CIVIL PROCEDURE - Parties - Class or representative actions - Settlements

Motion by certain plaintiffs in a class action against Volkswagen (VW) for a declaration that VW had failed to meet the June 15, 2017 deadline for obtaining an Approved Emissions Modification (AEM) for their Generation 2 automatic transmission vehicles, triggering a clause in the Volkswagen Diesel 2.0 Litre Settlement Agreement (settlement agreement) entitling the plaintiffs to benefit from a loan forgiveness clause in exercising a buyback option for their VW vehicles. The settlement agreement provided VW vehicle owners with a damages payment and the option to return their vehicles or to have the emission control systems repaired by VW at no charge if the proposed fixes were approved by the US Environmental Protection Agency (EPA). For the plaintiffs in question, the EPA approved the fix for their vehicles on May 19, 2017. VW informed the plaintiffs of the approval on June 14, 2017, and the fix was implemented in Canada on June 23, 2017. The plaintiffs took the position that this was beyond the June 15 deadline, such that, instead of having their vehicles repaired, they were entitled to seek buyback and to take advantage of a loan forgiveness benefit pursuant to which VW was obliged to pay up to 30 per cent of the amount owing by plaintiffs with negative equity in their vehicles. The loan forgiveness benefit was linked to the EPA approval and was triggered only if there was no AEM by June 15, 2017.

HELD: Motion dismissed. The Court accepted VW’s interpretation of the wording of the settlement agreement. The requirement that the AEM must be "implementable in Canada" did not mean that it must be available in Canada immediately. Under a fair and objective interpretation of all of the applicable provisions, including the definition of Class Update and the Good Faith performance obligation, "implementable in Canada" meant "available in Canada within a reasonable time." The loan forgiveness benefit was not triggered because the fix was approved by the EPA by the deadline and implementable in Canada within a reasonably short time frame. It was reasonable to expect that some additional time was needed after the EPA approval to allow VW to prepare dealerships and recall vehicles. If VW dragged its feet in making the fix available in Canada, it would be in breach of the Good Faith performance obligation set out in the settlement agreement.

Quenneville v. Volkswagen Group Canada Inc., [2017] O.J. No. 3987, Ontario Superior Court of Justice, E.P. Belobaba J., August 1, 2017. Digest No. TLD-Oct22017002