the UCC applies and the facts

of each case will determine whether the terms and conditions form part of the

contract; the course of dealing may be decisive. The case law provided by both

parties confirms that opinion. In argument, counsel compared and contrasted the

facts in the caselaw to support their analysis of each case. That simply confirms

the experts’ opinions; it often turns on the facts of the case.

[537] I accept the expert evidence to provide me with the legal analysis that would

determine a Missouri judges’ decision. In my view, however, it is for me to make

that determination on the facts of this case and not for the experts.

[538] The facts that I rely on here are:

Page: 153

1. Fasco and Venmar are sophisticated commercial entities and there is no

imbalance of power between them.

2. The terms and conditions had passed between them for many years

without change or objection.

3. Venmar confirms that it received the documents and the only discussions

that followed were with respect to the terms of payment.

4. At least with respect to custom made motors, Venmar confirmed the terms

and conditions when it signed off on the production drawings.

5. Venmar’s purchase order did not include any terms or conditions. This is

not a case of competing terms and conditions between the parties.

[539] On that basis, there was a course of dealing between the parties that

establishes a common basis of understanding to show their agreement to the

terms and conditions.

[540] I find that the terms and conditions were conspicuous; a reasonable person

in Venmar’s position would have noticed them. The terms and conditions take up

more than half the document and were produced twice per transaction in most

cases or at least once in others. The terms and conditions were bolded. They were

produced regularly and without exception. There is no unfair surprise to Venmar in

Page: 154

the presentation of these terms and conditions. Given the course of dealing, I can

find that Venmar agreed to them.

[541] Venmar argues that it would be unconscionable to enforce these terms. I do

not agree. I find that Fasco’s terms and conditions were reasonable in these

circumstances. Fasco was wise to include these terms in its dealings with its

customers for the very facts that are found here. Fasco is not in a position to know

how its motors will be used. Fasco can rely upon its confirmation document along

with Venmar’s silence and continued business to presume that Venmar was

insuring itself in case of liability. I find that Fasco is acting commercially reasonably.

As Ms. Schmitz referred to in her caselaw review: “Sellers usually do not ship, and

buyers do not receive goods unless they think they have struck a deal.”

[542] Lastly, Venmar argues that if the terms and conditions are to be included,

then the action should be tried in the jurisdiction of Missouri. This appears to have

been raised for the first time in argument; it is not pleaded in Venmar’s crossclaim.

Although Fasco pleaded the terms of the contract, Venmar did not file a defence

to that claim. No motion was brought prior to this trial for a stay on jurisdiction

grounds.

[543] In my view, Venmar is raising this issue too late to be successful.

[544] In Wolfe v. Pickar, 2011 ONCA 347, 332 D.L.R. (4th) 157, Justice Goudge

said, at para. 44:

Page: 155

[W]hen a party to an action appears in court and goes beyond

challenging the jurisdiction of the court based on jurisdiction

simpliciter and forum non conveniens, the party will be regarded as

appearing voluntarily, thus giving the court consent-based jurisdiction.

[545] This issue was brought forward late in the litigation without a proper motion

to stay the action. Neither party provided a comprehensive analysis relying on the

leading jurisdiction case of Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012]

1 SCR 572 and neither referred to it in argument. I need not determine this issue;

however, I am confident that, properly considered, jurisdiction for this case lies with

Ontario. The defendants are necessary parties to the plaintiffs’ action. The

damages were suffered in Ontario. Most of the evidence is in Ontario. The only

Van Breda factor that appears to support Missouri as the appropriate jurisdiction

are the terms and conditions in the contract between Fasco and Venmar. Had this

motion been properly brought, I expect that the proper jurisdiction and forum

conveniens for this litigation is exactly where it occurred.

[546] I find that Venmar is bound by the terms and conditions as alleged by Fasco.

Had Fasco been found liable, Venmar would have had to indemnify Fasco.

Decision

[547] In their submissions, the plaintiffs asked that I make determinations on the

several issues; I answer them as follows:

(a) Is Tecumseh (now Fasco) liable to the plaintiffs for the negligent design of

the motor? No

Page: 156

(b) Is Venmar liable to the plaintiffs for the negligent design of the Venmar

HRV? Yes

(c) Is Venmar liable to the plaintiffs for failing to warn of the design deficiencies

and the risk of fire? The evidence does not allow me to make that finding.

(d) Is Tecumseh (now Fasco) liable to the plaintiffs for failing to warn of the

design deficiencies and the risk of fire? No

(e) If Tecumseh and Venmar are both liable to the plaintiffs, what is the

appropriate apportionment of liability? Not applicable.

(f) If Venmar is liable to the plaintiffs, in what amounts must it compensate the

plaintiffs for:

(i) The subrogated and pecuniary losses? The plaintiffs suffered a loss

of $1,073,739.00 being the subrogated claim of $1,041,758.73 and the

plaintiffs’ special damage claim of $31,980.28.

(ii) The non-pecuniary losses of loss of use and enjoyment, irreplaceable

heirlooms and mental distress? $60,000.00

Page: 157

Costs

[548] If costs cannot be agreed upon, the plaintiffs and Fasco shall provide their

costs submissions within the next 20 days. Venmar shall provide its response

within 20 days thereafter.

[549] Each submission shall be no more than ten pages, not including any Bills of

Costs or Offers to Settle. No reply submission will be accepted unless I request it.

If I have not received any submissions within the time frames set out above, I will

assume that the parties have resolved the issue and I make no order as to costs.

[550] Neither party need include the authorities upon which they rely so long as

they are found in CanLII and the relevant paragraph references are included.

[551] Any costs submissions shall be forwarded to my office in Guelph by

electronic transfer to [email protected] or by mail to Guelph Superior

Courthouse, 74 Woolwich St., Guelph, N1H 3T9.

Justice Lemon

Justice G. D. Lemon

Released: January 21, 2022

Page: 158

CITATION: Burr v. Tecumseh, 2022 ONSC 0412

COURT FILE NO.: CV-14-831

DATE: 2022 01 21

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Leroy Burr and Joan Callister

Plaintiffs

– and –

Tecumseh Products of Canada, Limited,

Tecumseh Products Company and Venmar

Ventilation Inc.

Defendants

REASONS FOR JUDGMENT

Justice G.D. Lemon

Page: 159

Released: January 21, 2022