COURT OF APPEAL FOR BRITISH COLUMBIA
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Citation: |
Ernewein v. General Motors of Canada Ltd., |
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2005 BCCA 540 |
Date: 20051103
Docket: CA032430
Between:
Barry Ernewein and Reynolds John Bonneau
Respondents
(Plaintiffs)
And:
General
Motors of Canada Limited and
General Motors Corporation
Appellants
(Defendants)
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Before: |
The Honourable Chief Justice Finch |
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The Honourable Madam Justice Newbury |
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The Honourable Madam Justice Kirkpatrick |
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| P.G. Foy, Q.C. and B.W. Dixon |
Counsel for the Appellants |
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| J.M. Poyner and P.J. Poyner |
Counsel for the Respondents |
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Place and Date of Hearing: |
Vancouver, British Columbia |
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September 13, 2005 |
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Place and Date of Judgment: |
Vancouver, British Columbia |
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November 3, 2005 |
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Written Reasons by: |
| The Honourable Madam Justice Newbury |
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Concurred in by: |
| The Honourable Chief Justice Finch The Honourable Madam Justice Kirkpatrick |
Reasons for Judgment of the Honourable Madam Justice Newbury:
Introduction
[1] General Motors of Canada Limited ("GM Canada") and General Motors Corporation ("GMC") appeal the order of a Supreme Court judge in Chambers dated November 15, 2004 which certified this action as a class proceeding pursuant to the Class Proceedings Act, R.S.B.C. 1996, c. 50 (the "Act"). The claim is one for products liability, arising from the fact that between 1973 and 1991, certain pick-up trucks of the C, K, R and V series manufactured by the defendants were designed with their fuel tanks outside the "rails" of the vehicles. The plaintiffs allege that this created a risk of harm to consumers in the event of side-impact collisions. The plaintiffs do not allege any physical injury or damage as a result, but they say that because of the increased risk of harm, their series C, K, R and V vehicles are less valuable to them than they would be otherwise. The plaintiffs seek to recover damages for the alleged diminution in the value of their vehicles, and punitive damages.
[2] The appeal concerns the "evidentiary basis" that must be established by a plaintiff in order to meet the statutory requirements for certification — in particular in this case, the requirements of "commonality" and "preferability" mandated by ss. 4(1)(d) and (e), respectively, of the Act. As will become clear, I am of the view that the appeal must succeed because the Chambers judge proceeded on the basis that the former question fell to be determined "not . . . upon an assessment of evidence, [but] simply upon an assumption that the facts [pleaded] are true". For the same reason, his conclusion that a class action would be the preferable procedure for the resolution of the common issues must also fall: there is no (admissible) evidence to counter the opinion of the defendants' expert that one cannot generalize, or "extrapolate", from an allegation of negligent design of the fuel system of one model of vehicle manufactured by the defendants, to any other model of vehicle in the C, K, R or V series.
Pleadings and Particulars
[3] By Amended Statement of Claim filed January 21, 2004, the plaintiffs alleged that the defendants had negligently designed 28 models of pick-up trucks manufactured by them between 1973 and 1991. The vehicles are said to have contained "a latent and potentially fatal design defect, specifically, fuel tanks rupturing upon impact and subsequently producing a dangerous and explosive spray of gasoline covering the vehicles and the passengers involved in the collision." The plaintiffs say the defendants failed to conduct appropriate testing to ensure that the vehicles were safe; that if testing was done, they ignored, misinterpreted or withheld the results; that they knew or ought to have known that the placement of the fuel tanks outside the frame was dangerous; and that they were negligent in failing to warn consumers "of the great risk of danger associated with the normal use of the said vehicles". Last, the plaintiffs relied on the Trade Practice Act, R.S.B.C. 1996, c. 457 (since replaced by the Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2) and claimed "aggravated, punitive and exemplary" damages thereunder. (Breach of contract and misrepresentation simpliciter were also pleaded but were abandoned.)
[4] Since the plaintiffs did not allege any injury to person or damage to property, the defendants demanded particulars of the plaintiffs' losses. In response, the plaintiffs' solicitor advised:
The Plaintiffs have suffered loss insofar as they purchased the said vehicles which contained safety related defects at a price in excess of their value in view of the inherent danger relating to the placement of the fuel tanks outside of the vehicles' frame rails. The Plaintiffs have further suffered loss in relation to the re-sale value of the vehicles which has decreased due to the inherent danger as described aforesaid.
The Certification Hearing
[5] In anticipation of the certification hearing, the parties filed fairly extensive affidavit evidence. Mr. Ernewein, the representative plaintiff, deposed that he is both a geologist and a lawyer residing in Vancouver. He spends the summer months in the north doing exploration work. He deposed that in 1982, he had purchased a 1980 Chevrolet "K-30" pick-up truck. Both fuel tanks were located outside the frame rails of the vehicle. He continued:
5. I first became aware of the hazardous situation relating to my vehicle in late 1997 when I heard of a class action lawsuit that had been commenced and settled in the United States. That lawsuit had as [its] subject matter pick-up trucks that were designed, manufactured and sold by General Motors that had their fuel tank or tanks located outside of the vehicles' frame rails ("the Class Vehicles").
6. I understood at that time that the problem alleged with the Class Vehicles was that their fuel tanks were susceptible to puncture or rupture in the event of a side-impact collision due to the placement of the fuel tank or tanks outside the vehicles' frames.
