2008 BCSC 1781 Chartrand v. General Motors Corporation

Before: The Honourable Madam Justice Martinson

Reasons for Judgment

Counsel for Plaintiff	M. R. Dunn
Counsel for Defendants	B. W. Dixon and A. K. Foord
Date and Place of Trial:	June 23 to 25, 2008
	Vancouver, B.C.

I. Nature of the Claim

[1] This is an application for certification of a class proceeding. It involves an alleged defective spring clip of the parking brakes on1999-2002, 1500 series pickups and utilities equipped with an automatic transmission and a PBR 210x30 Drum-in-Hat parking brake system using a high-force spring clip retainer, made and distributed by the defendants, General Motors Corporation and General Motors of Canada Ltd. (“GM”). The proposed representative plaintiff is Jannifer Chartrand, who alleges negligence and unjust enrichment against GM for manufacturing, distributing and failing to warn of what she says is a dangerously defective high-force spring clip, which causes premature wear and failure of the parking brake.

[2] From 2003 onward GM modified the parking brake design on these pickups and utilities to incorporate a new low-force spring clip, in the production of vehicles with both automatic transmissions (“automatics”) and manual transmissions (“manuals”). In 2005, GM recalled the manuals in the 1999 to 2002 group of vehicles but did not recall the automatics. The manual recall involved replacing all the original spring clips and inspecting the parking brake shoe lining; if the lining was not thick enough a new parking brake shoe was installed on both sides.

[3] Ms. Chartrand claims damages against the defendants for not recalling the automatic proposed class vehicles. She alleges that the defect is equally dangerous in those vehicles.

[4] She became involved in this case because she was contacted by the proposed class counsel. Counsel had previously acted for her with respect to motor vehicle accidents. Her evidence is that counsel telephoned her in September 2005, and told her that her truck, which she purchased after one of the accidents, and which is one of the proposed class vehicles, might have a problem with a parking brake. Counsel asked her if she was interested in having her truck investigated. She agreed, and went to his office.

[5] He told her that he was “partnered” with some American lawyers from Texas. Counsel told her about “the basic allegation of this case, namely, that General Motors may have made a parking brake that was defective.” That day they had a mechanic put the vehicle on a lift and take off one of the rear wheels. Counsel advised her that it “looked like it was the one his partners had described to him.”

[6] That same day, Ms. Chartrand signed a retainer agreement agreeing to bring a class proceeding against GM as representative plaintiff. Several days after that, on October 13, 2005, her vehicle was inspected, at her request, by Mr. Bailey. It contained the original spring clip. The brake linings were worn down to bare metal. The new low force clip was installed and the lining replaced. Counsel paid for the inspection and repair.

[7] Proposed class counsel acknowledged at an early stage in these proceedings that he had American partners. He advised the Court that a decision was made to bring the first request for certification against GM for the alleged defect in Canada in British Columbia. Applications for certification would then likely follow in other provinces.

[8] The American National Highway Traffic Safety Administration (“NHTSA”), part of the Department of Transportation, investigated the concerns at issue. It said that the alleged defect has been identified as premature wear-out of the parking brake linings after one of them remains in contact with the brake drum surface while driving. This condition is characterized by the brake shoe pivoting about the piston assembly within the plane of the brake system backing plate so that the end of one of its linings rests against the drum surface. Relative motion of the drum during driving acts to self-energize the brake so as to maintain the drum/lining contact and may occur even in the absence of a parking brake application.

[9] The investigation by NHTSA, in its Engineering Analysis Closing Report (“Closing Report”), found that the defect is limited to 1999-2002 vehicles and that vehicle rollaways, the primary concern, are limited to 58,633 vehicles equipped with manual transmissions. The investigation found that the automatics had a rollaway rate comparable to their peers:

The subject brake system is used in over 4 million MY [Model Year] 1999 – 2004 C/K 1500 vehicles. Field data and manufacturing changes indicate that the defect is present only in the MY 1999 – 2002 vehicles. Further analysis of complaint data shows that vehicle rollaways—the primary concern in this investigation are largely limited to the relatively small population (58,633) of vehicles equipped with manual transmissions, whereas the remaining population shows a rollaway rate comparable to that of peer vehicles. GM has initiated a recall to remedy the premature wear condition in these manual transmission vehicles.

[10] The Closing Report also noted that field data showed a dramatically lower failure rate in vehicles using the new spring clip at comparable exposure levels, “suggesting that the newer clip has significantly extended the service life of the PBR system.”

[11] NHTSA closed the engineering analysis because GM initiated the recall to remedy the defective condition of the manual transmission vehicles. NHTSA was later asked to do another defect investigation with respect to vehicles with automatic transmissions, but it declined to do so. In its reasons, 71 Fed. Reg. 30474 (2006), NHTSA described its initial investigation relating to both manual and automatic transmissions and explained that GM had decided on a voluntary recall of vehicles with manual transmissions. It goes on to say:

…The remedies [the manual transmission voluntary recall and installation of the low-force clip] were necessary to correct the conditions that cause the friction linings to wear to an extent where the parking brakes can become ineffective in immobilizing a parked vehicle. Similar GM vehicles built on the same platforms with automatic transmissions were not recalled because ODI’s extensive study conducted during the investigation indicated that they had a roll-away event rate less than one fiftieth (1/50) of the rate for the recalled vehicles… and that the rate was also similar to peer vehicles with automatic transmissions manufactured by Ford and DaimlerChryser Corporation. Automatic transmission reduced unattended roll-aways because of the presence of a mechanical “park pawl” that immobilizes the drivetrain when the transmission is placed in park.

