Appeals arising from commercial contracts for the supply of industrial gearboxes used in an oil sands operation.
The Court held that the supplier-designer remained liable for design defects and for breach of the implied fitness warranty under s. 15(1) of the Ontario Sale of Goods Act because the contractual warranty did not clearly exclude the statutory protection.
The Court also held that the separate supplier's exclusion clause barred liability, rejecting use of fundamental breach to override clearly negotiated allocation of risk between sophisticated commercial parties, subject to unconscionability.
On the trust dispute, the majority allowed the cross-appeal and held the fund belonged to the respondent purchaser, rejecting the constructive trust claim for lack of unjust enrichment.