7. Upon learning of the subject matter of the aforementioned lawsuit and thinking that my vehicle fit the definition of the Class Vehicle in [its] settlement, I called a telephone number that was advertised as being established for registered owners of Class Vehicles. I cannot recall the exact number that I called but I do remember being advised by the person I spoke with that because I was not a resident of the United States, I did not qualify for the compensation as a member of the Class.
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10. I have been advised by Lance Bogner of R&D Mechanical in Prince Rupert B.C. who is a licensed mechanic that if my vehicle were struck by another in a side-impact type of collision, the fuel tanks would not be protected by the frame and would be susceptible to rupture and resulting fuel leak.
11. Given my understanding of the hazardous nature of my vehicle as described aforesaid, I have elected to take it off the road rather than risk my own safety and the safety of others in the event of an accident.
[6] In discovery, Mr. Ernewein clarified that in saying he had taken the vehicle "off the road", he had meant that he tried not to use it on "the main highways" but only as a "bush truck" in the Yukon. In a later affidavit, he also said he had been mistaken about the date of his acquisition of the vehicle. In fact, he had accepted it in July 1987 in return for the forgiveness of a debt. In response to an affidavit filed by the defendants indicating that his pick-up truck is worth no more than $100 for trade-in purposes, Mr. Ernewein further deposed that although he had no idea what the "monetary value" of his truck was, he was certain it would cost him significantly more than $100 to replace it with another that he could use while working as a geologist.
[7] The more important affidavit evidence filed in the plaintiffs' case was that of Kenneth J. Baxter, a lawyer of the firm which represents the plaintiffs. He began by briefly re-stating allegations in the Statement of Claim, beginning each paragraph with the phrase "It is alleged . . . ." He attached as Exhibit "B" to his affidavit, apparently for the truth of its contents, a copy of a report dated October 17, 1994 entitled "Engineering Analysis EA 92-041 General Motors Pickup Truck Defect Investigation". This report was prepared by the then U.S. Secretary of Transportation, Mr. Peña, after an investigation apparently carried out by the Office of Defects Investigation ("ODI") of the U.S. National Highway Traffic Safety Administration. The final page of the report set forth the following conclusions:
1. The increased risk of death and injury from fire in side-impact crashes involving the subject vehicles is a result of the design of their fuel storage system, primarily the location of the fuel tanks outside of the frame rails, supplemented by other features of the design.
2. Given the state of the art at the time and GM's awareness of the likely consequences, it was unreasonable for GM to design the subject vehicles with fuel tanks outside the frame rails.
3. The increased safety risk due to post-crash fires in the subject vehicles is unreasonable.
Therefore, on the basis of the entire investigative record, I have initially decided, pursuant to 49 U.S.C. § 30118(a) (formerly section 152(a) of the National Traffic and Motor Vehicle Safety Act), that the subject vehicles contain a defect that relates to motor vehicle safety.
Apparently relying on the word "initially", the defendants characterize the report as a "preliminary". However, there is no evidence as to whether a final version was ever prepared, or as to any particular action taken by the ODI as a result of the report.
[8] Perhaps not surprisingly, the defendants objected in the court below to the admissibility of Mr. Peña's report, without more, as hearsay and opinion evidence which had not been properly adduced directly through a qualified expert. The Chambers judge agreed with the defendants' position, stating at para. 55 of his Reasons (2004 BCSC 1462):
The defendants state that a report filed by the plaintiffs, as a part of Mr. Baxter's affidavit, on safety issues centering around the manner of gas tanks mounted on the vehicles manufactured and sold in the United States is not evidence. I agree. [Emphasis added.]
[9] Also attached as an exhibit to Mr. Baxter's affidavit was an "Agreement of Settlement" dated June 27, 1996 between GMC and the plaintiffs in a class action suit brought in Louisiana with respect to pick-up trucks and chassis cabs of the C and K series manufactured between 1973 and 1991. In the Agreement, GMC undertook to make a credit of up to $1,000 (U.S.) to the owners of such trucks and chassis, towards the purchase of new GM vehicles. GM also promised to fund certain independent research "to enhance fuel system safety for motor vehicles, in order to reduce the incidence of injuries and deaths resulting from post-collision fires in existing vehicles and future designs of passenger vehicles, including cars, light duty trucks and other vehicles used for passenger transportation". At the same time, the Agreement specified that it was made "for settlement purposes only" and did not constitute an admission of the validity of any claim or fact alleged by the plaintiffs in the litigation. The settlement evidently received the approval of the Louisiana court and the action brought in that state against GM was released and dismissed. Mr. Baxter deposed that although a similar action to the within action has been commenced in Ontario, "the relief provided for in the aforementioned settlement has not been extended to Canadian owners of otherwise qualifying vehicles."
[10] For their part, the defendants filed an affidavit sworn by Mr. Wecker, a statistician who had analyzed certain "real world accident data", including data from the database known as the Fatality Analysis Reporting System ("FARS"). He reached certain preliminary opinions concerning fatality rates experienced in collisions involving C and K series pick-up trucks. These opinions included the following:
b. In particular, the crashworthiness of C/K pickups is good in side impacts. C/K pickups have a lower fatality rate in collisions on the side of the vehicle having the standard fuel tank than on the side opposite the standard tank.
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d. Fire rates of C/K pickups are comparable to those of other fullsize pickups having different fuel system designs and fuel tank locations. Many other models, including pickups and passenger cars, have higher fire rates than C/K pickups.
e. Post-collision fires are rare events for C/K pickups as well as for motor vehicles generally. The risk of fatal fire injury in C/K pickups is small compared to risks commonly encountered in life.
