Newsletters

246

The Warranty Against Latent Defects: The Importance of Presumptions

The Superior Court’s decision in Compagnie d’assurances AIG du Canada c. Kenworth Québec inc., 2020 QCCS 1377, is a reminder of the principles applicable to the warranty against latent defects.

In April 2014, a Kenworth vehicle belonging to the City of Shawinigan [City] and insured by Compagnie d’assurances AIG du Canada [AIG] caught fire and was severely damaged. AIG indemnified its insured and instituted subrogation proceedings against the vendor of the vehicle, Kenworth Québec inc. [Kenworth], invoking the warranty against latent defects. Kenworth in turn filed a claim against the manufacturer, Paccar du Canada ltée [Paccar], also invoking that warranty. AIG filed an expertise report which concluded that most of the damages caused by the fire were in the motor compartment of the vehicle. The expert also underlined that there was a recall by the manufacturer in relation to risks of fire with Kenworth vehicles of the same model but assembled during a period that began a few days after the damaged vehicle was manufactured. Paccar’s expert underlined that the vehicle showed signs of excessive corrosion and that when such vehicle is used in a hostile environment, such as snow removal, particular attention is required to assure that the components of the motor are exempt of salt.

First, the Court underlined the provisions of the Civil Code of Québec governing latent defects affecting goods sold by a professional vendor and stated that this regime creates a presumption of liability when the purchaser establishes that the goods were acquired from a professional vendor or a person who is obliged to such a warranty as a professional vendor, and that the goods deteriorated prematurely in comparison to similar goods. This presumption of liability is triggered without it being necessary to prove the cause of the defect or the cause of the damages. The Court stated that it is a triple presumption of liability, namely:

  1. A presumption of the existence of a defect;
  2. A presumption that the defect existed at the time of the sale;
  3. A presumption of existence of a causal link between the defect and the deterioration of the property.

The presumption may be rebutted if the professional vendor establishes:

  1. Misuse of the property; and
  2. That the improper use is the cause of the premature deterioration or the improper functioning of the property.

After having analyzed the evidence, the Court noted that on the balance of probability, the vehicle had perished because of an electrical problem originating in the motor compartment. Although the Court concluded that the exact point of origin and the cause of the fire had not been established on the balance of probabilities, it underlined that this did not have to be established in a precise manner by the plaintiff in order to trigger the presumption of liability. Since the two conditions for the application of the presumption were satisfied, the causal link between the default and the damage was presumed.

The Court then proceeded to analyze whether the defendants had rebutted the presumption. In order to do so, it had to establish misuse and that the misuse caused the fire. The defendants alleged that the City could have prevented the fire by providing better maintenance for the vehicle. The Court ruled that the City had behaved appropriately by following the procedures dictated in the vehicle owner’s manual.

Accordingly, the Court granted the action and ultimately held Paccar liable.

246

Authors

Mariella De Stefano

Lawyer, Partner and Co-chair of the Insurance Law Group

Articles in the same category

Ruin Finds a Reason

In Société d’assurance Beneva Inc. c. Ville de Sherbrooke, 2026 QCCA 1301, the Court of Appeal delivers a decision as concise as it is compelling on liability arising from the ruin of an immovable, in a case involving the rupture of a water main. Its impact could extend well beyond underground pipe failures. The Facts […]

There Is No Point in Submitting a Bid Without Conducting Your Research First

In 9329-0146 Québec Inc. (M. Potvin Excavation) v. City of Saint-Constant, 2026 QCCA 1199, the Quebec Court of Appeal reaffirmed the principles governing a contracting authority’s duty to provide information and a bidder’s corresponding duty to seek clarification where necessary. The Facts  In May 2020, the City of Saint-Constant issued a public call for bids […]

2026 World Cup: FIFA Can Commercialise the Tournament, But Not Trust

Introduction With 48 teams, 104 matches, three host countries and 39 days of competition, the 2026 World Cup was already destined to make history because of its sheer scale. On the field, with a transformed VAR system (Video Assistant Referee) and FIFA’s new regulations, every player action was subjected to microscopic scrutiny. Off the field, […]

An Insurer Is Not Required to Uncover What the Insured Was Required to Disclose

In Kayembe-Kabeya v. Industrielle Alliance, assurance et services financiers inc., 2026 QCCS 1714, the Superior Court sets the record straight on the principle of contractual “utmost good faith”. The Facts In September 2019, Ms. Ricady Mede (hereinafter “Mede”) purchased a life insurance policy from Industrielle Alliance (hereinafter the “Insurer”). A few months later, she died of […]

When it’s too late for latent defects…

The Superior Court recently rendered a judgment in Reinert v. Construction Maurice Bilodeau Inc., 2026 QCCS 2276, dealing with timeliness to give notice in cases of latent defects. The Facts In 2013, Ms. Sylvie Reinert and Mr. Denis Leclerc retained Construction Maurice Bilodeau Inc. (“CMB”) for the construction of a residential building on a vacant lot in Lévis. […]

Insurance Math: One Claim, Two Fires, Three Points of Origin, Zero Recovery: When Circumstantial Evidence Speaks Louder Than a Confession

In Chatel v. Desjardins Insurance, 2026 QCCS 712, the Quebec Superior Court reaffirmed a principle of insurance law: direct evidence is not required to establish an intentional fault. Mr. Chatel claimed $532,000 under his homeowner’s insurance policy following two fires that occurred four days apart. The first caused partial damage to his residence, while the second […]