[12] No concerns have been raised with or expressed by Transport Canada, the regulatory body responsible for vehicle safety and standards in Canada. It was advised of the voluntary recall with respect to the manuals. Transport Canada receives and investigates complaints from the public and other sources. Only three complaints were made to Transport Canada relating to parking brakes on GM trucks; none relate to the vehicles included in the proposed class.

[13] The records of GM’s customer communication centre show three brake lining wear complaints from British Columbia in the period of September 6, 2001 to February 12, 2007. The cause of the wear cannot be identified. The uncontradicted evidence is that there are numerous causes of brake lining wear. When these vehicles were eligible to participate in the Canadian Motor Vehicle Arbitration Plan, no arbitrations were initiated by owners. GM’s expert evidence, provided by Jason Petric, a design engineer employed by GM, and Andreas Koschate, a mechanical engineering technologist, is that different considerations apply to automatics compared to manuals and there are no safety concerns for the automatics.

[14] Ms. Chartrand’s expert evidence, provided by Mark Bailey, director and senior engineer for MEA Forensic Engineers & Scientists Ltd., is that parking brakes are necessary for the safe operation of both manuals and automatics. Mr. Bailey’s opinion is that an automatic without a properly functioning parking brake is dangerous.

[15] In January 2007, the Federal Circuit Court in Arkansas certified a class action against GM in Bryant v. General Motors Corporation, No. CV-2005-051-2 (Ark. Cir. Ct. Jan. 11, 2007). The claim in that case is for breach of express and implied warranty, unjust enrichment, and fraudulent concealment, all arising out of the same alleged defective spring clip on the parking brakes of automatic, 1999-2002, GM pickup trucks and utility vehicles. The Supreme Court of Arkansas upheld the certification decision on June 19, 2008: General Motors Corporation v. Bryant, No. 07-437 (Ark. Sup. Ct. June 19, 2008).

II. Summary of the Arguments

A. Ms. Chartrand

[16] Ms. Chartrand asks for class certification of this action on the grounds of judicial economy, access to justice, and behaviour modification, which are the goals of class proceedings identified by the Supreme Court of Canada: Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158 at para. 15. She says that the common issues in this action allow for the adjudication of the claims of all owners of proposed class vehicles in British Columbia. Certification will eliminate the multiplicity of proceedings. She also argues that the cost of individual actions is prohibitive given the expected individual award.

[17] She says that GM’s conduct shows that GM thought that the spring clip problem related to both manuals and automatics all along, as it behaved as if it was a universal problem. It replaced the original spring clip in both the manuals and the automatics from 2003 onwards.

[18] The undisputed evidence is that service bulletins sent out by GM from September 2002 up to and including January 2005, made the new spring clip available to both manuals and automatics. Those service bulletins specifically said they did not address any parking brake concerns, though GM knew about the concerns.

[19] Technical bulletins issued in 2002 and 2003 also applied to both manuals and automatics. Those technical bulletins said that some owners may identify a scraping noise while driving that may be caused by the parking brake, but the bulletins did not differentiate between manuals and automatics.

[20] She points out that the Owners’ Manual provided to owners of automatics says it is dangerous to leave the vehicle without using the parking brake; it is a brake assistance device.

[21] GM has acknowledged safety concerns with respect to the spring clip problem in manuals. It said in the manual recall that the problem could cause a crash. Ms. Chartrand says that there is no material difference between the automatics and manuals; automatics are equally dangerous.

[22] Ms. Chartrand suggests that an inference can be drawn that only the manuals were recalled because to do so cost less money than recalling the automatics too. She bases this argument on the fact that there are significantly fewer manuals than automatics, as noted in the NHTSA report.

[23] She says that the universal re-design of the spring clip was not just a normal incremental move, as suggested by GM, but was done for safety reasons.

[24] She also says that GM’s own testing of an automatic pickup truck in June 2004, found that it failed all parking brake tests. She argues that the results show that the vehicle did not comply with Canadian regulatory standards. She relies on GM’s admissions found in notices to admit:

In late June of 2004, a 1500 Series customer buy-back vehicle with 99,779 miles and a worn, unserviced single-shoe parking brake system was evaluated for grade-holding capability at Milford Proving Ground. In as-received condition with measured clearances of .087 inches (left) and .057 inches (right) the parking brake would not hold the vehicle on a 20% grade at 6,400 lbs. gross vehicle weight (GVW) or on an 11.6% grade at 14,000 lbs. gross combined vehicle weight (GCVW) with trailer. Roll-away was obvious and immediate in each case. When the parking brake lining-to-drum clearances were adjusted on both sides to meet the nominal .026-inch service specification, the vehicle remained stationary in all scenarios except when pointed downhill on the 11.6% grade with trailer attached.

In early December of 2004, grade-holding capability of the high-mileage customer vehicle evaluated in June was again observed at Milford Proving Ground with the parking brake in the original unadjusted state. The intent of this evaluation was to determine if a “delayed roll-away” condition could be induced on a gentle grade. A series of evaluations conducted on 2.6% and 4.4% grades demonstrated that roll-away was immediate and obvious, and would have clearly indicated to the driver that the parking brake was not operating as intended. On the 2.6% grade in a 5,270 lb. Lightly-loaded vehicle (LLVW) condition, the parking brake held, but the vehicle would begin to move if pushed. It did, however, remain stationary with repeated door slamming.

[25] Ms. Chartrand argues that GM has been also been unjustly enriched. She says GM chose the high-force spring clip because it is less expensive than the alternatives. She also says that GM is enriched because vehicle owners will have to pay GM and their dealers for the replacement spring clip and repairs.

[26] She submits that she has proven, as she must, that: the pleadings disclose a cause of action; there is an identifiable class of two or more persons; the claims of the class members raise common issues, whether or not those common issues predominate over issues affecting only individual members; and a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues: Class Proceedings Act, R.S.B.C. 1996, c. 50 s. 4(1) [CPA].