[11] The defendants also filed an affidavit of Mr. Sinke, an engineering consultant who had worked on safety-related matters at GM for over 29 years. He opined that full-size C and K series and R and V series model pick-up trucks ("C/K pick-up trucks") contained "a number of distinct fuel system designs, not a single design". He recounted that the 1973 Model C/K pick-up truck had been a new model with fused fuel tanks outside the frame rails. The model was introduced by GM after considering "several factors, including field data showing that side impacts were less frequent than front and rear impacts, the fact that side-mounted fuel tanks would be protected by the structure of the truck including the rocker panel, the floor pan, the quarter panel, and the wheels and tires, customer demand for increased fuel capacity and driving range . . . and other developmental goals. . . ." He then detailed changes to the original fuel system design in C/K pick-up trucks made in 1975, 1977, 1979, 1980, 1981 and 1984. Beginning in 1977, when the federal motor vehicle safety standard ("FMVSS") 301 became applicable to pick-up trucks, GM had certified compliance with that standard. Mr. Sinke concluded:
23. Because there are a number of unique fuel system designs on the 1973 - 1991 C/K pickups, it is impossible to generalize on how such vehicles will perform in particular crashes beyond stating that all the designs are reasonably safe and meet all applicable federal safety standards. GM knows that all these designs meet and exceed the applicable fuel integrity requirements of FMVSS 301 and CMVSS 301, including its requirement that the pickups meet the 20 mile per hour side moving rigid barrier test with minimum fuel leakage. [Emphasis added.]
[12] A third affidavit filed by the defendants was sworn by Mr. Risebrough, the Director of Dealer Organization and Network Planning for GM Canada. Most importantly for present purposes, he deposed:
15. The media frenzy in relation to this issue began in late 1992 when an NBC news program addressed the allegations that the location of the fuel tanks outside the frame rails posed an unreasonable risk. That news program purported to show footage of crash tests in which class vehicles erupted into flames in the course of a staged collision. GMC carried out an investigation of those allegations and discovered that the crash tests depicted had been staged and falsely reported many aspects of the crash tests. Among other things, it was discovered that the eruptions depicted were aided by toy rocket engines to ignite the fuel carried by the vehicles involved in the crash tests.
16. Despite the circumstances of this news report, it began a frenzy of media coverage in relation to the class vehicles equipped with fuel tanks outside the frame rails.
Also attached to Mr. Risebrough's affidavit as evidence of the extensive media coverage were copies of newspaper reports from Canadian sources which indicated that GM Canada had declined to make the offer to its customers that GM had made to U.S. customers under the Louisiana settlement and that GM's position remained that "crash data show the trucks are as safe as others from that era and that they met federal safety rules at the time".
[13] As mentioned earlier, there was no evidence of any recall order being made by consumer protection authorities in Canada or the U.S. in respect of the subject vehicles, nor of any complaint having been made by Mr. Ernewein concerning the purchase of his vehicle. The Court was not told whether Canadian authorities have considered the matters alleged in Mr. Peña's report, or whether they take, or have ever taken, the view that the C/K pick-up trucks have a (common) defect in the fuel system design that is "likely to affect the safety of any person" within the meaning of s. 10 of the Motor Vehicle Safety Act, S.C. 1993, c. 16. The defendants did not raise the existence of any available remedy under that or any other consumer protection statute that might have provided more effective recourse to consumers of the vehicles than a class action.
The Plan of Proceeding and Notice
[14] The plan of proceeding filed by the plaintiffs in accordance with s. 4(1)(e)(ii) of the Act was notably vague: it stated their intention to sue for summary judgment "on all, or part of the claim herein", and if they were successful at the common issue stage, to seek a hearing where the Court could determine the "most efficient and practical means of determining the individual issues, if any, which may remain to be resolved."
[15] The form of Notice proposed by the plaintiffs for circulation pursuant to s. 20 of the Act formulated the following proposed common issues (which I have renumbered for ease of reference):
NEGLIGENCE
[1] Were General Motors of Canada Limited ("GM Canada") and the General Motors Corporation ("GM USA") the only manufacturers of the Class [C, K, R and V] Vehicles for sale through Canadian dealerships?
[2] Were the Class Vehicles originally made commercially available by GM Canada and GM USA?
[3] Prior to the manufacture of the Class Vehicles, and to present, did the Defendants know, or alternatively, should they have known that mounting the fuel tanks outside the frame rails of the Class Vehicles would make them more susceptible to puncture in the event of a side-impact collision?
[4] Prior to the manufacture of the Class Vehicles, and to present, did the Defendants know, or alternatively, should they have known that in the event that a Class Vehicle was involved in a side-impact collision, this could put it's occupants and others at risk of personal injury and death given the susceptibility of the fuel tanks to puncture?
[5] Did the Defendants owe a duty of care to the Plaintiffs and the Class Members?
[6] Did the Defendants breach the standard of care in their design and manufacture of the Class Vehicles?
[7] Did the Defendants breach the standard of care in failing to recall the Class Vehicles?
[8] Did the Defendants breach the standard of care in continuing to sell the class Vehicles subsequent to learning of the risk of fuel tanks puncturing or rupturing in the even of side-impact collision?
[9] Did the Defendants fail to provide a proper warning about the operation of the Class Vehicles?
