Bulletins

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The Excavator Lost Its Head

The Civil Code of Quebec places a heavy burden on manufacturers. But can it be reversed?

This question was addressed by the Superior Court in a judgment rendered on June 6, 2023 by the Honourable Suzanne Hardy-Lemieux in AIG Insurance Company of Canada et al v. Mécano Mobile R.L. inc. et al, 2023 QCCS 1935 (CanLII).

Groupement Forestier Chaudière Inc (GFC) is AIG’s insured and owns a 2016 Volvo excavator on which the defendant Mécano Mobile installs a special boom. The purpose of this modification is to install a multi-dimensional, multi-functional head that enables the excavator to become a piece of equipment for cutting trees at ground level, delimbing them and sectioning them. This is a substantial modification to the original equipment.

On August 26, 2015, Volvo sold the excavator to Strongco, its exclusive distributor in Canada, and on March 10, 2016, Strongco sold the excavator to Mecano Mobile, to whom it was delivered on March 16, 2016. Finally, on April 28, 2016, Mecano sells the modified excavator to GFC, AIG’s insured.

GFC received the modified machine on June 21, 2016 and operated it with no apparent difficulty until January 25, 2018, when the excavator was about to start a day’s work but caught fire. Despite the operator’s best efforts and several attempts to extinguish the fire, the excavator was a total loss.

The judge rightly recalls the principles set out in the Civil Code of Quebec concerning the seller’s warranty of quality of a good, i.e. the warranty that the good and its accessories are, at the time of sale, free from latent defects that render it unfit for its intended use (1726 CcQ). Furthermore, in the case of a professional seller, article 1729 creates a very strong presumption to the effect that the existence of the defect at the time of sale is presumed. The seller can only rebut this presumption if the defect is due to misuse of the goods by the buyer, a very heavy burden. These obligations are incumbent not only on the seller, but also on the manufacturer and anyone who distributes the product, including wholesalers and importers.

Having established this, the judge emphasized that article 1729 does not implement a simple presumption, but rather a triple presumption as already determined in CNH Industrial Canada Ltd v. Promutuel Verchères, société mutuelle d’assurances générales, 2017 QCCA 154 (CanLII). This triple presumption is broken down as follows: The existence of a defect, its anteriority in relation to the sales contract and the existence of the causal link with the deterioration or malfunction. Some have seen this as a presumption of liability, which can only be rebutted by establishing proof of the victim’s fault in using the goods, or of an act of God or fortuitous event.

The buyer, for his part, has a relatively light burden, namely to prove by a preponderance of evidence that he acquired the good from a person bound by this warranty as a professional seller, and that the good deteriorated prematurely compared to an identical good or one of the same kind.

In this case, the judge noted that the excavator in question had, according to the evidence, an expected lifespan of at least 10 years, and that in this case, it had only really been in operation for 18 months before being destroyed. Premature deterioration of the good had therefore occurred. The seller and/or manufacturer therefore had to show that the defect was due to improper use of the item by the buyer, and maintenance was therefore part of the notion of use.

After concluding that the deterioration was premature in view of the equipment’s relatively short life, the Court turned to the conclusions of the experts (in this case four different experts) who testified at the trial. After analyzing their technical appraisals and testimonies, the judge noted that only two experts had been able to see the machine after the loss and appraise it. She also dismissed one of the experts as having little credibility. As for the others, it seems that one of the experts concluded that the fire could have been caused by an electrical fault or the presence of combustible material such as wood residue on a hot surface. However, based on the operator’s testimony and his visual observations on the morning of the fire, the claimant’s expert concluded that there had been a “failure of the vehicle’s intrinsic electrical system, i.e. the alternator supply wiring”.

Another expert noted the presence of forest residues (organic matter) in various places on the equipment, suggesting poor maintenance. But since he could not rule out the possibility of an electrical fault, he concluded that the probable cause of the fire remains undetermined. However, Volvo’s (the manufacturer’s) expert points out that the excavator, whose primary function at the time of manufacture, has been extensively modified in terms of hydraulic pumps as well as electrical and mechanical systems. These additions generate more heat, which also increases the risk of fire, and these modifications have never been reported or disclosed to the manufacturer. The expert concluded that there were three possible causes: burning debris, an electrical problem or a hydraulic problem. The judge ruled out the possibility that a manufacturing defect had caused the electrical system to short-circuit, having been informed of how the cable in question was protected.

Although she doesn’t mention it specifically, the judge seems to conclude that the manufacturer discharged its burden by showing that the fire was caused by poor maintenance (cleaning up wood debris) or misuse (installing equipment for which the excavator was not initially designed), thus affecting both the hydraulic and electrical systems. She therefore concluded that the cause of the fire remained undetermined, and dismissed the action. It should be noted that this judgment, although dated June 6, 2023, was not the subject of a notice of judgment until July 7, so that at the time of writing this newsletter, the time limits for appeal had not yet expired.

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Authors

Patrick Henry

Lawyer, Partner

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