[27] She argues that she has proven that she will fairly and adequately represent the interests of the class. She has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceedings. She also says that she does not have, on the common issues, an interest that is in conflict with the interests of other class members. The Court must, therefore, certify the claim: CPA s. 4(1).

[28] She proposes five common issues for certification, but says these questions are subject to amendment depending on the evidence and record:

(a) Is the spring clip of the parking brake mechanism defective?

(b) Does the design, manufacture, and failure to warn of the defective spring clip constitute negligence on the part of the defendants?

(d) Assessment of damages or restitution attributable to the class members for the defective spring clip.

(e) Are the defendants liable for punitive damages?

B. GM’s Arguments

[29] Both defendants have taken the same position throughout.

[30] GM applied by way of a motion for summary judgment for an order that Ms. Chartrand’s claims be dismissed on the basis that she has not proven that she suffered a loss. It did this on that basis that her counsel paid for the repairs and the retainer agreement says she will not have to repay him even if her claim is dismissed.

[31] GM also defends the certification application on its merits.

[32] It says that while there is a cause of action in negligence, it is plain and obvious that there is not a cause of action in unjust enrichment. The primary focus of this argument is that Ms. Chartrand has not provided any evidence that GM benefited directly from any loss.

[33] It argues there is no identifiable class of two or more persons and, in particular that there is no air of reality to the commonality of the claims proposed to be advanced on behalf of the class members. It submits that there are no common issues, and if there are, they pale in comparison to the individual issues. The question of whether the parking brake was dangerous must be assessed on an individual basis. Premature wear can be caused in many different ways and individual inspection would be required to determine legal causation.

[34] GM also submits that Ms. Chartrand is not a suitable representative plaintiff.

[35] GM says that there is no basis in the evidence for Ms. Chartrand’s assertion that GM’s own test results show that the vehicle did not comply with Canadian regulatory standards. It says that the evidence the Court does have shows that there has been compliance.

III. Analysis

A. Decision

[36] I have concluded GM’s summary judgment application should be dismissed. Ms. Chartrand did suffer a loss.

[37] Ms. Chartrand’s application for certification, however, should be dismissed. Accepting that the pleadings disclose a cause of action in negligence, and assuming for this purpose that they disclose a cause of action for restitution based on unjust enrichment, there is not an identifiable class of two or more persons. Even if there were an identifiable class, Ms. Chartrand is not in a position to fairly and adequately represent the interests of that class.

[38] The causes of action alleged in the Bryant case, the legal principles that apply to them, and the law relating to certification, are not the same as those found in British Columbia. The Bryant decision does not assist this Court in determining whether there is a class of two or more persons in British Columbia, or whether Ms. Chartrand is a suitable representative plaintiff.

B. Identifiable Class

1. Ms. Chartrand’s Submissions

[39] Ms. Chartrand asks to have the class defined as all owners or subsequent owners of 1999-2002, 1500 series pickups and utilities originally equipped with an automatic transmission and a PBR 210x30 Drum-in-Hat parking brake system utilizing a high-force spring clip retainer, who registered his/her vehicle in British Columbia. She further defines this as the following model-year and model-coded vehicles equipped with automatic transmissions resident in British Columbia at the time of determination of whether or not this action is certified by the British Columbia Supreme Court as a class action: C-K 15703 (MY 99-02); C-K 15753 (MY 99-02); C-K 15903 (MY 99-02); C-K 15953 (MY 99-02); C-K 15706 (MY 00-02); C-K 15906 (MY 00-02); and C-K 15936 (MY 02 only). These vehicles are built on a GMT 800 platform.

[40] She says that GM has confirmed that 16,405 vehicles, which meet the above definition, were distributed in British Columbia and that GM has the contact information for the original purchaser. GM also has confirmed that it is possible to find the contact information for subsequent purchasers of those vehicles. Therefore, this is a clearly identifiable class of persons within the meaning of s. 4(1)(b) of the CPA.

[41] GM says it is unclear whether owners and subsequent owners include only those who own a specified vehicle at the date of any certification order or whether it includes anyone resident in British Columbia who owned one of the specified vehicles at any time up to the date of any certification order. In response, Ms. Chartrand argues that the wording of owners and current owners is from GM’s warranty documentation and means current owners.

2. GM’s Submissions

[42] GM says that there is no identifiable class of two or more persons sharing the same complaint, as required under the CPA.

[43] GM argues that there must be an air of reality to the commonality of the claims proposed to be advanced by Ms. Chartrand on behalf of the class members. GM says that there is no evidence that lends an air of reality to the proposition that there is a class of persons who share the alleged safety concerns of Ms. Chartrand, or the proposition that the proposed class of vehicles are affected by a potential safety risk. It also says that Ms. Chartrand has not introduced evidence of any loss of value in the proposed class vehicles. There is therefore no evidence that the proposed class shares a common claim, as required.

3. Discussion—Identifiable Class

[44] The CPA requires that there be an identifiable class of two or more persons: s. 4(1)(b). Identifiable class is described in Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534 at para. 38 [Dutton]:

[38] …First, the class must be capable of clear definition. Class definition is critical because it identifies the individuals entitled to notice, entitled to relief (if relief is awarded), and bound by the judgment. It is essential, therefore, that the class be defined clearly at the outset of the litigation. The definition should state objective criteria by which members of the class can be identified. While the criteria should bear a rational relationship to the common issues asserted by all class members, the criteria should not depend on the outcome of the litigation. It is not necessary that every class member be named or known. It is necessary, however, that any particular person's claim to membership in the class be determinable by stated, objective criteria.

