Canada: Class Action Against Nissan: Discontinuance Granted, Application For Authorization Refused (In Obiter)!

Litigation and Dispute Resolution Bulletin
Last Updated: March 26 2019
Article by Fasken Martineau

On February 26, 2019, in the case of Lévesque c. Nissan,1 the Honourable Justice Donald Bisson of the Québec Superior Court granted an application by Francis Lévesque (the "Applicant") to discontinue his Application for Authorization to Institute a Class Action (the "Authorization Application"). In a detailed 23-page judgment, Justice Bisson described the application for discontinuance as late and issued detailed reasons, in obiter, concluding that the Court would have dismissed the Authorization Application even if the action had not been discontinued. The Court provided its obiter reasons as an exercise in persuasion should anyone attempt to bring another such a class action against the Nissan Defendants in the Province of Québec.

The Authorization Application, filed on January 17, 2017, sought authorization to institute a class action against Nissan Canada Inc., Nissan North America Inc., and Nissan Motor Co., (collectively "Nissan") on behalf of all persons in Québec who own or have owned, lease or have leased, one or more of 23 Nissan models identified by the Applicant as having an alleged defect in their timing chain systems.

Discontinuance and Additional "Last Minute" Evidence

The hearing on the Authorization Application was scheduled for February 18, 2019. On February 14, 2019, after the parties had already exchanged and filed their respective plans of argument, the Applicant attempted to file a sworn statement and two new exhibits in order to supplement his evidentiary record, which the defence had argued was inadequate. The next day, on the last business day before the authorization hearing was scheduled to proceed and more than two years after the Authorization Application was filed, counsel for the Applicant informed the Court that Mr. Lévesque no longer wanted to act as the proposed class representative and would therefore be filing an application to discontinue the Application for Authorization.

In describing the events as a "coup de théatre", Justice Bisson granted the Applicant's request to discontinue the Authorization Application, which was not contested by Nissan. However, he also took the opportunity to provide detailed reasons why he would not have allowed the Applicant's new evidence to be adduced, and criticized this method of proceeding, which he described as "last minute" unfair to the defendants, whom he said were taken by surprise and not in a position to contest the new evidence in a timely manner. Justice Bisson also that it was necessary to seek the Court's approval in order to file any new evidence, which the Applicant HAD failed to do.

Hypothetical and Speculative Statements Without a Sufficient Factual Basis

In analyzing the criteria for the authorization of a class action, and specifically the second paragraph of article 575 of the Code of Civil Procedure ("CCP"), Justice Bisson questioned whether the Applicant had demonstrated an arguable case or an appearance of right as required. The Applicant alleged that the timing chain system in the relevant Nissan vehicles was affected by a latent/safety defect. In support of this allegation, Mr. Lévesque invoked his own personal case which can be summarized as follows:

  • In March 2014, he bought on the Kijiji website a used 2005 Nissan Frontier, which had been previously seriously damaged in an accident and had been rebuilt;
  • In April 2015, while he was driving on a highway in Québec, he heard a noise emanating from his vehicle's engine, had to stop on the service road and had his vehicle towed;
  • He noticed that the timing chain in his vehicle was defective;
  • His vehicle's mileage at the time was approximately 120,000 km;
  • He contacted Nissan which informed him that the warranty period had expired and that the repair was thus not covered under the applicable warranty;
  • He paid the costs of replacing and repairing the timing chain system and engine in his vehicle and incurred resulting damages.

In support of these arguments, the Applicant filed incomplete maintenance manuals and a Nissan technical bulletin intended for dealers that described the proper procedure to follow if "a noise" was discovered in the timing chain system. Based on this evidence, none of which mentioned anything about replacing or servicing the timing chain system, the Applicant concluded that the timing chain system should last the entire useful life of the vehicle.

The Court summarized the Applicant's legal syllogism as follows: my vehicle had a problem with the timing chain system that I consider premature, and so I conclude that it is a latent defect known to the manufacturer and hidden by it for years, and I conclude that this defect is present in all of the manufacturer's vehicles.

As a result, and in the absence of any factual evidence of a defect or premature degradation, the Court was of the view that the Applicant's proposed legal syllogism was flawed, amounting TO unsupported inferences and speculation, and could not be accepted. As Justice Bisson concludes, it cannot be the case that every time an automobile part breaks, there is automatically a latent defect or safety flaw, without at least some factual evidence or basis to support such a conclusion.

Establishing the Existence of a Class: Still an Essential Criterion

Justice Bisson then assessed the criterion in article 575(3) CCP to determine whether the Applicant had demonstrated that the existence of a class as proposed. The Applicant alleged that the proposed class could potentially include thousands of people, but the Court proceeded to analyze whether this statement could be accepted as true.

On this, the Court concluded that the Applicant had failed to establish that there was even one other potential class member in a similar situation. In fact, the allegations refer only to the Applicant's purely personal case, from which he deduced that there was a class of potential members. His allegations were general and did not establish the existence of a class of persons who were victims of a latent defect and/or faults alleged against Nissan. The mere fact that thousands of people in Québec have bought and leased Nissan vehicles is not sufficient to satisfy the criterion under article 575(3) CCP. In short, the Applicant could not infer, without any evidence whatsoever, that a class of potential members existed as a result of his personal experience.

The Court then addressed the criterion of proper representation under article 575 (4) CCP and concluded that the Applicant had not even discharged the "minimum" burden of proving that he could properly represent the class. The Applicant had no personal cause of action against Nissan, and therefore no sufficient interest to bring the action at all. Moreover, the fact that the Applicant had not taken any steps to find another class member established that the Applicant was not a proper or competent representative and thus would have also failed to meet the criteria at article 575(4) CCP.

Conclusion: The Importance of Some Factual Evidence in Support of the Allegations

This decision reminds us of the fundamental principles of an applicant's burden when requesting authorization to institute a class action. Even though the applicant's allegations are to be taken as true at the authorization stage, these allegations must be supported by some factual evidence (as the Supreme Court of Canada noted in Infineon Technologies AG v. Option consommateurs2). An applicant cannot simply allege vague, imprecise facts or mere hypotheses. Further, despite the fact that certain recent decisions have indicated that it is possible to presume the existence of a class in certain situations, the Court has issued a reminder that an applicant must nonetheless take some positive steps to establish that he is not the only one in his situation, if he wishes to be accepted as an adequate representative.

This decision is important for all companies facing class actions in Québec and serves to demonstrate that, despite the low threshold for the authorization of a class action in the Province of Québec, the Court will not authorize a class on the sole basis of general statements or the personal opinions and hypotheses of one person without having some tangible evidence to support an arguable case.

Footnotes

[1] Nissan c. Lévesque, 2019 QCCS 609

[2] 2013 SCC 59

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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