Punitive damages awarded
Automakers in Canada can expect lots more lawsuits in Canada asking for “punitive damages” following a March 9 2005 Supreme Court decision that confirmed car owners can sue for much more than they lose when they buy a ‘lemon.’
This is a major victory for motorists because it confirms four other major, though, little-known, pro-consumer judgments rendered in Whiten ($1 million award against “the insurance company from hell”), Robson (automakers and their American counterparts can be held liable in Canada (in this case: Chrysler and GM paint delamination) for deceptive acts that violate the provincial Trade Practices Act:), Wharton ($5,000 special damages can be awarded when a vehicle, in this case, a Cadillac, doesn’t live up to its hype), and Sharman ($7,500 given a Windstar owner for “mental distress.”). All of these cases are fully-covered in Lemon-Aid.
As detailed in Lemon-Aid’s Used Car Guide, the $25,000 punitive damage award given by Saskatchewan courts in Prebushewski v. Dodge City Auto (1984) Ltd., et al. (Sask.) and upheld by the Supreme Court, sends a strong message that automakers and their dealers who stonewall owner complaints in Canada now risk serious financial losses, much greater than the replacement cost of the vehicle.
In December 1996, the Appellant and her husband purchased a brand new 1996 Dodge Ram 4X4 one-half ton truck. Financing was arranged through the Respondent Dodge City Auto (1984) Ltd. Fourteen months later, with only 31,000 km on the odometer, the truck burned beyond repair. They had paid $43,198.80 for the vehicle including taxes and extended warranty from the Respondent Chrysler Canada Ltd. (“Chrysler”). Upon learning of the incident, Chrysler did not assist the Appellant and declined to negotiate despite numerous requests from the Appellant; rather, it redirected them to their insurer. The Appellant’s insurer, Saskatchewan Government Insurance (“S.G.I.”) investigated the fire and concluded that it was caused by a defective daytime running light module. Two other Dodge trucks had caught fire after that of the Appellant and S.G.I. had a claim against Chrysler on all three trucks at the time of trial.
The trial judge concluded that the cause of the fire was a defect in the daytime running lights module. She concluded that the Respondents breached The Consumer Protection Act. Furthermore, she concluded that pursuant to s. 65 of the Act, $25,000 exemplary damages should be awarded to the Appellant.
The Court of Appeal upheld the non-exemplary damage award but found that there was insufficient evidence to warrant an award of exemplary damages.
The Supreme Court re-instated the exemplary damage award.

2001 Dodge Ram 1500 transmission victory
Hi Phil, I received the good news in the mail today, March 21, 2005. I won my court case against Chrysler Canada. The judge accepted the testimony of my independent transmission repair shop that the transmission failed prematurely due to a design error relating to the transmission cooling system (I have a 2001 Dodge Ram 1500 Quad Cab with a 360 engine and 125,000 km).
However the judge did take into consideration “betterment” and only awarded damages of 50% of the actual claim (which including interest and court costs amounted to $2,111.16). I am considering appealing the decision amount, as I believe there is some precedent that betterment has been ignored by the judicial system in some of these cases. What do you think?
(Yep, “betterment” was successfully challenged in Frank v. GM, a Saskatchewan judgment summarized in Lemon-Aid)
Phil, I want to thank you so very much for all of the help and guidance you
(and your wonderful Lemon-Aid guide) provided during this process. Had I
not found your book, and decided to pursue this issue further, I would never
have had the required knowledge, or courage to pursue this case to
conclusion. If you so desire, I can either scan, and e-mail, or fax you a
copy of the judgment for your records, and for your use for others to
consider as they pursue similar action. As well, if you know of others who
wish to contact me to discuss how I proceeded, you can certainly pass along
my contact information.
Jaret Gebert <[email protected]>