TRADE PRACTICES ACT
[10] Were the Defendants "suppliers" to consumer transactions, as that term is defined in the Trade Practices Act R.S.B.C. 1969, c. 457 ("the Act")?
[11] Did the Defendants engage in deceptive acts or practices, within the meaning of section 3 of the Act, by:
(a) failing to disclose to the Class Members the risk of fuel tanks rupturing or puncturing on side-impact collisions;
(b) actively concealing from the Class Members the test results indicating the risk of fuel tanks rupturing or puncturing on side-impact collisions;
(c) representing to the Class Members that the Class Vehicles were and are of the highest quality when they knew that the danger of the fuel tanks rupturing on side-impact collisions seriously diminished the quality of the Class Vehicles; and
(d) representing to the Class Members that the Class Vehicles were manufactured with extraordinary attention to safety when they knew that the danger of the fuel tanks rupturing on side-impact collisions exposed the occupants of the Class Vehicles and others to risk of personal injury and death from collisions?
PUNITIVE DAMAGES
[12] Are the Defendants liable to pay punitive or exemplary damages having regard to the nature of the established breaches?
The Judgment Appealed From
[16] After a three-day certification hearing in July 2004, the Chambers judge issued his reasons in November. He began by describing the plaintiffs' allegations and the parties' arguments in general terms. At paras. 22-26, he noted that the Act provides a "procedural tool" and that, as stated by Chief Justice McLachlin in Hollick v. Toronto (City) [2001] 3 S.C.R. 158 at para. 16, "the certification stage focuses on the form of the action. The question . . . is not whether the claim is likely to succeed, but whether the suit is appropriately prosecuted as a class action." The Chambers judge also correctly set forth the five factors specified in the Act which, if met, necessarily lead to certification; and the five additional factors specified in s. 4(2) to be considered on the question of preferability. He found that the pleadings disclosed a cause of action – a conclusion not challenged on appeal — and that there was an identifiable class of plaintiffs, namely, "owners of a particularized vehicle that had fuel tanks mounted on the outside of the rails and who are resident in British Columbia." (Para 42.) He continued:
If in the course of the progress of this litigation sub-classes may be identified such as in terms of modifications to but not replacement of fuel tanks from their complained of location, that is a matter to be addressed either through sub-classes, or through individual issues.
What is alleged and not denied as being common to the class vehicles is that the fuel tanks were placed on the outside of the rails and it is upon this basis that it is alleged the economic loss occurs. [paras. 43-44]
[17] The Chambers judge then turned to the question of whether the claims of the class members raised common issues, regardless of whether such issues predominate over issues affecting individual members. At para. 49 he quoted the comment of Huddart J.A. in Harrington v. Dow Corning Corp. (2000) 82 B.C.L.R. (3d) 1, lve. to app. refused (sub nom. Bristol-Myers Squibb Co. v. Harrington) [2001] 2 S.C.R. vii, that:
If the point of fact or law is necessary to the successful prosecution of the cause of action (or in some circumstances to its defence), then its resolution will inevitably move the litigation forward. The degree of materiality and the interplay among the various common and individual issues is a matter for consideration under s.4(1)(d) and thus s. 4(2), not a matter for consideration [under s. 4(1)(c)]. [para. 23]
As well, he noted (at para. 50) McLachlin C.J.C.'s statement in Hollick that "an issue will not be 'common' in the requisite sense unless the issue is a 'substantial . . . ingredient' of each of the class members' claims." (Para. 18.)
[18] The Chambers judge turned to the defendants' argument that "the trial of the proposed common issues do not stand as proof . . . [of] the claims of any other class member and thus cannot be said to advance the litigation in respect of the whole of the class." He stated that although Mr. Baxter's affidavit was "not evidence", the question before him was to be decided "upon an assumption that the facts [pleaded] are true. . . . Thus, the report attached to Mr. Baxter's affidavit for the purposes of this stage may be presumed to be true. The proof of those asserted facts is for a later stage." (Paras. 54-57; emphasis added.) On this point, the Chambers judge cited Endean v. Canadian Red Cross Society (1998) 157 D.L.R. (4th) 465, where this court was dealing not with the question of commonality or predominance, but with the more fundamental question of whether the pleadings disclosed a cause of action known as spoliation.
[19] The Chambers judge then proceeded to examine the plaintiffs' proposed common issues on the assumption that Mr. Baxter's affidavit was true. The crux of the judge's reasoning appears at paras. 64-66:
The determination that a product is in fact defective or dangerous is the fundamental basis to the action. As held in Chace v. Crane Canada Inc. (1996), 44 B.C.L.R. (3d) 264, 14 C.P.C. (4th) 197 (B.C.C.A.) at para. 16:
[16] This court recently observed that in a product liability case a determination that the product in question is defective or dangerous as alleged will advance the claims to an appreciable extent: Tiemstra v. I.C.B.C., [1997] B.C.J. No. 1628 (7 July 1997), Vancouver Registry No. CA21870 (B.C.C.A.). I agree with the chambers judge that is the situation here. The respondents are alleging an inherent defect that results in tanks suddenly cracking. This seems exactly the type of question for which a class action is ideally suited and remarkably similar to that concerning faulty heart pacemaker leads that was certified by the Ontario Court (General Division) in Nantais v. Telectronics Proprietary (Canada) Ltd. (1995) 25 O.R. (3d) 331.
