CANADA Trends and Developments Contributed by: David Gadsden, John Pirie, Brendan O’Grady and Anton Rizor, Baker McKenzie
replacing the vehicles. The plaintiffs also alleged that BMW failed to warn its consumers of the safety risks associated with the vehicles. No class member suf- fered physical harm and no property aside from the vehicles suffered damage. The lower court declined to certify the duty to warn claim and only certified the negligent design and manufacture claims on a narrow basis restricted to claims that allegedly resulted in (a) repair costs of the engine or (b) repair costs to avert imminent danger to persons or property. The plaintiffs appealed and the defendants cross-appealed the certification decision. The Ontario Court of Appeal dismissed the appeal and allowed the cross-appeal, setting aside the certifica- tion order. The Court of Appeal found that only the repair costs to avert imminent danger were economi- cally recoverable, but that the plaintiffs were not suit- able representatives because they had not suffered any recoverable losses. The Ontario Court of Appeal explained that pure eco- nomic loss is economic loss without a connection to a physical or mental injury to the plaintiff’s person or physical property. The common law distinguishes between a product that is damaged by an external force or incident (which results in a standard negli- gence claim) and a product that is inherently flawed and likely to become damaged and perhaps a safety risk to others (which raises difficult questions about recovery of pure economic loss). Ultimately, the Court of Appeal concluded that the plaintiffs’ losses were pure economic losses and that they were not recover- able because no costs associated with removing or repairing any dangerous defects occurred. The plaintiffs also argued that the defendant breached their duty to warn class members of the alleged neg- ligent design or manufacture. The Court of Appeal rejected this argument, noting that tort law imposes a duty on manufacturers to warn consumers of inher- ent dangers in their products. However, the Court of Appeal agreed with the lower court that the plaintiffs were not alleging that a warning to the class members would have averted harm or property damage, but rather, they were alleging that a warning would have resulted in the class members not purchasing or pay-
ing full price for the vehicle. The Court of Appeal con- cluded that the plaintiffs’ claim was for the diminished value of unrepaired cars, which is not recoverable. Separately, the Court of Appeal rejected certification because neither proposed plaintiff had incurred costs to prevent a real and substantial danger, leaving no suitable representative for the class claims. The appellants are seeking leave to appeal the deci- sion to the Supreme Court of Canada. Cryptocurrency class actions (and the question of jurisdiction) Cryptocurrency class actions are growing in Canada. Recent cases concern disputes under various sub- stantive legal areas including securities, consumer protection and competition laws. It is expected that this trend will continue to increase with the growth of digital assets and cryptocurrencies. An important preliminary question in any cryptocur- rency class action is whether the provincial courts have jurisdiction over international digital asset plat- forms. In determining whether a court has jurisdiction over a dispute, courts apply the two-part framework from the Supreme Court of Canada’s seminal decision in Club Resorts Ltd v Van Breda , 2012 SCC 17. At the first stage, a plaintiff must establish a presumptive connecting factor to the jurisdiction, which includes the following non-exhaustive factors: • the defendant is domiciled or resident in the prov- ince; • the defendant carries on business in the province; • the tort was committed in the province; or • a contract connected with the dispute was made in the province. Once the plaintiff has established one of the presump- tive connecting factors, at the second stage a defend- ant may rebut the presumption of jurisdiction by showing that the factor does not, in the circumstances of the case, point to a real relationship between the subject matter of the dispute and the forum, or only points to a weak relationship between them. If the defendant fails to rebut the presumption, the court accepts jurisdiction over the dispute.
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