Ford 1997 Crown Vic engine victory
Dear Phil, my court case against Ford re the plastic intake manifold on my 1997 Crown Victoria was yesterday, March 15, 2005. The judge decided in my favour and awarded me the amount of the repair $961.13 plus interest and costs.
Ford’s argument centered around saying that there where good reasons why
My car wasn’t covered by the extended warranty and other cars were.
However, neither Ford’s lawyer, nor their product liability manager, who
testified by phone, really got around to saying what those reasons
were. They did say that police cars, taxis and limousine were considered
to be severe duty operations because of longer than normal idling times
supposedly resulting in higher engine and underhood operating
temperatures. One of my witnesses, a journeyman mechanic, did not agree
with this and said it was easier on a police car engine to be running
all day than another engine that was subjected to many ON/OFF cycles,
especially in our climate.
Myself, I pointed out that ONP #97M91 included not only the above
mentioned vehicles but also Mustangs, Cougars and Thunderbirds. These
cars are not subjected to the idling times mentioned earlier. Once again,
Ford could not give an explanation why these cars received extended
warranty and my car did not. I also pointed out that attachment 1 page 1
of this ONP tells the dealer to correct all vehicles in stock before
delivery. Having the defective part in court was also very helpful.
In the closing, I said that this intake manifold was defective from day
one (this was stated by the journeyman mechanic) and therefore should
be covered by the original three year 60,000 km warranty even though the
defect didn’t become evident until six years and 154K later. I also
mentioned the Consumer Protection Act of Saskatchewan section 48 (d)(g)
section 50 (2). In his closing remarks the judge also mentioned section
51 of the Act.
I would have never thought of taking Ford to court if it wasn’t that you
suggested it in your Lemon-Aid book. Thanks a bunch for your books and
your support in this matter. You are providing an invaluable service to
people. Ford’s lawyer was certainly not happy with your Lemon-Aid books!
PS. The case file # is SC#461(2004). The ONP I used in court was 97M91
Supplement #2 not 97M91. I also entered into evidence ONP 99M01, ONP
01M02 and TSB #02-2-2.
Doug

Four Successful Lawsuits against GM
Confidential U.S. dealer service bulletins and memos confirm the 6-year/unlimited mileage benchmark that GM uses to accept or reject secret warranty claims. This attitude has resulted in GM losing four small claims court cases when its actions were contested in Ontario, Saskatchewan, and British Columbia. An Ontario GM judgment follows; there are almost a hundred others, affecting other automakers in Lemon-Aid Part Two and Three. Read these judgments to familiarize yourself with jurisprudence, court procedures, and evidentiary requirements.

Shields v. General Motors of Canada ,
No. 1398/96, Ontario Court (General Division),
Oshawa Small Claims Court,
33 King Street West,
Oshawa, Ontario L1H1A1, July 24, 1997,
Robert Zochodne, Deputy Judge.

Judgment rendered January 6, 1998.

Reasons for Judgment
The Plaintiff owns a 1991 Pontiac Grand Prix. This car was manufactured by General Motors. The Plaintiff did not buy the car new but purchased it about one year after it was built and when it had over 100,000 kilometers on its odometer. Commencing in 1995 the paint on this car began to bubble and then flake and eventually peel off. Exhibit 1 shows that the problem is most evident on the front hood of the vehicle. After the Plaintiff encountered this problem, he approached General Motors of Canada Limited.

After significant debate, General Motors agreed to pay for one-half the cost of repairing the three affected panels. The Plaintiff asked General Motors if the rest of the car would peel and he advised that General Motors’ response was that they could not guarantee that that would not occur. The Plaintiff rejected the proposal on the basis that he believed that if the work was done, the car would look like a “checkerboard.” The Plaintiff claims that there are thousands of people with the same problem with General Motors’ cars…

…What was the cause of the Plaintiff’s difficulty?

Grant Greenwood is an engineer with General Motors. He has worked for General Motors since 1963 and carries the title of Senior Product Investigator. He testified that he checked the vehicle history and confirmed that it went into service in November 1990. He advised that the warranty on this vehicle is three years or eighty thousand kilometers, whichever occurs first. As Exhibit 13 is a copy of the warranty booklet. He testified that the paint warranty was against defects and workmanship. He also testified that the warranty excluded consequential losses. He also stated that General Motors has not extended the warranty for paint.

Mr. Greenwood inspected the vehicle in March 1997 at Plaza Pontiac Buick. He stated that paint was coming off in three areas. He said that the cause was that the colourcoat, that is the coat visible to you and I, was separating from the primer. The cause of this was, in Mr. Greenwood’s view, ultraviolet rays in the atmosphere. He stated that the ultraviolet rays were going through the colourcoat, attacking the primer and breaking down the bond between the primer and the colourcoat.

He said that ultraviolet rays have been increasing over the past decade and that since General Motors has become aware of this, they have been working on new paints that are more retardant to the effects of ultraviolet rays. He emphasized that the problem was not caused by the primer, which has been used by General Motors for decades, but rather by the ultraviolet rays. He stated that waxing a vehicle helps prevent delamination as well as storing the vehicle inside.

He said that light gray and light blue vehicles are more susceptible to this problem and appeared to be somewhat skeptical about the fact that this condition appeared with a white vehicle. At the time of his inspection the vehicle had traveled 156,000 kilometers. He noticed a scratch on the left front fender and chipping on the front hood.

