Supplier And Manufacturer Of Copper Piping Liable For Failure To Meet City’s Watermain Sterilization Process


By: Jeffrey A. Brown, Partner

The Ontario Superior Court of Justice rendered a decision[1] involving a product liability claim that considered new legislation and guidelines arising from the Walkerton water crisis. This case suggests that even if there has been no specific discussion about a product between the buyer and seller, a Court might still find that the buyer has relied on the seller regarding the suitability of a product if the seller had previously provided advice. The decision also suggests that if a supplier knows that a product will be used for an application that has to meet specific local standards, the supplier needs to make an inquiry of the manufacturer to ensure that it meets those standards.

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In this case, the plaintiff, Brantford Engineering and Construction Ltd. (“Brantford Engineering”), was hired by an engineering firm to install watermains in the City of Brantford (“the City”). The specifications for the project called for the use of copper tubing in the watermain system. Brantford Engineering retained Underground Specialties Cambridge Incorporated (“the Supplier”) to obtain the copper piping to be used in the project. The Supplier hired Wolverine Tube (Canada) Inc. (“the Manufacturer”) to manufacture the copper tubing.

As a result of the Walkerton water crisis in 2000, the Ontario government instituted the Safe Drinking Water Act, 2002 (“the Act”), which established minimum water standards throughout Ontario, including the necessity of maintaining a chlorine residual at all times in the water system. Chlorine is used as a disinfectant to eliminate pathogens that can lead to sickness and death. Pursuant to the Act, municipalities were permitted to establish higher standards than those set out in the Act. The City chose to do so, and required a two-step sterilization procedure involving a chlorination test and a chlorine residual test, which had to be met prior to the connection of the watermain to the municipal water system.

Although the copper piping met the chlorination test, it repeatedly failed the chlorine residual test. The Manufacturer did investigations and obtained a report which suggested that the copper’s protective layer was attacked during the “superchlorination process” during the first part of the City’s sterilization test, which caused the copper to corrode and dissolve and have a negative impact on the chlorine residual level (the second part of the sterilization test). The Manufacturer failed to disclose this report to Brantford Engineering, the Supplier and the City.

Ultimately, Brantford Engineering ordered plastic pipe from the Supplier which was installed as a replacement watermain and passed all tests. Brantford Engineering brought a claim against the Supplier for breach of contract under the implied warranties of the Sale of Goods Act (“the SGA”) and against the Manufacturer for negligence, for the losses it incurred to replace the pipe and incidental costs.

Liability of Supplier for Breach of the Implied Warranties

In order to find a breach of the implied warranty, it is crucial to find that the buyer relied on the seller’s skill or judgment. The Court found that Brantford Engineering’s expertise was in the installation of watermains, but the Supplier was knowledgeable about the material it supplies on watermain projects, and the Supplier’s general manager (“GM”) knew that the City required that the watermain pass the sterilization process before it could be connected to the water distribution system. The Court also found that the Supplier’s GM knew of the special purpose of the copper pipe and would be “applying his knowledge” to the City’s requirements.

The Court found that the Supplier had breached the warranty of reasonable fitness. In reaching this conclusion, the Court made three curious statements:

  1. The court noted that the Supplier’s GM had “provided advice and recommendations in the past”. However, it is unclear why prior recommendations would have any bearing on the question of whether Brantford Engineering had relied on the Supplier for this specific project. The Court noted that there had been “no specific discussions” regarding the piping used for this project.
  2. The Court stated that it is of no consequence that the type of copper tubing was specified by the engineering firm that had retained Brantford Engineering. Apparently, the Court believed that the Supplier was under an obligation to tell Brantford Engineering that copper tubing would not meet the City’s sterilization procedure.
  3. The Court held that the seller is obliged to be diligent in acquiring information, and cannot simply rely on the manufacturer. In this regard, the Court stated that it had “long been known a chemical reaction can occur when copper comes in contact with chlorine, particularly when chlorine is of a high concentration”, and that the Manufacturer had this information.