[45] The Supreme Court of Canada in Dutton examined the history of the class action and described the problem class proceedings address as “many suitors with the same grievance.” The Court described numerous problems in today’s world—including problems with manufacturers who produce faulty products—which create conflicts that “pit a large group of complainants against the alleged wrongdoer.” The Court said that class actions aggregate similar individual actions. See Dutton at paras. 25-27.

[46] The CPA addresses the need for a group of people with complaints, as identified by the Supreme Court of Canada in Dutton, by saying that the claims of the class members must raise common issues: s. 4(1)(c). The class members must have claims and those claims must raise common issues. The broad purpose of the legislation is to provide an effective means of resolving situations where two or more people have the same or similar complaints. Class proceedings are not designed to create complaints where none exist.

[47] Ms. Chartrand did not have a complaint before she was contacted by the proposed class counsel. She now has claims based on negligence and unjust enrichment.

[48] GM concedes that the pleadings disclose a cause of action in negligence on the basis that there is recognition in Canadian law of recovery in negligence for economic loss related to the correction of defects that pose a real and substantial danger: Winnipeg Condominium Corporation No. 36 v. Bird Construction Co., [1995] 1 S.C.R. 85, 121 D.L.R. (4th) 193. The elements of that claim that must be proven at a trial are: that GM owed Ms. Chartrand and the members of the class a duty of care not to manufacture and distribute a vehicle containing a dangerously defective spring clip; that GM breached the standard of care; that she and the other class members suffered a loss; and that the loss was caused by GM.

[49] With respect to breach of the standard of care, her complaint is that the spring clip of the parking brake mechanism was dangerously defective in ordinary use. GM should either not have sold the vehicles or ought to have warned the owners of the proposed class vehicles once they knew or ought to have known of the dangerous defect: Harrington v. Dow Corning Corp., 2000 BCCA 605, 82 B.C.L.R. (3d) 1.

[50] Ms. Chartrand alleges in her pleadings two bases for a claim for restitution for unjust enrichment: GM chose the spring clips because they cost less than the previously proven designs, which had three times the number of parts; and GM is enriched from her “and the class purchasing the new low force spring clips from GM and their dealers.”

[51] The test for unjust enrichment has three elements: (1) an enrichment of the defendant; (2) a corresponding deprivation of the plaintiff; and (3) an absence of juristic reason for the enrichment: Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629 at para. 30.

[52] There is no determination of the merits at the certification stage; the test is whether the claim is appropriately prosecuted as a class action. There must, however, be an evidentiary basis to support the assertion that there is an identifiable class: Hollick at para. 25.

[53] It is not enough to point to a group of people in British Columba who are owners of specific vehicles with automatic transmissions. There must be some evidence that two or more people have a complaint that GM manufactured a dangerously defective product that caused them a loss and/or that GM was unjustly enriched at their expense.

[54] There is no evidence of such complaints. NHTSA was satisfied with the recall of only the manuals. Transport Canada has no concerns and has received no complaints. The three complaints to Transport Canada relating to parking brakes on GM vehicles had nothing to do with vehicles in the proposed class. The three brake lining wear complaints from British Columbia in the period of September 6, 2001 to February 12, 2007 have not been tied to the spring clip problem and could have been caused in other ways. There is no evidence of complaints or concerns by consumer groups. There is, therefore, not an identifiable class as there is not a group of two or more people with complaints.

[55] I have not overlooked the fact that members, or some members, of the proposed group may not know about the spring clip issue; Ms. Chartrand did not know about it. However, there is no evidentiary basis for concluding that they would have reason to complain that it was dangerously defective or that GM was unjustly enriched, even if they did know about it.

[56] In addition to the evidence just referred to, the evidence discloses that the Canadian Motor Vehicle Safety Standards (“CMVSS”) requirements have been met. They are set out in Schedule IV of the Motor Vehicle Safety Regulations, C.R.C. c. 1038.

[57] The CMVSS contain relevant standards relating to parking brakes and rollaway prevention features of automatic transmissions. These are, respectively, CMVSS 105 and 114. Generally, a vehicle cannot be imported into or sold in Canada unless it complies with the CMVSS. The specifics of those safety requirements are included in the Technical Standards Document No. 105. Under requirement S5.2.2.2, the vehicle’s parking brake, with the parking mechanism not engaged, must be capable of holding the vehicle stationary for five minutes on a 20% grade, in both directions.

[58] The evidence of Mr. Petric is that the parking brake system in the proposed class vehicles underwent testing before it was approved for use by GM and, as designed and manufactured, it met or exceeded all applicable safety standards, including CMVSS 105 and the Federal Motor Vehicle Safety Standard 105 in the United States. William E. Davies, an employee of GMCL, stated in his affidavit that validation testing also established that the holding capacity for the automatic transmission parking pawl in the proposed class vehicles met or exceeded the applicable standard set out in CMVSS 114.

[59] There is no evidentiary link between GM’s testing, using a truck with a trailer, and the requirements of the Canadian regulatory standards. Arguments relating to GM’s conduct are based on speculation, not legally permissible inferences founded in the evidence. While Mr. Bailey has expressed the opinion that an automatic without a properly functioning parking brake is dangerous, the factual underpinnings of that opinion, for the proposed class vehicles in British Columbia, are not present.

[60] If the group of automatic vehicle owners found in the proposed class can, by reason of ownership alone, be viewed as an identifiable class under the CPA, there must still be some rational relationship between that class and the proposed common issues. This is implicit in the identifiable class requirement: Hollick at para. 20. The requirement is not an onerous one. The representative plaintiff does not have to show that everyone in the class shares the same interest in the resolution of the asserted common issues. The class, however, must not be unnecessarily broad: Hollick at para. 21.

