Introduction
The recent Alberta decision of ATCO Energy Solutions Ltd v Energy Dynamics Ltd, 2024 ABKB 162 (“ATCO Energy”) provides a helpful review of product liability law, discussing how circumstantial evidence may be used and how resulting inferences and theories of negligence can be rebutted.
ATCO Energy involved the manufacture of an allegedly defective engine piston. In July 2014, a natural gas compressor engine belonging to the plaintiff, ATCO Energy Solutions Ltd. (“ATCO”), failed when one of its 16 pistons fractured into numerous pieces.[1] The defendants (collectively, “EnDyn”) had previously manufactured and supplied replacement pistons as part of ATCO’s engine overhaul work.[2] ATCO argued that a loose piston plug caused the failure. The piston at issue – piston 8R – was destroyed, and the compressor engine required multiple repairs, although the total costs attributable to the incident were disputed.[3]
No Breach of the Standard of Care
The Court found that EnDyn owed a duty of care to not negligently manufacture products with defects that pose a real and substantial danger of physical harm to persons or property.[4]
Following a long line of established authority, including Baker v Suzuki Motors Co,[5] the Court noted that strict liability is not the law in Canada. Rather, a plaintiff must prove that the product was defective and that the manufacturer was negligent in allowing the defect to occur.[6]
In many cases, such as in ATCO Energy, the product at issue is often destroyed or no longer available for examination. Therefore, a Court may consider circumstantial evidence and draw appropriate inferences.[7] To infer negligence in a product liability case, the inference must be supported by proven facts and the record.[8] Any proposed alternative causes or theories cannot be based on conjecture or speculation; they must be grounded in the actual circumstances established by the evidence.[9] Where two equally plausible theories exist, the plaintiff will fail to meet the burden of proof.[10] Additionally, if the product has been subject to intervention by third parties or prolonged use, the strength of the inferences may be weakened.[11] While inferences are often drawn from circumstantial evidence, the Court in ATCO Energy cited the Supreme Court’s decision in Fontaine v British Columbia (Official Administrator)[12] and reaffirmed that the doctrine of res ipsa loquitor (“the thing speaks for itself”) is no longer the law.[13]
In ATCO Energy, the 8R piston plug was damaged and broken into pieces. The largest remaining remnant had a yellow substance on the threads.[14] ATCO argued that the substance was unidentified, that EnDyn had not proven the thread locker it applied to the threads was the correct one, and, therefore, that the 8R piston plug was defective.[15] In response, EnDyn provided undisputed evidence that since 2001, its practice was to use LOCITITE 620 in accordance with EnDyn’s design and manufacturing specifications.[16] Moreover, although LOCITITE 620 is green in its uncured form, a technical data sheet suggested that its appearance may not be the same after curing.[17] The Court found that while the aged colour differed from that of the required thread locker in liquid form, there was sufficient evidence to conclude, on a balance of probabilities, that it was the correct one and had been installed according to the manufacturing specifications.[18] Some (but not all) of the other 16 pistons were removed and found to be missing thread locker, in breach of the standard of care.[19] However, without inspecting the other plugs, the Court was not willing to draw an inference that they too were missing thread locker.[20]
ATCO also argued that, following the incident and in direct response to the alleged defect, EnDyn changed its process for applying thread locker.[21] The Court rejected this argument and held that post-incident conduct is rarely considered an admission of a defect or negligence.[22]
No Causation Established
The Court noted that the but-for causation test must be applied in a “robust, common sense and pragmatic fashion.”[23] While the Court found that four of the other 16 pistons were defective, neither party asserted that these defective pistons caused the incident. Because ATCO did not show that the piston at issue – piston 8R – was loose or defective (i.e., no breach of the standard of care), there was no need to consider whether it caused the loss.[24] Alternatively, even if the 8R plug were assumed to be loose, any inference of causation was neutralized by the totality of the evidence: the presence of other loose plugs for significant periods of time and the lack of similar incidents suggested that ATCO had not met its burden to establish factual causation.[25]
