New Brunswick Power Corp. v. Westinghouse Canada Inc. et al., (2006) 309 N.B.R.(2d) 299 (TD)

• Judge: Garnett, J.
• Court: Court of Queen's Bench of New Brunswick (Canada)
• Case Date: October 15, 2003
• Jurisdiction: New Brunswick
• Citations: (2006), 309 N.B.R.(2d) 299 (TD);2006 NBQB 370

N.B. Power v. Westinghouse (2006), 309 N.B.R.(2d) 299 (TD);

    309 R.N.-B.(2e) 299; 799 A.P.R. 299

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2006] N.B.R.(2d) TBEd. NO.020

New Brunswick Power Corporation (plaintiff) v. Westinghouse Canada Inc. and Asea Brown Boveri Inc. (defendants)

(F/C/103/02; 2006 NBQB 370)

Indexed As: New Brunswick Power Corp. v. Westinghouse Canada Inc. et al.

New Brunswick Court of Queen's Bench

Trial Division

Judicial District of Fredericton

Garnett, J.

November 2, 2006.

Summary:

The plaintiff alleged that the power trans­formers that it purchased from the defendant Westinghouse contained a design defect. The plaintiff commenced an action alleging breach of contract and negligence.

The New Brunswick Court of Queen's Bench, Trial Division, dismissed the action.

Editor's Note: for a related case involving these parties see 263 N.B.R.(2d) 279; 689 A.P.R. 279.

Contracts - Topic 2107

Terms - Express terms - Warranty clauses - NB Power alleged that the power trans­formers that it purchased in the 1970s from Westinghouse contained a design defect - NB Power commenced an action alleging, inter alia, breach of contract - The con­tractual warranty period had expired - NB Power argued that, given the design defect, the express warranty in the contracts did not apply and amounted to a fundamental breach of the contract - The New Bruns­wick Court of Queen's Bench, Trial Divi­sion, rejected the argument - NB Power had been able to use most of the trans­formers for at least 15 years - It had not been deprived of substantially the whole benefit under the contract - Therefore, the design defect did not amount to a funda­mental breach - In any event, the unam­biguous exclusionary clause clearly cov­ered all defects including design defects and effectively limited Westinghouse's contractual liability - See paragraphs 97 to 108.

Contracts - Topic 2126

Terms - Express terms - Exclusionary clauses - Interpretation - NB Power alleged that the power transformers that it pur­chased in the 1970s from Westinghouse contained a design defect - NB Power commenced an action alleging, inter alia, breach of contract and negligence - The contracts contained a limitation of liability clause - NB Power argued that, the words "any tortious acts or omissions of their respective employees or agents" in the clause should not be interpreted to include negligence - The New Brunswick Court of Queen's Bench, Trial Division, held that the words were wide enough to include the tort of negligence by implication - There­fore, the clause protected Westinghouse from the consequences of its negligence - See paragraphs 113 to 118.

Contracts - Topic 2126

Terms - Express terms - Exclusionary clauses - Interpretation - [See Contracts - Topic 2107 ].

Contracts - Topic 3730

Performance or breach - Fundamental breach - What constitutes a fundamental breach - [See Contracts - Topic 2107 ].

Contracts - Topic 3735

Performance or breach - Fundamental breach - Effect of exclusionary clause - [See Contracts - Topic 2107 ].

Limitation of Actions - Topic 15

General principles - Discoverability rule - Application of - NB Power alleged that the power transformers that it purchased in the 1970s from Westinghouse contained a design defect - NB Power commenced an action in 1997 alleging breach of contract and negligence - Westinghouse argued that the action was barred by a six year limita­tion period (Limitation of Actions Act, s. 9) - The New Brunswick Court of Queen's Bench, Trial Division, rejected the argu­ment - NB Power could not have dis­covered the material facts on which the action was based before March 21, 1996, when it received a report identifying the design problem - Therefore, the action was not barred - See paragraphs 86 to 93.

Limitation of Actions - Topic 9305

Postponement or suspension of statute - General - Discoverability rule - [See Limi­tation of Actions - Topic 15 ].

Sale of Goods - Topic 4069

Conditions and warranties - Warranties - Persons liable under warranty - [See Con­tracts - Topic 2107 ].

Sale of Goods - Topic 4117

Conditions and warranties - Implied or statutory terms as to quality or fitness - Exclusionary clause - Validity of - NB Power alleged that the power transformers that it purchased in the 1970s from West­inghouse contained a design defect - NB Power commenced an action in 1997 alleg­ing, inter alia, breach of contract - It ar­gued that the transformers were not fit for the purpose specified and were not of merchantable quality contrary to the im­plied conditions which arose under s. 15 of the Sale of Goods Act - The express war­ranty contained in the contracts provided, inter alia, that "The applicable Warranty expressed in this paragraph constitutes the only Warranty of the Company and no other warranty or condition, statutory or otherwise, shall be implied." - The New Brunswick Court of Queen's Bench, Trial Division, held that this clause was effective to exclude implied statutory conditions - See paragraphs 94 to 96.