[61] This requirement has been viewed as an air of reality test, testing the reality of the linkage between the plaintiff’s claim and the proposed class: Samos Investments Inc. v. Pattison, 2001 BCSC 1790, 22 B.C.L.R. (3d) 46, 2003 BCCA 87, 10 B.C.L.R. (4th) 234; Nelson v. Hoops L.P., a Limited Partnership, 2003 BCSC 277, 2004 BCCA 174.

[62] In Samos the Court was considering an application to certify on behalf of a single, diverse class, in a proceeding that alleged a civil conspiracy spanning some five years and which included a series of complex corporate transactions involving a widely traded public company. The Nelson case involved the move of the Grizzlies basketball team from Vancouver. Mr. Nelson proposed to bring a class proceeding on behalf of all season ticket-holders for the 2001 and 2002 seasons, saying he and the proposed class members would not have renewed their season’s tickets if they had known the team would leave. The applications for certification were dismissed in both cases.

[63] The British Columbia Court of Appeal dealt with Samos in Hoy v. Medtronic Inc., 2003 BCCA 316, 14 B.C.L.R. (4th) 32, a defective product case, pointing out that Samos dealt with a type of case where an identifiable class with common issues was not obvious. It did so in the context of a suggestion by the defendants that the Court hearing the certification application should have denied the application on the basis that there was no evidence of an actual demand for the class proceeding:

[56] ...The defendants rely on Hollick, supra, and the judgment of Mr. Justice Bauman in Samos Investments Inc. v. Pattison (2001), 22 B.C.L.R. (3d) 46, 2001 BCSC 1790, aff’d (2003) 10 B.C.L.R. (4th) 234, 2003 BCCA 87 (“Samos”) for the proposition that the plaintiff was required to demonstrate the support of other members of the proposed class.

[57] There is, before this Court by consent, evidence of 447 individuals who intend to join the class. That evidence was not before the chambers judge. In my opinion, however, the judge cannot be said to have erred in certifying this proceeding in the absence of this fresh evidence. In my view, in the circumstances of this case, the learned judge correctly applied the statutory criterion in s. 4(1)(b), namely that there was an identifiable class of two or more persons.

[58] In Samos, Bauman J. was faced with a “type of case where an identifiable class of persons with common issues [was] not obvious.” In this case, the learned judge was able to identify a potentially large number of claimants (¶58), and noted that if the certified action does not attract a sufficiently large class it would be open to the class action judge to de-certify the class action. Accordingly, I would reject this ground of appeal.

[64] It is true, as the Supreme Court of Canada noted in Hollick at para. 20, that in the usual case, the relationship between the class and the common issues is clear from the facts. The Court used as one example product liability actions “where the class is usually composed of those who purchased the product.”

[65] The circumstances in this case are very different from those found in the more usual products liability case such as Hoy. In that case, there was evidence of a link between the class and the common issues on the evidence. The claim involved the manufacture of pacemaker pacing leads which were implanted in people. The evidence at the certification hearing was that the United States Food and Drug Administration (“FDA”) found that the device in question could malfunction causing an unreasonable risk of substantial harm to public health. When the FDA contacted the defendant, Medronics, it immediately issued a health safety alert. There was evidence of at least two people who had their implant removed or partially removed as a result.

[66] In Hoy, as noted above, the question of an air of reality that was argued went specifically to a determination of whether the people who clearly did have complaints would want to participate in the class proceeding. The argument made before the hearing judge was that there was no evidence of a widespread demand for access to justice, based on the fact that only two people had indicated an interest in pursuing the litigation: Hoy v. Medronic Inc. (2001), 94 B.C.L. R. (3d) 169 at para. 26 (S.C.).

[67] In this case, there have been no complaints in British Columbia to GM or Transport Canada about the alleged defective parking brake system. No regulatory body in Canada or the United States has expressed concern over the safety of the parking brake system on the automatic proposed class vehicles. There is no evidence that GM has been unjustly enriched. There is also no evidence of anyone wanting to participate in the class proceeding; Ms. Chartrand herself was recruited to participate.

[68] There is no air of reality to the assertion that there is a relationship between the proposed class, being the owners of the automatics in question, and the proposed common issues that arise in Ms. Chartrand’s negligence and unjust enrichment claims.

C. Representative Plaintiff

[69] Before this case can be certified as a class proceeding, the Court must be satisfied that Ms. Chartrand, as the proposed representative plaintiff, would fairly and adequately represent the interests of the class: s. 4(1)(c) CPA.

1. The Evidence

[70] Ms. Chartrand swore affidavits in support of her application for certification and to be appointed as the representative plaintiff. She was cross-examined on those affidavits.

[71] She and her husband Michel Paquette purchased the 2000 Chevrolet Tahoe at issue in 2002 from Preston Chev Olds in Langley, British Columbia. She provided the details of how she became involved in this matter in her affidavit sworn on February 9, 2007:

4. In September of 2005, the time of which I am advised by Michael Dunn, I was telephoned by Michael Dunn. He advised that my Truck might have a problem with the parking brake. He asked if I was interested in having it investigated. I agreed. I came to Vancouver on September 28, 2005 and he explained that he was partnered with some American lawyers, I am advised by him that their names are James Wyly and John Arnold, of Texas, in the United States of America. Michael Dunn told me about the basic allegation of this case, namely, that General Motors may have made a parking brake that was defective. Michael Dunn and I went to Tremblay Motors Ltd. [location given] on September 28, 2005. A Mechanic put my vehicle on the lift and took off one of the rear Wheels of my Truck. Mr. Dunn advised that in his mind the Parking brake I had looked like it was the one his partners had described to him.

