The court also held that the lower court judge erred in certifying claims for losses reflected in the cost of repairing damage to the engines in vehicles owned or leased by class members.
In North v. Bayerische Motoren Werke AG, 2025 ONCA 340, released on May 2, Associate Chief Justice J. Michal Fairburn found that repair costs incurred after catastrophic engine failure were not recoverable in tort as pure economic loss, and that neither plaintiff met the legal threshold for a compensable claim.
“The lack of any suitable representative plaintiff is fatal to the certification of the action,” the judge wrote.
The proposed representative plaintiffs, Patricia North and Dinis Rego, each acquired a BMW vehicle with an N20 engine. They submitted that several years after they acquired the vehicles, they suddenly lost power as a result of the failure of their vehicle’s chain assembly system, resulting in catastrophic damage to the vehicles’ engines.
They sold their vehicles “as is” instead of repairing them after they were quoted high costs to repair the vehicles.
They commenced a proposed class action against the defendants Bayerische Motoren Werke AG, BMW of North America, LLC and BMW Canada Inc., on behalf of some 66,600 current and former owners and lessees of BMW vehicles, model years 2012 to 2015, with allegedly defective N20 engines.
They alleged that the class members' vehicles were dangerous and defective goods and that BMW’s negligence in designing, engineering, testing and manufacturing the class vehicles resulted in damage to the plaintiffs and other class members.
The plaintiffs submitted that the damages included the costs of averting the real, substantial and imminent danger of personal injury or death by replacing the vehicles.
They also alleged that BMW owed the plaintiffs and class members a duty to warn consumers of serious safety risks associated with the vehicles.
A certification judge declined to certify the duty to warn claim and limited the scope of the negligent design/manufacturing claim.
The certification judge found that there was no basis in fact for asserting that design or manufacturing defects existed in all of the class vehicles.
The Ontario Superior Court certified the causes of action of negligent design/manufacturing resulting in a loss reflected in the cost of repairing damage incurred to an engine in a class vehicle, or the cost of repairing an engine in a class vehicle to avert imminent damage to persons or property.
The certification judge also found that North, who decided not to repair her vehicle, had no legally cognizable loss.
The plaintiffs challenged the decision, arguing that the certification judge erred in finding that North’s losses were not recoverable in negligence and in failing to certify the claim for breach of the duty to compensate for shoddy and dangerous goods.
They argued that they had pleaded actual property damage, specifically damage to the N20 engines caused by the failure of the timing chain system.
Associate Chief Justice Fairburn observed that the certification judge had not accepted that the timing chain system in this case was a separate system independent from the whole in which it was situated.
The court upheld the certification judge’s finding that the class vehicles and other parts of the N20 engines were “other property” with respect to the timing chain system.
“In other words, this is not a traditional negligence claim but rather a claim for pure economic loss,” the judge wrote, dismissing the plaintiffs’ appeal.
BMW cross appealed, arguing that the plaintiffs had failed to plead losses recoverable in negligence since they sought recovery of the replacement value of the vehicles.
The defendants submitted that those who suffered “a loss reflected in the cost of repairing damage incurred to an engine in a Class Vehicle” had no claim as repair costs incurred after the failure of a class vehicles’ timing chain system were not legally recoverable.
They also argued that Rego did not incur a compensable loss and therefore also did not have a viable cause of action.
Justice Fairburn noted that the case at bar highlighted the distinction between a pure economic loss claim and a traditional negligence claim.
She cited 1688782 Ontario Inc. v. Maple Leaf Foods Inc., 2020 SCC 35, in which the Supreme Court of Canada held that economic loss incurred to avert danger caused by a design or construction defect is analogous to physical injury to the plaintiff’s person or property.
Justice Fairburn noted that in such cases, the scope of recovery is limited to the costs of averting real and substantial danger.
She observed that there was therefore no basis for any recovery exceeding the costs associated with removing the real and substantial danger.
The judge accepted BMW’s argument that repair costs incurred after the failure of a class vehicles’ timing chain system were not legally recoverable.
“If an engine is catastrophically damaged, it cannot be driven. Repairing the engine would serve to restore the use or functionality of the vehicle as opposed to averting any real and substantial danger,” the judge wrote.
The judge also accepted BMW’s argument that a fee that Rego had paid for the inspection and diagnosis of his engine’s problem was not a reasonably foreseeable cost in discarding the product.
“Since Mr. Rego claims that his engine was ‘catastrophically damaged,’ it is difficult to see how the danger was not already averted: the car was no longer driveable and so any safety threat was already removed,” the judge wrote.
She held that even if the fee that Rego incurred could somehow be said to be related to disposal of the car, it was nonetheless not recoverable as a “cost of removing the danger.”
The court concluded that the loss claimed by Rego could not sustain a cause of action in negligence and that he was therefore not a suitable representative plaintiff.
The judge also noted that the plaintiffs had not sought an opportunity to substitute a new representative plaintiff.
Associate Chief Justice Fairburn allowed BMW’s cross appeal and set aside the certification order.
Justices Steve Coroza and Lorne Sossin concurred in the decision.
Counsel for the parties were not immediately available for comment.
Counsel for the plaintiffs were Alex Dimson and Stefani Cuberovic of Siskinds Law Firm, and Justin Smith and David Wingfield of Strosberg Wingfield Sasso LLP.
Counsel for the defendants were Peter Pliszka, Zohaib Maladwala and Hussein Fawzy of Fasken.
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