In Evans v. General Motors of Canada Company, 2024 SKCA 87, Justice Lian Schwann held that the plaintiff’s claims with respect to overpayment for the defective vehicles and diminution in value of the vehicles did not plead a real and substantial danger that disclosed a reasonable cause of action in negligence.
“[A]n action in negligence for pure economic loss is barred where the plaintiff advances no claim for personal injury or property damage and does not plead the imminent risk of a real and substantial danger to person or property,” the judge wrote.
The judge also noted that the reduction in value of a vehicle resulting from an alleged defect is not recoverable in negligence.
In 2015, the respondent, Mandy Evans, launched a proposed multi-jurisdictional class action against the appellants General Motors of Canada Company and General Motors LLC.
Evans alleged that the company had breached various common law and statutory duties in the designing, manufacturing, marketing and selling of Chevrolet Cruze automobiles with defects in their coolant systems.
The plaintiff alleged that proposed class members, those who had purchased or leased a 2011 or newer Chevrolet Cruze automobile, had overpaid at the time of purchase and suffered losses as a result of a diminution in the value of their vehicles.
Evans alleged the appellants breached their duty to the class members by, among other things, failing to properly and adequately design, develop and test Cruze vehicles to ensure that they were without any defect and failing to promptly recall the vehicles from the Canadian market upon notice of the defect.
The plaintiff did not, however, make any claim for the cost of repairs or other consequential damages arising from the alleged defects.
In Evans v. General Motors of Canada Company, 2019 SKQB 98, a motion judge certified common issues, including whether GM breached statutory warranties by selling vehicles with the defects and whether they breached a duty of care owed to class members by designing, developing or manufacturing the relevant vehicles with the defect.
The certification judge also held that a class proceeding was the preferable procedure to resolve the common issues.
GM appealed the decision, arguing that the certification judge erred in concluding that the pleadings disclosed a cause of action in negligence and in determining that a class action was the preferable procedure for resolving the common issues.
At the certification hearing, the appellants argued that the injury or damages alleged in the negligence claim were in the nature of pure economic loss in connection with non-dangerous goods.
They argued that there was therefore no recovery possible against GM as the manufacturer of those goods.
The certification judge had cited Winnipeg Condominium Corporation No. 36 v. Bird Construction Co., [1995] 1 SCR 85, in which the Supreme Court of Canada held that the purchasers of a condominium building were owed a duty of care by a builder with respect to stone cladding on the exterior of the building which needed to be removed and replaced after part of it separated from the building and fell to the ground.
In Winnipeg Condominium, the Supreme Court held that the type of economic loss claimed by the plaintiff, in that case, was recoverable in negligence as the negligently supplied structure was dangerous and as injury to other persons and property in the community was reasonably foreseeable in the circumstances
The certification judge held that the respondent’s assertion that the defect made the Cruze automobiles unsafe engaged the dangerous goods principle confirmed by Winnipeg Condominium.
Justice Schwann cited 1688782 Ontario Inc. v. Maple Leaf Foods Inc., 2020 SCC 35, in which the Supreme Court held that the duty of care in relation to the negligent supply of shoddy goods protects the “right to be free from injury to one’s person or property.”
In Maple Leaf, the court held that merely shoddy products raised questions pertaining to issues such as implied conditions and warranties — and claims as to the quality of goods are better channelled through the law of contract.
The court also held that the defendant’s liability for claims in negligence for pure economic loss does not extend to the diminution or loss of other interests, other than the cost of removing a real and substantial danger to the physical integrity of a person or property.
Justice Schwann noted that the duty of care tort serves to protect the bodily integrity and property interests of plaintiffs and that a plaintiff can only claim the reasonable cost of repairing the defect and mitigating the danger in relation to those personal and property rights.
The judge observed that the statement of claim was bereft of any claim for the cost of repairs to the class members' vehicles or any other consequential damages.
“Thus, Ms. Evans’s cause of action in negligence can only be sustained to the extent her pleadings allege that the purported breaches resulted in personal injury or the risk of personal injury,” the judge wrote.
The court held that the respondent’s pleadings did not disclose a reasonable cause of action in negligence for pure economic loss unconnected with harm to property.
The judge did, however, note that the certification judge had expressly permitted the respondent to apply to amend her pleadings to assert a claim for the cost of repairs and other consequential damages.
Justice Schwann further stated that the respondent could apply to the court to amend her pleadings to assert that the defects posed an imminent risk of a real and substantial danger.
GM also argued that the certification judge erred in certifying the action as a class proceeding even though Evans had failed to adduce some basis in fact evidencing any compensable harm or danger posed to the proposed class.
Justice Schwann noted that the tort of negligence lay at the heart of the respondent’s action.
“As such, to certify her action for the negligent supply of shoddy goods, Ms. Evans had to adduce some evidence to show that the alleged defect in the coolant system posed a real and substantial danger capable of causing personal injury or property damage and that the risk is imminent, not indeterminate,” the judge wrote.
The judge held that the respondent had not satisfied the some-basis-in-fact threshold for her claims.
The court also noted that there was no evidence that the putative class members suffered compensable harm related to the coolant system.
Justice Schwann held that the certification judge erred in his preferability analysis and set aside the certification order.
Justices Jeffery Kalmakoff and Jillyne Drennan concurred in the decision.
Counsel for the parties were not immediately available for comment.
Counsel for the appellants were Robert Bell and Rebecca Shoom of Lerners LLP and Kenneth Ready of McDougall Gauley LLP.
Counsel for the respondent were Anthony Merchant and Anthony Tibbs of Merchant Law Group LLP.
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