5. On September 28, 2005 Michael Dunn advised of the obligations of the Representative Plaintiff in a Class Proceedings. I had to fairly represent all those people in BC who like me had a parking brake on a GM vehicle that was defective. That I could not have a conflict of interest with the other class members and that the subject of the action would be to have GM motors recall the defective trucks or pay to have them fixed. I was also advised that there would be no cost to me for this litigation. I was also advised that other than the repairs to my vehicle there would be no other financial incentive to me. I signed the retainer agreement to be the representative plaintiff for this action.

[72] Ms. Chartrand explained that they went to Tremblay Motors because the truck had previously been in an accident and she was not sure whether there had been any repairs done to the parking brake after the accident. She said that the cost of the repair, paid for by her lawyer, was $842.70. Her evidence is that she is not a wealthy woman and “may have difficulty paying for an unscheduled repair over $500.00.”

[73] The retainer agreement says this:

This is a contingency fee retainer agreement between yourself and Dunn & Company A Professional Law Corporation. We are pleased that you have asked our firm to provide legal services to you. We have agreed that your action will be commenced as a class action in which you will be the representative plaintiff.

We have agreed that fees from this class action will be charged on a contingency basis and that any fees will be derived from our application to the court for an award of fees. We will request fees based on a percentage of the amounts recovered in the class action.

Under such a contingency fee arrangement, our firm assumes the risk that we will not be paid in the event that nothing is realized within the class action. However, it is also possible that we may earn fees, which are greater than the fees, which would be charged on an hourly basis, which is, in part, compensation for the risk we will assume.

In the context of a class action, this agreement cannot be enforced unless it is approved by the court. We will apply to the court to approve this agreement at the appropriate stage.

We will represent you on the following terms:

1. No amount will be payable by you or any other class member to our firm unless an amount is recovered for you or the class.

2. Our fee will be determined by the court. We expect to apply for a fee calculated as a percentage of the amounts recovered, plus all applicable taxes:

a. If this action is settled up to 90 days prior to trial, we expect to apply for a fee of 30% of all amounts recovered;

b. If this action is settled or final judgment obtained at any time after 90 days prior to trial the percentage will be 35%.

At this stage of the litigation it is very difficult to estimate what amounts may be recovered and what the fees might be. We will be able to provide a better estimate once we have more information in relation to the size of the class in Canada and the damages sustained.

3. The “amounts recovered” include any payment of money which is made to you or other class members by or on behalf of the opposing parties by way of settlement, judgment, voluntary payment or execution and any other benefit derived from the class proceeding for which a value may be attributed by the court. The “amounts recovered” do not include any costs award made in your favour.

4. In addition to our fees, all reasonable, proper, and necessary disbursements incurred by us in the class proceeding will be paid from the amounts recovered. These disbursements are those expenses incurred by us on the class’ behalf, such as expenses for consultants, experts, copying, deliveries, long distance calls, travel, etc. as well as interest on these expenses at the rate set from time to time by the relevant authorities.

5. You are hereby authorize and direct that any amounts recovered shall by paid to us, in trust, and you also authorize us to deduct from those proceeds our fees and disbursements as approved by the court, with the balance of the amounts recovered being remitted to you and the other class members as directed by the court.

6. You have the right to terminate our services at any time, with or without cause, upon written notice. In the event of such termination of our services, we may apply to the court to determine any appropriate fees or disbursements payable to us for our services.

7. We reserve the right to terminate our services for good reason. Examples include the emergence of a conflict of interest or where your legal action would require us to act against an existing client of ours. We also reserve the right not to proceed with your action at any time if, in our view, it has insufficient merit, either in the terms of probability of success or in the amount you or the class are likely to recover. In such a case, you will not be responsible for any fees or disbursements.

8. Within 90 days after this agreement is made, or our lawyer-client relationship is terminated, you may apply pursuant to s. 68 of the Legal Professions Act to a District Registrar of the B.C. Supreme Court to have the agreement reviewed.

The case will be handled collaboratively by Dunn & Company of Vancouver. Mr. Michael Dunn will be primarily responsible for the conduct of the litigation. However, we may be assisted from time to time by other partners, associates and Legal Assistants.

[Emphasis added]

[74] With respect to the involvement of the lawyers from Texas, Ms. Chartrand agreed in cross-examination that she did not understand what their role is. She also agreed that she did not know anything about the financial arrangements that have been made with them; no one has told her anything about that.

[75] Her evidence is that no one, including GM and Preston Chev Olds, told her or wrote a letter to her telling her that her parking brake did not work. Neither offered to fix it or pay to have her fix it. No one, other than her lawyer, ever told her that a new spring clip was designed to replace the one in her brakes. No one, other than her lawyer, ever told her that the manual transmission trucks similar to hers were recalled. She said she wished “they would have told me and fixed my parking brake without having to go through this law suit.”

[76] She said she understands her duties and obligations to protect the class members. She knows she may be required to testify and otherwise appear before the court. Her evidence is that she is fully prepared to do this. She believes that everyone should have a fair chance of having his or her parking brake fixed. She said, during her cross-examination, that safety is a concern:

Just like for my vehicle for anybody else out there. Anybody else that works their butt off every day deserves to have something that they believe is what they’re paying for. We paid $50,000 for this vehicle. And I drive my kids in it, myself, my husband, whatever we do in it, I’m sure we should be safe, and I find out we’re not.

[77] Ms. Chartrand gave evidence about the nature of her relationship with her lawyer. She said she was not involved with a decision made to amend the statement of claim to narrow the class. She said she lets Mr. Dunn deal with most of her papers because she’s not educated when it comes to that; that is why she has a lawyer.

