Ontario Court of Appeal Addresses the Duty to Warn and Declines to Certify Claims for Pure Economic Loss in a Product Liability Class Action

In North v. Bayerische Motoren Werke AG, 2025 ONCA 340 the Ontario Court of Appeal addresses the limits of claims for pure economic loss in product liability cases. Applying Maple Leaf Foods, the court held that the proposed action could not be certified. The plaintiffs could not recover the cost of repairing their vehicles: there was no damage to persons or property other than the vehicles and no danger for the plaintiffs to avert. Further, the plaintiffs had no viable duty to warn claim: a plaintiff cannot succeed on an allegation that a warning would have prevented them from incurring unrecoverable economic losses. This decision highlights the difficulties plaintiffs will face certifying and succeeding with economic loss claims against manufacturers.

Background

The plaintiffs acquired BMW vehicles. After years of use, the vehicles allegedly suffered sudden power loss due to a failure in the chain assembly system, causing engine damage. The plaintiffs alleged that the vehicles were dangerously defective and that BMW was negligent in their design and manufacture of the vehicles. They also alleged BMW owed a duty to warn consumers about the alleged defect and that, had they been properly warned, they would not have purchased or leased the vehicles. The plaintiffs  did not allege any personal injury or damage to property beyond the vehicles.

The motion judge declined to certify the duty to warn claim and significantly narrowed the plaintiffs’ negligent design and manufacturing claim. The plaintiffs appealed and alleged the judge erred by not certifying the failure to warn claim and narrowing the negligent design and manufacturing claim. BMW cross appealed and alleged the case should not be certified.

ONCA’s Decision

The Court of Appeal allowed the cross-appeal and set aside the certification order. It found that the certification judge had erred by:

• certifying causes of action in negligent design and manufacturing based on damage limited to engine repair costs, and
• defining the class to include individuals who suffered only unrecoverable purely economic losses.

The court also held that the representative plaintiff did not have a viable cause of action. Without a representative plaintiff, certification was not available.

Economic Loss

The decision highlights the distinction between a pure economic loss claim and a traditional negligence claim. Pure economic loss is economic loss unconnected to injury to persons or other property. There is no general right in tort to be free from the negligent infliction of pure economic loss, and recovery for such loss is the exception rather than the rule.

The costs of repairing a defective product are recoverable in tort only if they are necessary to avert real and substantial danger to persons or property. Recovery is limited to the costs associated with removing the danger, not the costs of repairing the defect. In this case, the court found that the plaintiffs' claim for the cost of replacing their vehicles was not recoverable as it exceeded what was necessary to avert danger.

Further, even if only part of the vehicle (the chain system) was responsible for the failure, the plaintiffs had no claim for damage to the rest of the engine or the rest of the vehicle. The rest of the vehicle was not “other property” that could ground a traditional negligence claim. Damage to the vehicle was captured by the economic loss rule.

The Duty to Warn

The court affirmed that a plaintiff pleading failure to warn must plead the failure caused compensable harm—such as personal injury or property damage—not just economic loss tied to overpayment or lost value.

In this case, the plaintiffs did not allege that a warning would have allowed them to prevent personal injury or property damage. Rather, they claimed they would have avoided buying or leasing the vehicles altogether. The court held those allegations, focused solely on overpayment for a defective product, did not support a viable duty to warn claim in tort.