The resolution of issues that the defendant was a manufacturer/distributor of these vehicles is defined by their class[,] that the defendants owed a duty of care to owners and the nature of that duty of care and whether that duty was in fact breached by the placement of the fuel tanks are, in my view, issues that any individual owner must establish. That being so, the resolution of those issues would advance the litigation.
The defendants say that between the period of 1973 to 1991, modifications were made to the fuel systems of their vehicles. While that may be established on the evidence, what remains common is the placement of the fuel tanks during this period of time. Thus, if the purported modification is established at trial, then this may require nuanced answers in the form of sub-classes (see Reid v. Ford Motor Company, [2003 BCSC 1632]).
He reached a similar conclusion with respect to the allegations of deceptive acts or practices complained of under the Trade Practice Act, and with respect to the claim for punitive damages, relying on the latter point on Griffith v. Winter, 2002 BCSC 1219 at para. 22.
[20] The Chambers judge next considered whether a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues. He found that the certification of the action would accomplish the overall purposes of the Act, i.e., access to justice, judicial efficiency and the resolution of disputes and behaviour modification. He then turned to whether the five factors listed in s. 4(2) of the Act were met, beginning with the matter described at subparagraph (a) thereof, namely "whether questions of fact or law common to the members of the class predominate over any questions affecting only individual members." Here, the Chambers judge observed that "Given that the claims being made are for economic loss, the common issues that may lead to such a claim are common to all in a class." (Para. 80.) He said these common issues included those questions advanced by the plaintiffs in their litigation plan and quoted supra at para. 15. With respect to economic loss, he reasoned:
The question of economic loss in terms of depreciation in the value of any particular owner's vehicle would be individual, but given the statistical basis of sale values, the determination of any individual loss may well be approached in time as sub-classes defined by year and model. [para. 81]
Noting that the Act provides the "mechanisms" to resolve individual issues in the context of a class action, he found that the common issues predominated over individual ones.
[21] The Chambers judge was also satisfied that the other subparagraphs of s. 4(2) were met. In particular, in connection with s. 4(2)(c), he noted that there was "no evidence or any indication that this proposed class proceedings involves claims that are or have been the subject of other proceedings in British Columbia"; and in connection with s. 4(2)(d), that there was no proposed method for resolving these issues other than individual litigation — an inefficient and improbable option, given the small loss likely to have been suffered by each plaintiff. He was also satisfied that Mr. Ernewein was an appropriate representative of the class of plaintiffs and that he had provided a "detailed plan that reflects the understanding of the representative plaintiff's counsel of the complexities of such litigation and the requisite time frames for steps along the way in the advancement of the litigation." (Para. 105.) The Chambers judge continued:
While blemishes in the plan may with the passage of time occur, they will be addressed and amendments made as they are deemed necessary.
As observed by [Gerow J.] in Reid v. Ford Motor Company, supra at para. 75:
It is anticipated that plans will require amendments as the case proceeds and the nature of individual issues are demonstrated by class members.
Such a concept of amendments simply reflects the reasonable anticipation that some class members may wish to raise individual issues, particularly in light of the defendants' assertion that there were class modifications to the fuel systems in question. Those sorts of issues may be sub-classed or individually dealt with as they arise. However, the plaintiffs' understanding and his theory of litigation permits him to represent all class members based on the singular and common defect alleged.
As I observed earlier, this is a products liability case which, while complex in terms of the evidence, does not evidence any indication of causing undue difficulties in its presentation either on behalf of the class of plaintiffs or the defendants.
The case, in my view, given the fact that it seeks economic and punitive damages, is the kind of case that no individual plaintiff could be expected to advance on their own. It permits a myriad of plaintiffs with a common complaint to advance those complaints in a controlled and orderly manner. It also protects the defendants from a myriad of individual claims should such individual plaintiffs choose to do so. [paras. 106-110]
Accordingly, the Chambers judge certified the action as a class proceeding and certified the issues referred to at para. 80 of his reasons as common issues. A copy of his order is attached as an appendix to these reasons.
ANALYSIS
[22] Before turning to the grounds of appeal advanced by the appellants, it may be worthwhile to comment parenthetically on some of the common issues as framed by the plaintiffs and adopted by the Chambers judge. The first is whether the two defendants were "the only manufacturers of the Class vehicles [i.e., Class C, K, R and V] for sale through Canadian dealerships". Presumably, if there were another manufacturer, it would be joined as a defendant. It is difficult to see, however, how the answer to this question would move this litigation forward, or is even relevant to the claims against GM Canada or GMC. The onus is on the plaintiffs to prove that one or both defendants did manufacture the vehicles which were sold in Canada; and while the fact that others may have manufactured the vehicles, or participated in that process, might provide the defendants with third parties to join, it has little to do with the defendants' potential liability. Questions 3 and 4 (supra, at para. 15) are also problematic in terms of negligence law, which of course requires that the plaintiffs prove that vehicles manufactured by the defendants breached the applicable standard (or standards) of care by creating an unreasonable risk for those using them for the purpose intended. As well, question 3 refers to "more susceptible to puncture" without indicating "more susceptible than what?"; while question 4 again assumes a "susceptibility" of the fuel tanks to puncture that puts drivers and passengers "at risk of personal injury and death." It may be said, however, that riding in any car puts drivers and passengers at risk of personal injury and death. Again, the real question is whether the location of the fuel tanks created an unreasonable risk in breach of the applicable standard (or standards) of care between 1973 and 1991.