[78] In the context of that amendment she was asked if she had choices and she said:

I’m sure I did because I have seen Michael Dunn many times in the last couple of years to talk about this case. But exactly what changes or what decisions we made, I’m not 200 percent sure what they were, but I’m sure I would have – if he came and he talked to me we would discuss it. And I trust him, and he’s been my lawyer for many years, so I believe he knows what he’s doing. He’s the lawyer, I’m just the –

[79] She also said in the amendment context:

I have a lot of paperwork. What the difference is between everything, I’m not too sure, so I’m – I understand some of the facts. Like, my – my vehicle is a faulty vehicle, and it’s probably not the only faulty vehicle, which I believe for me – I’m not the smartest person in the world, I’m not educated when it comes to the law or whatever, but I don’t think it’s fair that a person like me and my husband, who work hard every day and paying $850 a month for a vehicle and has to – has to be worried about the performance of my vehicle.

[80] She agreed that she was not aware of the proposed litigation plan, which is also required: s. 4(1)(e)(ii) CPA.

[81] She said in cross-examination that she was not aware of the investigations by the U.S. regulatory authorities.

[82] Her husband, Michel Paquette, has sworn an affidavit in which he agrees with Ms. Chartrand’s decision to be the representative plaintiff. He says that if “the Court requires me to be added as a named representative in this action I have been advised of the representative [plaintiff’s] obligations and I am fully prepared to share this responsibility with my wife.”

2. Ms. Chartrand’s Submissions

[83] Ms. Chartrand acknowledges that she does not have extensive knowledge about the proceedings. However, she says that she has received a lot of documents and was advised of the procedure throughout. She has a core understanding of what the litigation is about and what is appropriate.

[84] She points out that she is not a lawyer and is entitled to rely on the advice of her lawyer. She and her lawyer have had a longstanding solicitor-client relationship and she trusts him. She says that she should not be expected to pass an examination on civil procedure or court forms.

[85] Ms. Chartrand also argues that she was advised from the outset that her counsel is partnered with American counsel. There is reference to partners in the retainer agreement she signed on September 28, 2005.

[86] Ms. Chartrand emphasizes that she is a mother and a wife who is willing to come forward and be the representative plaintiff without anything more than the “incentive” to get her brakes fixed. She believes that it is important that all owners in the proposed class have the same opportunity to have their brakes fixed and that GM should pay for it. She submits that this is an access to justice issue for people like her with small claims. She is in as good a position as any other plaintiff in any proceeding; to say otherwise would set a dangerous precedent.

[87] She says that the indemnity agreement found in her retainer agreement is not uncommon and is appropriate. She could not afford the costs of the repairs that were paid for by her counsel.

[88] She argues that there is no statutory provision or other legal principle that prevents recruitment; it is not unlawful. This case is dramatically different from many recruitment cases. The fact that she was recruited is not a basis for dismissing her certification application.

[89] She acknowledges that she said in her initial application for certification that she was the owner of the truck, when in fact her husband was the registered owner at the time. She has explained that they purchased the truck jointly and both use it. They have changed the registered owner from time to time so as to obtain the best insurance rates.

[90] She points out that her husband agrees that she should be a representative plaintiff in this case. Her husband, Michel Paquette, is prepared to be added as representative plaintiff.

3. GM’s Submissions

[91] GM emphasizes that having an adequate representative plaintiff is of real concern to it because it must deal with the proposed plaintiff in efforts to resolve the dispute or have it fairly determined. Ms. Chartrand’s lawyer should not be the driving and controlling force behind the litigation.

[92] GM says that the evidence shows that Ms. Chartrand has no independent knowledge or understanding of the issues underlying the action, was solicited to act as representative plaintiff, and was provided with what she refers to as a financial benefit in return for doing so. While a representative plaintiff may be able to rely on counsel, even on her evidence Ms. Chartrand does not have even a basic level of understanding of the litigation process or the capacity that would allow her to adequately instruct counsel in any truly independent way.

[93] She has, it says, played no role in decisions relating to the litigation. For example, she has no understanding that amendments were made to the pleadings narrowing the class and she knows nothing of the litigation plan advanced by her counsel. She has no awareness of the procedures that are available to proposed class members to bring any safety concerns to the attention of Transport Canada and she undertook no consideration of such an alternative before the commencement of these proceedings.

[94] Her counsel has mentioned several times that he is partnering with American lawyers involved in a similar class action in the United States. There are no specifics provided of this relationship. She does not know the particulars of the relationship, did not play a role in determining the parameters of the relationship, and has not had interaction with the American counsel.

[95] GM says that Ms. Chartrand has no personal stake in the resolution of the common issues. She cannot be seen to be serving in this proceeding as anything other than a nominate plaintiff through which the organizers of the litigation seek to pursue its prosecution. Having her as representative plaintiff, GM submits, would be tantamount to allowing a class proceeding to go forward without a representative plaintiff. This, they argue, is not what the legislation intended when it included a requirement that there be a representative plaintiff who would fairly represent the interests of the class.

4. Decision – Representative Plaintiff

[96] In assessing whether Ms. Chartrand is an appropriate representative plaintiff, the Court may look to her motivation and the competence of her counsel. She does not have to be "typical" of the class, nor the "best" possible representative. The Court should be satisfied that she will vigorously and capably prosecute the interests of the class: Dutton at para. 41; Campbell v. Flexwatt Corp., (1997), 44 B.C.L.R. (3d) 343 at para. 75, 98 B.C.A.C. 22.

[97] As the representative plaintiff she has a significant role to play in the proceedings after certification. She acts in the best interests of the class by directing litigation, instructing class counsel and authorizing settlement: Richard v. British Columbia, 2007 BCSC 1107, 284 D.L.R. (4th) 48 at para. 42. She should be more than a spectator: Frey v. BCE Inc., 2006 SKQB 328, [2006] 12 W.W.R. 545 at para. 86.