ATCO did not call an independent expert witness at trial but instead called an employee who had experience as a heavy-duty mechanic and in dealing with engine and piston failures. He did not have any mechanical engineering training.[26] Citing Kon Construction Ltd v Terranova Developments Ltd,[27] the Court set out the categories of witnesses with expertise – including actual litigants with expertise who are involved in the underlying events giving rise to litigation.[28] The ATCO employee had observed the pistons at the facility nearly four years after the incident and was then asked to become involved in the case some time later. While he was involved in operation of ATCO’s facility in 2018 or 2019 (approximately four years after the incident), this involvement was not an issue in the underlying litigation. The Court refused to admit the ATCO employee as an expert as contemplated by Kon and would not accept his lay opinion evidence about the cause of the piston failure, as this was beyond what an ordinary person could observe.[29] Therefore, even though the ATCO employee concluded that the cause of the incident was a loose 8R piston plug, the Court gave very little weight to his opinion.[30]
In contrast, EnDyn called an employee who held a degree involving internal combustion engines and became involved in the case starting in mid-2015 (about one year after the incident). EnDyn also called an independent expert to support its argument that the likely cause of the incident was a “detonation” – an early and unintended combustion of the air/fuel mixture[31] (not attributed to negligent manufacture), rather than a loose 8R piston plug. Although the Court had issues with EnDyn’s expert evidence, it found that, when reviewing all of the evidence (including EnDyn’s factual evidence), the stronger inference and probable cause was detonation.[32]
The theories of a loose piston plug versus detonation were not necessarily mutually exclusive. However, the evidence of loose plugs being in operation for significant periods of time, along with the lack of similar piston incidents, effectively neutralized any inference of causation, even if a loose piston plug were assumed.[33]
Takeaways
In ATCO Energy, the Court ultimately found that ATCO had proven that four pistons were defective and negligently manufactured, but did not establish the critical issue – that piston plug 8R was loose (i.e., defective) and caused the engine failure. Therefore, despite a lengthy King’s Bench trial, ATCO was only awarded the cost of replacing the four defective pistons, which amounted to about $19,000.[34]
This case not only provides a helpful and comprehensive overview of the state of product liability law in Alberta, but also practically illustrates that:
- Courts are willing to draw inferences based on circumstantial evidence; however, those inferences must be based on established facts proven by the plaintiff on a balance of probabilities. While a defendant may be inclined to object to the Court’s use of similar fact evidence, that same evidence can effectively be used to neutralize the plaintiff’s inferences.
- With a proper evidentiary foundation, based not just on speculation or conjecture, Courts are willing to accept alternative theories on the standard of care and causation put forward by a defendant. Presenting a positive, alternative theory (typically supported by expert evidence) can be an effective way to defend a product liability claim, because it can bring considerable counterweight to the plaintiff’s theory, which the plaintiff must ultimately prove on a balance of probabilities.
- Product liability trials often come down to a battle of experts, where each party wants the Court to accept its expert(s) as credible, knowledgeable, impartial, and correct. Parties should pay careful attention to preserving evidence, generating reports, and considering how the experts will be qualified at trial. When using a “company expert”, parties should be aware that, in certain circumstances, the Court will likely prefer the testimony of a third-party expert and should consider utilizing such an expert as a substitute or support for the company expert.
Should you have questions or require any assistance with a product liability matter, please do not hesitate to contact a member of Miller Thomson’s Commercial Litigation Group.
[1] Ibid at para 1.
[2] Ibid at para 11.
[3] Ibid at paras 1,13.
[4] Ibid at para 118.
[5] [1993] 8 WWR 1, 12 Alta LR (3d) 193 (Alta QB).
[6] ATCO Energy, supra, at para 124.
[7] Ibid at para 126.
[8] Ibid at para 127.
[9] Ibid at para 143.
[10] Ibid at para 128.
[11] Ibid at para 139.
[12] [1998] 1 SCR 424, 156 DLR (4th) 577.
[13] ATCO Energy, supra, at para 129.
[14] Ibid at para 166.
[15] Ibid at para 167.
[16] Ibid at para 168.
[17] Ibid at para 168.
[18] Ibid at para 170.
[19] Ibid at para 184.
[20] Ibid at para 185.
[21] Ibid at para 189.
[22] Ibid at para 190-91.
[23] Ibid at para 231.
[24] Ibid at para 236
[25] Ibid at para 281.
[26] Ibid at paras 239, 255.
[27] 2015 ABCA 249 at para 35 [Kon].
[28] ATCO Energy, supra, at para 240.
[29] Ibid at paras 252-54.
[30] Ibid at para 255.
[31] Ibid at para 237.
[32] Ibid at para 278.
[33] Ibid at para 281.
[34] Ibid at para 295.