[23] A similar objection may be made to question 8, which again assumes that the defendants learned of some "risk" which was unreasonable, but continued to sell the vehicles. In fact, the questions 7, 8 and 9 arise only if question 6 is answered in the affirmative, and should have been framed accordingly. As many Canadian cases have shown (see especially Rumley v. British Columbia, infra), the formulation of the common issues in a class proceeding is important to the later efficiency of the trial and deserves some care on the part of the drafter of the pleadings and of the certification judge.
Grounds of Appeal
[24] The appellants argue that the Chambers judge erred in approaching the requirements of commonality and preferability "on the basis of presumptions of the truth of the pleadings and of inadmissible evidence." In their submission, the only evidence properly adduced on these issues was their own, and it was to the effect that there are no common issues the resolution of which would "move the litigation forward" in a meaningful way. Further, individual issues predominated over the alleged common issues such that a class proceeding would not be fair, efficient, or manageable.
[25] Although it is clear that no assessment of the merits of the claim takes place at the certification stage, it is equally clear that an "evidentiary basis" is required for each of the certification requirements other than that the pleadings disclose a cause of action. The phrases "evidentiary basis" and "basis in fact" were used by the Supreme Court of Canada in Hollick, (supra, at paras. 24-26) in such a manner as to be synonymous with "evidence", and as the Chief Justice pointed out, the requirement arose from the statutory obligation placed on the plaintiff in a class proceeding in Ontario to file "one or more affidavits setting forth the material facts" to be relied upon. The British Columbia legislation is similar in this regard: s. 5(1) of the Act requires an applicant for certification to file an affidavit containing the items specified at s. 5(5), and the recipient of the notice of motion may also file affidavit material: s. 5(4). In Hollick, after citing with approval the Ontario cases of Caputo v. Imperial Tobacco Ltd. (2004) 236 D.L.R. (4th) 348 (Ont. Sup. Ct. J.) and Taub v. Manufacturers Life Insurance Co. (1988) 40 O.R. (3d) 379 (Ont. Ct. (Gen. Div.)), McLachlin C.J.C. noted:
I agree that the representative of the asserted class must show some basis in fact to support the certification order. As the court in Taub held, that is not to say that there must be affidavits from members of the class or that there should be any assessment of the merits of the claims of other class members. However, the Report of the Attorney General's Advisory Committee on Class Action Reform clearly contemplates that the class representative will have to establish an evidentiary basis for certification: see Report, at p. 31 ("evidence on the motion for certification should be confined to the [certification] criteria"). The Act, too, obviously contemplates the same thing: see s. 5(4) ("[t]he court may adjourn the motion for certification to permit the parties to amend their materials or pleadings or to permit further evidence"). In my view, the class representative must show some basis in fact for each of the certification requirements set out in s. 5 of the Act, other than the requirement that the pleadings disclose a cause of action. That latter requirement is of course governed by the rule that a pleading should not be struck for failure to disclose a cause of action unless it is "plain and obvious" that no claim exists: see Branch, supra, at para. 4.60. [para. 25; emphasis added.]
[26] The evidentiary basis was established in Hollick through extensive complaint records lodged with the provincial and municipal authorities concerning noise and pollution allegedly emitted from a landfill owned and operated by the City of Toronto. The Chief Justice stated:
(Presumably, the 115 pages of complaint records put into evidence by the plaintiff in Hollick were attached to an affidavit deposed to by someone with personal knowledge of the making of the complaints and of the records kept by the City.)
[27] The plaintiffs in this case relied heavily on the Supreme Court of Canada's decision in Rumley v. British Columbia [2001] 3 S.C.R. 184, for the proposition that Mr. Peña's report could be adduced into evidence at the certification hearing. Rumley concerned allegations of abuse (both sexual and non-sexual, and "secondary" as well as direct) of deaf and blind children attending the Jericho Hill School in Vancouver, operated by the Province. Prior to the commencement of the litigation, the Attorney General had appointed Mr. Thomas Berger, Q.C. as special counsel. He had issued a report in March 1995 concluding that "sexual abuse was at times widespread at the residence at Jericho Hill School and . . . it went on over a period of many years."
[28] The certification judge had declined to certify the actions, finding that there were no common issues and that individual litigation was preferable to a class proceeding. On appeal, this court found she had failed to recognize the limited grounds on which certification was sought. The Court certified a narrower question aimed at whether the defendant had been guilty of systemic negligence — i.e., negligence not specific to one victim but rather to the class of victims as a group. The Supreme Court of Canada agreed with this approach, notwithstanding that the standard of care would likely have varied over the 40 years during which abuses were alleged. The Supreme Court also concluded that common issues predominated over those affecting only individual class members. On this point, the Chief Justice stated:
[29] It is not clear from the reasons precisely how Mr. Berger's report was introduced into evidence at the certification hearing. From the subsequent judgment of the Chambers judge in the later decertification application (Rumley v. British Columbia (2003) 12 B.C.L.R. (4th) 121 (B.C.S.C.)), however, it would appear that the Province had not previously challenged the assumption that the contents of Mr. Berger's report were true. The higher courts therefore proceeded on the footing that his conclusions had been conceded. Indeed, as Humphries J. noted, the Supreme Court of Canada stated at para. 36 of its reasons that "There is no dispute that abuse occurred at the school" and "that that was 'a given' upon which the entire certification proceeding was based." (Para. 8.) In fact, the Province clarified at the later hearing that it had intended to make no such factual concessions and that it did not admit the "facts" found in the Berger report. Humphries J. commented on the effect of the mistaken assumption on the "potential for conducting this action as a class proceeding". In her words:
In my view, it is not useful to begin the analysis of systemic negligence from the assumption that "it is now clear that sexual and physical abuse of children took place at the school throughout its history." That very assertion inappropriately and perhaps erroneously (without having heard the evidence it is too early to tell) informs the analysis of a developing and changing standard of care over 42 years in a way that undermines the potential for conducting this action as a class proceeding. To start from such an all-encompassing assertion necessarily puts the defendant to the task of identifying an unending series of circumstances in order to attempt to answer, refute or admit on a piece-meal basis the facts which underlie that assertion. This renders the proceedings unmanageable because individual complainants are not before the court, the alleged abusers will not be called, and the individual events of sexual misconduct are not in issue, even with regard to the prima facie reliability of the reports concerning them.