Sale of Goods - Topic 4117

Conditions and warranties - Implied or statutory terms as to quality or fitness - Exclusionary clause - Validity of - [See Contracts - Topic 2107 and first Con­tracts - Topic 2126 ].

Words and Phrases

Any tortious acts or omissions - The New Brunswick Court of Queen's Bench, Trial Division, discussed the meaning of these words contained in a limitation of liability clause of a contract - See para­graph 118.

Cases Noticed:

Central Trust Co. v. Rafuse and Cordon, [1986] 2 S.C.R. 147; 69 N.R. 321; 75 N.S.R.(2d) 109; 186 A.P.R. 109, refd to. [para. 90].

Consumers' Glass Co. v. Foundation Co. of Canada Ltd. (1985), 9 O.A.C. 193; 20 D.L.R.(4th) 126 (C.A.), refd to. [para. 91].

Grenier v. Canadian General Insurance Co. (1999), 118 O.A.C. 204; 43 O.R.(3d) 715 (C.A.), refd to. [para. 91].

98956 Investments Ltd. (Receivership) v. Fidelity Trust Co. (1988), 89 A.R. 151 (C.A.), refd to. [para. 91].

MacCulloch v. McInnes, Cooper & Robert­son (1995), 140 N.S.R.(2d) 220; 399 A.P.R. 220 (C.A.), refd to. [para. 91].

Desjardins et al. v. Côté et al. (2006), 304 N.B.R.(2d) 40; 788 A.P.R. 40; 2006 NBCA 81, refd to. [para. 92].

Syncrude Canada Ltd. et al. v. Hunter Engineering Co. and Allis-Chalmers Canada Ltd. et al., [1989] 1 S.C.R. 426; 92 N.R. 1; 57 D.L.R.(4th) 321, refd to. [para. 96].

Thomas Equipment Ltd. v. Sperry Rand Canada Ltd. and Sperry Rand Corp. (1982), 40 N.B.R.(2d) 271; 105 A.P.R. 271; 135 D.L.R.(3d) 197 (C.A.), refd to. [para. 102].

Canso Chemicals Ltd. v. Canadian West­inghouse Co. (1974), 10 N.S.R.(2d) 306; 2 A.P.R. 306; 54 D.L.R.(3d) 517 (C.A.), refd to. [para. 102].

Guarantee Co. of North America v. Gor­don Capital Corp., [1999] 3 S.C.R. 423; 247 N.R. 97; 126 O.A.C. 1, refd to. [para. 105].

Pompey (Z.I.) Industrie et al. v. Ecu-Line N.V. et al. (2003), 303 N.R. 201; 224 D.L.R.(4th) 577 (S.C.C.), refd to. [para. 106].

Jaillet v. Myers (1984), 58 N.B.R.(2d) 94; 151 A.P.R. 94 (C.A.), refd to. [para. 112].

Raynard and Raynard v. O'Blenis and Barton (1978), 21 N.B.R.(2d) 425; 37 A.P.R. 425 (C.A.), refd to. [para. 112].

Bow Valley Husky (Bermuda) Ltd. et al. v. Saint John Shipbuilding Ltd. et al., [1997] 3 S.C.R. 1210; 221 N.R. 1; 158 Nfld. & P.E.I.R. 269; 490 A.P.R. 269, refd to. [para. 114].

Miida Electronics Inc. v. Mitsui O.S.K. Lines Ltd. and ITO-International Termi­nal Operators Ltd., [1986] 1 S.C.R. 752; 68 N.R. 241, refd to. [para. 116].

Alderslade v. Hendon Laundry Ltd., [1945] 1 K.B. 189 (C.A.), refd to. [para. 116].

Lamport & Holt Lines Ltd. v. Coubro & Scrutton (M. & I.) Ltd. et al.; Ship Raphael, Re, [1982] 2 Lloyd's Rep. 42 (C.A.), refd to. [para. 116].

Upper Lakes Shipping Ltd. v. St. Law­rence Cement Inc. (1992), 89 D.L.R.(4th) 722 (Ont. C.A.), refd to. [para. 120].

Counsel:

Marc A. Bossé, Q.C., and Ian Blue, Q.C., for the plaintiffs;

David Morritt and Sonia Bjorkquist, for Westinghouse Canada Inc.

This action was heard on June 9 and 10 and September 15 to October 15, 2003, by Garnett, J., of the New Brunswick Court of Queen's Bench, Trial Division, Judicial District of Fredericton, who delivered the following decision on November 2, 2006.