Although not strictly necessary, the Court also found that the copper piping was not of merchantable quality, and therefore the Supplier also breached the implied warranty of merchantable quality under the SGA. However, merchantability is a question of whether a good is generally saleable in the market, and it is not clear that the copper piping would not have been saleable for use in other watermains that were not subject to the City’s more stringent requirements.

Finally, the Court held that the exclusion under the Supplier’s limited warranty did not exclude the implied warranties under the SGA, because the warranty did not use explicit language to exclude “statutory conditions” of fitness or merchantability, which a long line of cases have said is necessary to exclude the implied warranties under the SGA. Interestingly, the Court considered the limited warranty even though it was not in the contract documents, but was solely contained in subsequent documents (i.e. packing slips, invoices) after the contract was signed. The Court said that because prior dealings between Brantford Engineering and the Supplier contained the limited warranty, the post-contractual documents would be considered even though the impact of the warranty stated therein was unclear.

Liability of Manufacturer in Tort

The liability of the Manufacturer in tort also raises some interesting questions. The Court rejected the Manufacturer’s argument that the pipe only had to meet ASTM standards, given that the Manufacturer knew the product was going to be used in watermains. The manufacturer was unaware of the City’s requirements. Indeed, on cross-examination, when the Manufacturer’s witness was asked if they made any inquiries into municipal sterilization specifications following the Walkerton crisis and the legislation that followed, the witness responded “Why would we?”

The Court found that the Manufacturer had a “due diligence obligation” to ensure that its product met regulatory and municipal standards, and that it should have made inquiries after the introduction of the Act. This ruling suggests that a manufacturer can be found liable if its product is sold in municipalities where it does not meet local standards, even if the product would meet standards elsewhere.

The Court also found that the Manufacturer had breached its duty to warn given that it failed to disclose the report that set out the reasons why the copper piping was failing.


[1] Brantford Engineering and Construction Ltd. v. Underground Specialties Cambridge Inc., 2014 ONSC 4726, 2014 CarswellOnt 11423.

Jeffrey A. Brown is a partner at Theall Group LLP. He is engaged in all aspects of the defence and trial of civil matters, including insurance law, commercial litigation, product liability and enforcement of secured transactions. Jeff has appeared as counsel at the Ontario Superior Court of Justice, Divisional Court and Court of Appeal. He was admitted to the Ontario Bar in 1999 after having completed his articles as a law clerk at the Federal Court of Canada for the Honourable Mr. Justice Teitelbaum. Jeff is co-author of the annually updated loose-leaf text, Product Liability: Canadian Law and Practice (Canada Law Book)

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Photo credit: r.nial.bradshaw via VisualHunt / CC BY

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Broad Exclusions Do Not Apply Simply Because Peril Is In Chain Of Causation

LGT (105x104)

By: Lawrence G. Theall, Partner

The Ontario Court of Appeal recently held that a broad contributing cause exclusion does not apply simply because an excluded peril was included in the chain of causation. In O’Byrne v. Farmers’ Mutual Insurance Co.,[1] negligence of the insured’s tenant set in motion a chain of events ultimately leading to an oil spill after a furnace broke down. The “all risks” policy included an exclusion for “loss or damage directly or indirectly caused by, resulting from, contributed to or aggravated by: …e) centrifugal force, mechanical or electrical breakdown or derangement…” The insurer argued that since the furnace broke down, the loss was due to multiple causes including “mechanical derangement” of the furnace. The Court disagreed and looked at the evidence to determine the real cause of the loss.

