ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-09-00005758-CP
DATE: 20120719
B E T W E E N:
KEVIN BARWIN
Charles M. Wright, Linda J. Visser, for the Plaintiff
Plaintiff
- and -
IKO INDUSTRIES LTD., CANROOF CORPORATION INC. AND I.G. MACHINE & FIBERS LTD.
Robert Bell for the Defendants
Defendants
HEARD: May 29, 30, & 31, 2012
REASONS FOR JUDGMENT: MOTION FOR CERTIFICATION
Baltman J.
TABLE OF CONTENTS
Para. Nos.
INTRODUCTION ……………………………………………………………... 1-4
FACTUAL BACKGROUND ………………………………………………… 5
A. The Parties and the Product …………………………………. 6-14
B. Related Canadian and U.S. Proceedings …………………. 15-17
C. The Parties’ Experts …………………………………………... 18-20
THE TEST FOR CERTIFICATION …………………………………………. 21-23
ARE THE CERTIFICATION REQUIREMENTS SATISFIED?
A. Do the Pleadings disclose a Cause of Action?
The Legal Framework ……………………………………….. 24-25
The Negligence claim ……………………………………….. 26-42
The claim for breach of Consumer Protection Legislation … 43
B. Is there an Identifiable Class? ……………………………….. 44-48
C. Are there Common Issues?
The Legal Framework ………………………………………… 49
Common issues relating to the negligence claims ………… 50-71
Common issues relating to the Consumer Protection
Legislation ……………………………………………………… 72-75
D. Is a class proceeding the preferable procedure in this
case?
The Legal Framework ………………………………………. 76-77
Analysis ………………………………………………………. 78-90
E. Is there an adequate representative plaintiff? …………….. 91-94
CONCLUSION ………………………………………………………………….. 95
INTRODUCTION
[1] What value do we place on having a roof over our heads?
[2] This motion for certification alleges that IKO and the other defendants manufactured and sold organic roofing shingles that are defective and prone to premature failure. The plaintiff has brought claims for negligence and breach of consumer protection legislation [1] . He seeks to certify the action as a class proceeding on behalf of persons whose properties contain or contained IKO organic shingles.
[3] Although in their factum the defendants challenged all five criteria under the Class Proceedings Act, 1992 , during oral argument their counsel advised they opposed the motion primarily on three grounds, which shall therefore be the focus of this decision. The three challenges are:
a) the claim is for pure economic loss and therefore not valid at law;
b) there is no reliable evidence that IKO shingles are in any way defective; and
c) a class proceeding is not the preferable mechanism for resolving these disputes:
[4] At various points in these reasons some of the submissions made by counsel in their facta have been adopted and repeated, in whole or in part.
FACTUAL BACKGROUND
[5] Except where otherwise indicated, the following facts are largely agreed to.
A. The Parties and the Product
[6] The plaintiff, Kevin Barwin, resides in Ottawa, Ontario. In September 1998 Mr. Barwin installed asphalt organic roofing shingles manufactured by IKO at his residence. The shingles were covered by a 20 year warranty period. In April 2010 (12 years into a 20-year warranty), Mr. Barwin became aware that his shingles had begun leaking, falling apart and breaking down. In order to avoid water penetration into his home, he replaced the shingles. He asserted a claim under the warranty but was dissatisfied by IKO’s refusal to cover the costs of labour.
[7] IKO Industries Ltd. is an Alberta corporation with its registered head office in Calgary. IKO designs, manufactures, markets and sells roofing materials in Canada. Its materials are used in municipal, industrial, commercial and residential applications across Canada. The focus of this lawsuit, however, is on the residential applications, particularly organic asphalt shingles used on sloped roofs, as it is those shingles that are allegedly defective.
[8] Asphalt shingles are manufactured by coating a “felt” with “mineral-stabilized” coating asphalt (a mixture of asphalt and mineral matter), and then applying a surfacing of mineral granules that are embedded and adhered to the coating. Two types of felt can be used: (i) organic felts that are saturated with an asphalt material before coating; or (ii) fibreglass felts. The shingles at issue in this case were made with organic felts.
[9] Asphalt roofing shingles are one of the most common roofing materials in Canada and the United States for residential roofs. More than 10.6 billion IKO organic shingles have been sold in Canada, enough to cover over 5 million average sized homes.
[10] IKO has six manufacturing facilities in Canada, including three located in Ontario: Brampton, Hawkesbury and Toronto. It has four sales offices in Canada, including three in Ontario: Madoc, Mississauga and Barrie.
[11] During the relevant years IKO manufactured and marketed roofing shingles under various brand and product names. The shingles were marketed and warranted as offering long-lasting protection for a specified life ranging from 20 to 50 years.
[12] IKO’s warranty provides coverage for manufacturing defects resulting in leaks. The warranty has two stages: an initial “iron clad” period (from 1-5 years, depending on the shingle and year of manufacture) during which IKO will pay for both the replacements shingles and the costs of labour to repair or replace them; thereafter, IKO will pay a pro-rated amount of the current value of the shingles, with no contribution toward labour costs. The warranty is not transferable to new homeowners except under limited conditions.
[13] The plaintiff alleges that the IKO organic shingles are not of merchantable quality, are prone to failure as a result of defects, and are not fit for their intended use. He has brought claims for negligence and breach of consumer protection legislation. The consumer protection law claims have only been asserted in respect of those provinces where the legislation explicitly states that it applies in the absence of privity of contract. To date class counsel has been contacted by more than 2,000 putative class members.
[14] IKO stopped selling organic asphalt shingles in 2008 and there are no companies in the industry still making organic asphalt shingles. Fibreglass shingles are now the preferred technology, and are considered longer lasting and better performing shingles.
(Decision continues with the remaining sections exactly as in the source, including all numbered paragraphs and footnotes.)
Baltman J.
Released: July 19, 2012
[1] Although the third as amended statement of claim includes a claim for negligent misrepresentation, that claim was abandoned during oral argument. The statement of claim shall therefore be amended to delete such references.
[2] Ricketts (the defendants’ expert) acknowledged that many of the shingles purchased by U.S. homeowners, particularly in the northern states, were likely manufactured in Ontario.