As I indicated previously, he identified three areas on the vehicle where the paint was coming off. There is an extensive area on the hood as well as the trunk and left rear quarter-panel. He said that this was not typical paint delamination. He also found it odd that there was no paint peeling off of the roof of the car. He stated that if the vehicle was repaired and repainted, it would be difficult to tell that it had been repainted.

Exhibit 2 is a memo to all Pontiac dealers dated October 16, 1992, from Perry White, Director of Service/Customer Satisfaction with Pontiac Division of General Motors (U.S.). This letter states in part as:

Following a recent review, Pontiac has decided to provide dealers’ authorization for cases involving paint repairs for vehicles up to six years from the date of delivery, without regard to mileage.

Mr. Greenwood stated that this bulletin was not sent in Canada but only in the United States. He also stated that it did not deal with paint delamination, which was the Plaintiff’s problem in this case. Mr. Greenwood indicated that insofar as damages were concerned that the answer to the problem did not lie in removing the primer. He stated that the primer gives very good protection against rust and that if the primer was removed, the vehicle was more likely to rust even if it was replaced with primer.

Mr. Greenwood arranged for an estimate to be completed to strip the colourcoat and repaint the vehicle from the lower molding up. That repair estimate was marked as Exhibit 12 and is in the sum of $1,305.72.

In cross examination, Mr. Greenwood stated that delamination is a common condition. He also acknowledged that there were no warnings given to customers of such a problem.

Exhibit 8 is a Product Service Bulletin issued by General Motors of Canada. It is entitled “Service Procedures for Identification and Repair of Paint Colourcoat Delamination from ELPO Primer.” Mr. Greenwood identified this document as being a valid Product Service Bulletin issued October 31, 1992, and revised on December 15, 1992.

This bulletin is being issued to assure that the correct procedure is followed to repair a condition known as DELAMINATION.

This condition may occur on vehicles produced in plants where the paint process does not call for application of a primer surfacer. Under certain conditions, ultraviolet light can penetrate the colourcoat, sometimes causing a reaction and separation of portions of the colourcoat from the ELPO (electrocoat) primer CORRECTION: Refinish the ENTIRE BODY ABOVE THF BODY SIDE MOULDINGS using the following repair procedure…Is the Defendant liable to the Plaintiff?

As the Plaintiff did not purchase this vehicle from General Motors, the Sale of Goods Act does not apply. In order to succeed, the Plaintiff must establish that General Motors of Canada’s warranty covers this problem.

That warranty provides in part as follows:

REPAIRS COVERED: This warranty covers repairs or adjustments to correct any vehicle defect related to material or workmanship occurring during the WARRANTY PERIOD. New or remanufactured parts will be used. Adjustments refer to minor repairs not usually associated with the replacement of parts.

The warranty also provides as follows:

The complete vehicle is covered for 3 years or 80,000 kilometers, whichever comes first.

It also states as follows:

Warranty repairs and adjustments, including Towing, Parts and Labour, will be made at NO CHARGE (except for $100 deductible per repair visit after the first 12 months or 20,000 kilometers, whichever comes first).

The warranty also provided:

This warranty is for GM vehicles registered in Canada and normally operated in Canada or the United States and is provided to the original and any subsequent owners of the vehicle during the WARRANTY PERIOD. The Defendant did not seek to rely upon any exclusion within the warranty.

The questions to be decided therefore are as follows:

1. Did the vehicle have a “defect”?

2. If so, did the defect occur during the warranty period?
In my view, the vehicle did have a defect. While I acknowledge and accept Mr. Greenwood’s evidence that the increase in ultraviolet rays has caused delamination, it is my view that the presence of ultraviolet light is an environmental condition to which the vehicle is subject. If it cannot withstand this environmental condition, it is defective, in my view. This is no different from a situation where a vehicle does not start in weather below 0 Celsius. Since motor vehicles are operated in such conditions on a regular basis, the failure of the vehicle to adequately operate in such temperatures is a defect, in my view. To be precise, the defect is the failure to ensure proper bonding between the colourcoat and primer. In reviewing the Product Service Bulletin and hearing the evidence of Mr. Greenwood, it is clear to me that the lack of a primer surfacer was a defect as defined by the warranty.

3. Did this defect occur during the warranty period?
The answer to this question is yes. General Motors contended that the problem was caused by ultraviolet light. A logical inference is that they contend that the problem did not arise until sufficient exposure to ultraviolet light, the result being that the warranty period would have expired.

I do not accept this contention. The defect, which I have found, that is the lack of primer surfacer, occurred at the time that the vehicle was manufactured. At that point, however, the defect was latent. The defect became patent when the paint began to bubble, flake and then peel off of the vehicle. Having decided that the warranty responds to this loss, I grant judgment in favour of the Plaintiff in the amount of $1,205.72 plus costs.