Ontario Superior Court Limits Potential Class Action Entitlement For Pure Economic Loss

• Published date: 13 August 2021
• Subject Matter: Consumer Protection, Litigation, Mediation & Arbitration, Class Actions, Dodd-Frank, Consumer Protection Act
• Law Firm: Bennett Jones LLP
• Author: Ms Cheryl Woodin, Ilan Ishai and Ethan Schiff

The authors acted for the defendants in these motions.

While the effects of the Supreme Court of Canada's decision in 1688782 Ontario Inc v Maple Leaf Foods Inc., 2020 SCC 35 [Maple Leaf], begin to reverberate in the decisions of lower courts, Justice Paul Perell's certification decision in Carter v Ford Motor Company of Canada [Carter] illustrates the significant impact of the Maple Leaf analysis in the ever-busy landscape of auto liability class actions. The Court issued two sets of reasons cited as 2021 ONSC 4137 and 2021 ONSC 4138. The Carter decision interprets and applies Maple Leaf and provides much needed guidance on the limited scope of claims for pure economic loss in this area. Relying on Maple Leaf, Justice Perell also rooted out various causes of action which have crept into claims against auto manufacturers over the last several years.

The plaintiffs in Carter sought to certify multiple causes of action in tort, contract and restitution for a proposed class of current or former owners or lessees of the allegedly defective vehicles. The plaintiffs alleged that the defect in the vehicles' water pumps created a propensity to fail after "moderate mileage" (claimed to be after 100,000 km), potentially causing catastrophic engine damage, which may be dangerous. The plaintiffs were seeking not only the cost of repair for the allegedly dangerous defect but also economic loss damages, including diminution in value. The Court struck the majority of the pleaded claims, certifying only the cause of action in negligent design for class members who owned or leased vehicles damaged by manifestation of the alleged defect (including those who suffered personal injury). The Court also determined that issues of causation and damage for each class member would be reserved for individual trials. The decision provides a valuable precedent for future products liability class actions, particularly for its application of Maple Leaf.

The Narrow Exception for Real, Substantial and Imminent Danger

As with many auto products liability class actions, the plaintiffs sought costs to repair the alleged defect and diminution in value for all of the impugned vehicles. Such claims are allegedly based on the real and substantial danger exception to the general bar on negligence claims for pure economic loss. Applying Maple Leaf, the Court held that the claim did not meet the test for the exception because the plaintiffs failed to plead an imminent threat'instead, they...