In view of all the foregoing, I am of the view that, notwithstanding the comments by the Supreme Court of Canada, the defendant has not made the admissions now sought by the plaintiff and those allegations could not have been found to be facts by that Court within the context of this litigation. [paras. 30-31]
[30] Humphries J. went on to consider the admissibility of a report such as Mr. Berger's into evidence in a court of law, citing Robb Estate v. St. Joseph's Health Care Centre (1998) 31 C.P.C. (4th) 99 (Ont. Ct. (Gen. Div.)), in which the admissibility of the Krever Report was considered. She concluded on this point:
That reasoning is even more applicable here, where the evidence given at the two inquiries was confidential and untested. The Ombudsman and Berger Reports do not purport to make findings in the usual sense; they do not focus on any particular factual situation, set of circumstances, or specific time periods. In fact, both the Ombudsman and Mr. Berger took pains to ensure that no specific complainant, event or accused could be identified. Both reports contain broad and vague statements as to events at the school, qualifications on those statements, general conclusions, opinions and recommendations.
Taken with the statements I have referred to above within the Berger Report itself, it is clear that there is no basis upon which to admit the contents of the two reports for the truth of their contents. Further, given the contents, it is difficult to imagine what probative value the reports could have for the purposes of this litigation.
The reports and the Ministerial Statement are not admissible for the truth of their contents. If there is some other reason to tender them at trial, I will hear argument at the appropriate time. [paras. 51-53]
[31] Returning to the case at bar, what "evidentiary basis" did the plaintiffs provide on the question of commonality? Certainly the conclusions reached by Mr. Peña set out above at para. 7 would, had they been properly adduced as expert opinion evidence, have provided a basis for a court to conclude that a series of common questions had been raised with respect to the design of motor vehicles with fuel tanks outside their frame rails. But as has been seen, the Chambers judge acknowledged that Mr. Peña's report was "not evidence", and no challenge to that ruling is made by the respondents on this appeal. Despite the robust approach taken by Canadian courts to class actions, I know of no authority that would support the admissibility, for purposes of a certification hearing, of information that does not meet the usual criteria for the admissibility of evidence. A relaxation of the usual rules would not seem consonant with the policy implicit in the Act that some judicial scrutiny of certification applications is desirable, presumably in view of the special features of class actions and the potential for abuse by both plaintiffs and defendants: see the discussion at paras. 31-52 of Epstein v. First Marathon Inc. (2000) 41 C.P.C. (4th) 159 (Ont. Sup. Ct. J.).
[32] Accepting, then, that Mr. Peña's report was "not evidence", no proper basis was advanced for the proposition that the location of fuel tanks outside the rails of the subject vehicles raised a question common to all the plaintiffs, the resolution of which question would significantly advance the litigation. Rather, the only evidence is that of the defendants' expert, Mr. Sinke, to the effect that because the C/K pick-ups between 1973 and 1991 incorporated "a number of unique fuel system designs", one cannot "generalize on how such vehicles will perform in particular crashes beyond stating that all the designs are reasonably safe and meet all applicable federal safety standards." The ability to generalize, or extrapolate, from one plaintiff's vehicle to another, is crucial to the existence of a common issue. As Huddart J.A. stated for the majority in Harrington v. Dow Corning Corp., supra:
More important to a determination of common issues is the requirement that they be "common" but not necessarily "identical." In the context of the Act, "common" means that the resolution of the point in question must be applicable to all who are to be bound by it. I agree with the appellants that to be applicable to all parties, the answer to the question must, at least, be capable of extrapolation to each member of the class or subclass on whose behalf the trial of the common issue is certified for trial by a class proceeding. As the appellants note, this requirement will, of necessity, require that the answer be capable of extrapolation to all defendants who will be bound by it. [para. 24; emphasis added.]
Having provided no "evidentiary basis", the plaintiffs did not meet this requirement in this case.