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The insured owned a two-story apartment building which was insured pursuant to an “all risks” insurance policy issued by the Farmers’ Mutual Insurance Co. (“Farmers'”). An oil fired furnace was located in one of two residential apartments on the second floor. The tenant there inserted a piece of cardboard into the primary control of the furnace between two sets of contacts in order to bypass the thermostat, “presumably to keep the furnace in constant hot operation while she was away.” While the tenant was absent, there was a significant spill of heating oil from the furnace on to the apartment floor which leaked through the floorboards and saturated the main floor beam and ceiling of the building’s lower commercial units. The insured sought coverage under the policy. The insurer denied coverage for damage caused by the leaked oil. One ground for denial was reliance on the mechanical breakdown or derangement exclusion found in the “Perils Excluded” section of the policy as follows:

This Form does not insure against loss or damage directly or indirectly caused by, resulting from, contributed to or aggravated by:… (e) …mechanical or electrical breakdown or derangement in or on the “premises”…

The trial judge found on the evidence that the cause of the discharge of oil was the tenant inserting a piece of cardboard into the control panel. This, in turn, bypassed the thermostat which forced the furnace to run an excessively high temperature, causing the ignition component to fail [i.e. re-ignite] and oil to be pumped continuously without burning. Consequently coverage was provided under the policy.

Farmers’ agreed that one of the causes (i.e. the tenant’s negligence) was covered by the Policy. It argued that the other cause (i.e. the breakdown of the furnace) was “mechanical derangement” within the exclusion which should have been applied by the trial judge because the loss “was caused indirectly”, “resulted from”, “was contributed to” or “was aggravated by” a failure in the operation of the furnace due to a mechanical defect or derangement. It relied on a decision of the Supreme Court of Canada (Derksen[2]) as authority for the proposition that an exclusion can be worded to apply in case where there are multiple causes of a loss so as to exclude the entire loss.

The Court of Appeal disagreed and held that the oil spill was not a multi-causal loss. The loss in this case was not produced by two independent causes operating together, as was the case in Derksen[3]. It was caused by the tenant’s negligence (i.e. the proximate cause) that in turn led to a chain of events that culminated in the oil spill:

The fact that an element of the furnace ceased to operate does not engage the application of the mechanical exclusion. …it is not sufficient to find that some type of mechanical or electrical breakdown or derangement occurred: it is essential to examine the cause of that occurrence. The failure of a mechanical element of the furnace was not another cause of the oil damage, but rather something that occurred only after the tenant interfered with the proper operation of the furnace. Simply put, the oil damage was the result of external interference, and not a defect in the furnace.

The Court also added that, in any event, the oil damage was not the result of an internal defect in the furnace, but only occurred after the tenant interfered with its proper operation. The “mechanical derangement” exclusion consequently had no application to the facts of the case.


[1] 2014 ONCA 543 (C.A.).

[2] Derksen v. 539938 Ontario Ltd., 2001 SCC 72, [2001] 3 S.C.R. 398 (S.C.C.).

[3] In Derksen one independent cause was the negligent clean-up of the construction site where the operator placed a metal plate on the rear tow hook of a truck and the other independent cause was the negligent operation of the truck from which the plate flew off injuring the plaintiffs. They were independent concurrent causes because, although both needed to happen for the loss to have occurred, the operation of the vehicle was not a natural sequence or consequence of negligent site clean-up.

Lawrence G. Theall is the founding partner of Theall Group LLP. He practices commercial litigation, insurance and product liability (including class proceedings), and has appeared before all levels of the Ontario and Federal courts, as well as the superior courts of Manitoba and Alberta. He is honoured to have been selected as a Lexpert Ranked Lawyer for Product liability and selected by his peers for Best Lawyers 2017  for Insurance, as well as in  Expert Guides in the areas of Litigation, Product Liability, Insurance and Reinsurance. He is an editor for the Insurance chapter to be published in Bullen & Leake & Jacob’s 3rd Edition of Canadian Precedents of Pleadings in 2017 and a co-author of the annually updated loose-leaf text, Product Liability: Canadian Law and Practice (Canada Law Book).

For more information, visit

Photo credit: LOLren via / CC BY

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