September 29, 2017
Vézina, Mainville, Healy
Appeal from a judgment of the Superior Court allowing a claim for damages in the amount of $5,661,830 and dismissing a counterclaim for $95,720. Allowed in part, with dissenting reasons ($78,900).
The appellants sold a bedplate and reconditioned crankshaft to the respondents for one of their ships. The components of the crankshaft were assembled at the appellants’ plant. Some ten months later, the motor suffered a major breakdown, and the ship was immobilized for several months. The damages sustained by the respondents is admitted to be $5,661,830. It is also admitted that the cause of the breakdown was the insufficient tightening of a bolt on a connecting rod of one of the pistons attached to the crankshaft. According to the respondents, this insufficiency was caused by the appellants’ plant employees at the time of assembly, whereas the appellants assert that it was the result of subsequent actions carried out by the respondents’ employees. In addition, the appellants invoke clauses limiting the contractual warranty to six months and limiting their liability in the case of latent defects. The respondents reply that these clauses are not enforceable under Quebec civil law. The trial judge agreed with the respondents and ordered the appellants to pay them $5,661,830.
The trial judge erred in law by failing to refer to ss. 22(2)(m) and (n) of the Federal Courts Act (R.S.C. 1985, c. F-7) to determine the applicability of Canadian maritime law. These provisions expressly concern the contract in dispute concerning the supply of motor parts to repair a ship. The action is therefore subject to Canadian maritime law. It is the common law rules of tort that apply in this case rather than the civil law rules of delictual liability. The judge did not err in her assessment of the facts in concluding that the goods supplied by the appellants contained a latent defect affecting an essential characteristic rendering them unfit for their intended purpose. However, there is no reason to exclude the validly negotiated clause in the contract limiting the appellants’ liability. Consequently, the damages are reduced to $78,900. For his part, the dissenting judge would have dismissed the appeal because, in his view, the appellants limited the warranty against latent defects without discharging their obligation to repair the damages caused to others by their fault. In his view, Quebec civil law should apply.
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