[33] I reach this conclusion notwithstanding the fact that product liability claims are often cited as an example of the type of action particularly suited to class action proceedings. Since earlier cases such as Chace v. Crane Canada Inc. (1997) 44 B.C.L.R. (3d) 264 (B.C.C.A.) and Campbell v. Flexwatt Corp. (1997) 44 B.C.L.R. (3d) 343 (B.C.C.A.), experience has shown that not all product liability cases lend themselves to certification. In some, the complexities inherent in problems of proof of the applicable duty of care over a long period of time, changing manufacturing techniques, or multi-party involvement in the product delivery chain, have made the formulation of a common question problematic: see Bittner v. Louisiana-Pacific Corp. (1997) 43 B.C.L.R. (3d) 324 (B.C.S.C.), Caputo, supra, and Gariepy v. Shell Oil Co. (2002) 23 C.P.C. (5th) 360 (Ont. Sup. Ct. J.), aff'd [2004] O.J. No. 5309 (Ont. Sup. Ct. J. (Div. Ct.)). In each instance, the question must be determined "contextually" — i.e., not on the basis of a blanket assumption regarding product liability cases but in light of all the evidence concerning the specific case before the court. In the case at bar, the plaintiffs failed to establish an evidentiary basis; i.e., to adduce admissible evidence, for the proposition that the determination of the real common issues — whether the fuel system design(s) employed by the defendants breached the applicable standard(s) of care and created an unreasonable risk of harm to the plaintiffs — would advance the litigation in a meaningful way. I conclude that the certification order must therefore be set aside.
[34] For the same reasons, the Chambers judge's ruling that the common issues in this case predominate over individual issues must also be set aside. Again, the only evidence before the court on this point is that of Mr. Sinke, the defendants' expert, to the effect that one cannot generalize concerning the various fuel system designs incorporated into the various models of pick-up trucks that are at issue.
DISPOSITION
[35] I would allow the appeal and set aside the Chambers judge's order.
“The Honourable Madam Justice Newbury”
I Agree:
“The Honourable Chief Justice Finch”
I Agree:
“The Honourable Madam Justice Kirkpatrick”
Corrigendum: 23 November 2005
At page 22, paragraph 27, the first sentence should read. “The plaintiffs in this case relied…”
APPENDIX
THE APPLICATION of the Plaintiffs, coming on for hearing at Nanaimo, B.C. on the 13th and 14th days of July 2004, AND ON HEARING James M. Poyner, Kenneth J. Baxter and Patrick J. Poyner, Counsel for the Plaintiffs and David C. Harris and Andrew D. Borrell, Counsel for the Defendants, AND ON READING the material filed by counsel for the parties:
AND JUDGMENT RESERVED UNTIL THIS DATE:
THIS COURT ORDER THAT:
1. The within action is hereby certified as a class proceeding as against the Defendants pursuant to s. 4 of the Class Proceedings Act, R.S.B.C. 1996, c. 50;
2. The Class is hereby defined as:
Any person or entity resident within the Province of British Columbia who currently owns any of the following vehicles (hereinafter referred to collectively as "the Class Vehicles"):
(i) 1973 through 1986 model year General Motors full-size pick-up trucks or chassis cab models of the "C" or "K" series including the following models: Chevrolet C10, C20, C30, K10, K20, K30, and GMC Truck, C1500, C2500, C3500, K1500, K2500, K3500; and
(ii) 1987 through 1991 model year General Motors full-size pick-up trucks or chassis cab models of the "R" or "V" series including the following models: Chevrolet R10, R20, R30, R2500, R3500, V10, V20, V30, V2500, V3500 and GMC Truck R1500, R2500, R3500, V1500, V2500, V3500.
3. The common issues for the Class are hereby defined as:
a. Negligence issues
(i) Were General Motors of Canada Limited ("GM Canada") and the General Motors Corporation ("GMC") the only manufacturers of the Class Vehicles for sale through Canadian dealerships?
(ii) Were the Class Vehicles originally made commercially available by GM Canada and GMC?
(iii) Prior to the manufacture of the Class Vehicles, and to present, did the Defendants know, or alternatively, should they have known that mounting the fuel tanks outside the frame rails of the Class Vehicles would make them more susceptible to puncture in the event of a side-impact collision?
(iv) Prior to the manufacture of the Class Vehicles, and to present, did the Defendants know, or alternatively, should they have known that in the event that a Class Vehicle was involved in a side-impact collision, this could put its occupants and others at risk of personal injury and death given the susceptibility of the fuel tanks to puncture?
(v) Did the Defendants owe a duty of care to the Plaintiffs and the Class Members?
(vi) Did the defendants breach the standard of care in their design and manufacture of the Class Vehicles?
(vii) Did the Defendants breach the standard of care in failing to recall the Class Vehicles?
(viii) Did the Defendants breach the standard of care in continuing to sell the Class Vehicles subsequent to learning of the risk of fuel tanks puncturing or rupturing in the event of a side-impact collision?
(ix) Did the Defendants fail to provide a proper warning about the operation of the Class Vehicles?
b. Business Practices and Consumer Protection Act issues
(i) Were the Defendants "suppliers" to consumer transactions, as that term is defined by the Business Practices and Consumer Protection Act, R.S.B.C. 2004, c. 2 ("the Act")
(ii) Did the Defendants engage in deceptive acts or practices, within the meaning of section 4 of the Act, by:
(a) actively concealing from the Class Members the test results indicating the risk of fuel tanks rupturing or puncturing on side-impact collisions;
(b) representing to the Class Members that the Class Vehicles were and are of the highest quality when they knew that the danger of the fuel tanks rupturing on side-impact collisions seriously diminished the quality of the Class Vehicles; and
(c) representing to the Class Members that the Class Vehicles were manufactured with extraordinary attention to safety when they knew that the danger of the fuel tanks rupturing on side-impact collisions exposed the occupants of the Class Vehicles and others to risk of personal injury and death from collisions?
c. Punitive Damages issues
(i) Are the Defendants liable to pay punitive or exemplary damages having regarding to the nature of the established breaches?
4. Barry Ernewein is hereby appointed as the Representative Plaintiff for the Class.