[98] She is entitled to look to counsel to know the law, the procedures, and to devise the strategy whereby a remedy will be obtained: Frey v. BCE Inc., 2007 SKQB 328, 312 Sask. R. 4 at para. 7. She does not have to demonstrate an extensive understanding of the litigation process itself.

[99] What is needed is a genuine plaintiff with a real role to play and not a placeholder plaintiff for the entrepreneurial interests of lawyers who have so much at stake. The CPA does not contemplate that causes of action, legitimate though they may be, will be identified, and class members recruited, for the ultimate financial gain of lawyers or organizers. See: Richard, at para. 42; Poulin v. Ford Motor Co. of Canada, (2007), 52 C.P.C. (6th) 294 at para. 63 (Ont. S.C.J.); and Fantl v. Transamerica Life Canada, (2008), 60 C.P.C. (6th) 326 at para. 104 (Ont. S.C.J.).

[100] The evidence shows that Ms. Chartrand does have basic knowledge about the litigation and is being kept informed about what is happening. She has read the affidavits. She knows that there was a spring clip that caused premature wear on her parking brake and she thinks GM should pay. She knows experts have been hired to explain the details of how the brake functions and whether or not the spring clip is defective.

[101] She has a general understanding about her role as representative plaintiff. She trusts her lawyer and relies on him. She is convinced that GM is responsible for making a dangerously defective product, though she has no knowledge of the NHTSA investigation in the United States which supported GM’s decision to only recall the manuals. She seems passionate about making sure that GM is held accountable for manufacturing what she has been told by her lawyer is a dangerous product.

[102] I, however, am not satisfied that she has been actively participating in the decisions relating to the litigation to date. Nor am I satisfied that she would actively participate in the future by directing the litigation and instructing class counsel. The role for which she was recruited is a passive one. In that sense she is not in a position to vigorously and capably prosecute the interests of the class.

[103] This conclusion is reinforced by the contents of the retainer agreement. That agreement makes no reference to her participation in decision making. Her retainer agreement is quite different in this respect from the one found in Fantl, (at para. 23) which says that the client “retains the right to make all critical decision regarding the conduct of the matter.”

[104] Ms. Chartrand was unquestionably recruited by her lawyer. At the time she had no idea that there was a problem with the parking brake on her truck. Her lawyer paid for the repair of the truck as what she has called an incentive. She will never have to pay, even if she is unsuccessful in her claims. This goes beyond an indemnity agreement relating to costs and disbursements. While she may have some minor damage claims outstanding, she has no real stake in the resolution of the common issues or in the litigation generally.

[105] There is no specific legislative provision or legal principle which prohibits recruitment. Nevertheless, recruitment is a factor to consider in deciding whether a proposed representative plaintiff can fairly and adequately represent the class.

[106] Concerns also arise when American counsel are involved in proposed Canadian class proceedings. The nature of the involvement is relevant. Lawyers from other jurisdiction may be able to act as consultants. It is a different matter if they are in some way underwriting the litigation and obtaining a potential benefit from it. A representative plaintiff must have competent counsel in order to fairly and adequately represent the interests of the class. The court, as part of its role in a class proceeding, supervises class counsel to ensure that counsel is acting in the interests of the class. The court is not in a position to supervise the actions of or participation of counsel from another jurisdiction. See Poulin v. Ford Motor Company of Canada Ltd. (2006), 35 C.P.C. (6th) 264 at paras. 87-94 (Ont. S.C.J.).

[107] American lawyers are playing a significant role behind the scenes in this case. That is apparent from comments made throughout the proceedings by proposed class counsel. Ms. Chartrand does not know the nature of that relationship; she played no role in putting into place the arrangement with her counsel’s American partners. The Court does not know the nature of that relationship.

[108] The retainer agreement makes specific reference to partners. The CPA says that a retainer agreement is not enforceable unless it is approved by the court: s. 38(2). No application has been made to date to approve this retainer agreement. At such an application this Court may well have concerns about the undefined role of the American partners. Are they consultants or are they underwriting the litigation?

[109] The facts in Poulin show the kind of arrangement that can be in place. Canadian counsel in that case entered into what was called a co-counsel association agreement with a U.S. law firm. The agreement provided that the U.S. law firm would supply litigation support and guidance and fund the litigation costs. Canadian counsel had to get the firm’s consent before paying disbursement over $2,500.00. There was an agreed upon fee splitting of 70% to Canadian counsel and 30% to the U.S. law firm.

[110] It is incumbent upon Ms. Chartrand, in seeking certification, to satisfy the Court that she has a lawyer who will independently discharge his duties to her, the class, and the Court. Without knowing the nature of the relationship with her counsel’s American “partner”, the Court cannot be satisfied that her counsel is making choices based solely on Ms. Chartrand’s best interests and the interests of the proposed class.

[111] In all of these circumstances I am unable to say that she is a genuine plaintiff, and not a placeholder plaintiff for the entrepreneurial interests of her lawyer and his American partners. The evidence that her husband, Mr. Paquette, is willing to be added as a representative plaintiff does not change the analysis.

[112] In reaching this conclusion I am not criticizing Ms. Chartrand personally. She is a capable person. Ordinarily, someone in her position could be a suitable representative plaintiff. Here, she is not a suitable representative plaintiff because: she was recruited to play a particular role by counsel which did not involve active participation in decision making, at a time when she had no complaint against GM; she has no real interest in the outcome of the litigation because she was given a financial incentive to become involved; and her counsel has a partnership with U.S. lawyers, the nature of which is undisclosed, which may not be in her best interests or in the best interests of the class.

Conclusion

[113] GM’s summary judgment application is dismissed. Ms. Chartrand’s application to have her claims certified as a class proceeding is dismissed.

“Martinson J.”

Citation:	*Chartrand v. General Motors Corporation,*
	2008 BCSC 1781