BETWEEN: Claim No: SCCH-449438 IN THE SMALL CLAIMS COURT OF NOVA SCOTIA Cite as: Ben-Simon v. Capital Auto Sales, 2016 NSSM 34 DANIEL BEN-SIMON Claimant - and - CAPITAL AUTO SALES and 2304606 NOVA SCOTIA LTD. Defendant REASONS FOR DECISION BEFORE Eric K. Slone, Adjudicator Hearing held at Halifax, Nova Scotia on May 3, 2016 and May 17, 2016 Decision rendered on May 31, 2016 APPEARANCES For the Claimant For the Defendant self-represented Michael Corkum, manager
-1- BY THE COURT: [1] The Claimant purchased a used car from the Defendant Capital Auto Sales, which appears to be a business name for the numbered company also named as a Defendant. For simplicity, I will refer to them collectively as the Defendant as they are, in fact, one entity. [2] In this claim the Claimant seeks $4,902.22, representing both a refund of the purchase price plus the cost of some repairs he had done shortly after the purchase, plus a towing charge. In effect, he wishes both to rescind the contract and be compensated for certain expenses. [3] It is noted that the Claimant, and his wife, Marina Ben-Simon who accompanied him, are recent immigrants from Israel and speak very limited English. As it happens, the salesman that they dealt with, Denis Lyselko, is also a recent immigrant and is fluent in Hebrew. The Claimant and Ms. Ben-Simon met Mr. Corkum, the manager, but most of their dealings were with Mr. Lysenko. [4] The vehicle purchased was a 2007 Dodge Caliber with 114,430 kilometres on the odometer. The sale date was August 5, 2015. The negotiated base price was $3,434.78. With tax the total was $3,950.00. [5] The sales contract provided that the Claimant would receive a 3-month, 3,000 km. Lubrico power train warranty. Lubrico is a third party warranty company. [6] The vehicle had been inspected by another company (Major Discount) that was not a party to this action. Ms. Ben-Simon testified that they were told that
-2- the vehicle had also been checked for rust, although there was nothing in the documentation that specifically said so. They may have made some assumptions arising from the fact that there is a RustChek business very close by at 103 Cobequid Rd. The Defendant is at 111 Cobequid Rd. [7] The one loose end noted on the sales contract was that the engine light was on, and the Defendant promised to look after it. When they brought the vehicle back on August 22, 2015 to have this problem attended to, Ms. Ben-Simon testified that she saw Mr. Lysenko spray painting the underside of another car, using black paint to cover some rust. This later made them suspicious when they experienced the problem that I will describe. [8] Ms. Ben-Simon testified that the engine light issue was never resolved, as it came on again almost immediately after leaving the Defendant s shop. Mr. Lysenko suggests it may be nothing more than a loose gas cap or a worn gasket for the gas cap. In any event, this is not the issue that brought the matter to court. [9] On September 8, 2015, while the Claimant and family were driving from Halifax to Bedford, suddenly and without any apparent cause, the front left wheel essentially fell off, causing the car to be immediately disabled. In fact, there was significant damage to the axle and other structures. The car was initially towed to the Defendant s shop and then, at the Defendant s suggestion to a Dodge Chrysler dealership, where the vehicle was repaired. The Claimant was charged $143.75 for the towing fee by the towing company. [10] The investigation and repair disclosed a seriously corroded sub-frame. The Claimant took video and photos of the underside of the vehicle, showing the
-3- damage that has since been repaired. Part of what one can see is the apparent use of what looks like black spray paint over rusty areas and welds. They also brought the removed structure to court, where it could be inspected. It clearly showed the presence of black paint in some places, in what can only be seen as an attempt to conceal rust. [11] When the car was towed into the Defendant s shop, Mr. Lysenko came to learn that there was a manufacturer s recall on this vehicle that extended the warranty on front and rear crossmembers, as a result of premature corrosion. This led to some, but not all of the repairs, being done at the expense of the manufacturer. The cost of the parts and repair to the actual crossmember was covered, but the Claimant had to pay $852.58 for other needed repairs, including replacing the axle and two control arms that also broke. He also purchased parts (struts) costing $159.25 from another source. [12] The Defendant contributed $200.00 toward these repairs, as a goodwill gesture, but denies any further responsibility for repairs or for the towing charge. [13] Ms. Ben-Simon (whose English is better than her Husband s) called Lubrico to see if that warranty would cover any of the repairs, or the cost of towing. They were told that neither was covered, because the warranty only covered the power train and this was not a power train issue. [14] The Claimant seeks recovery of these two amounts, which total $955.58. He also seeks recovery of the original purchase price, $3,950.00, and is prepared to surrender the vehicle and reverse the transaction.
-4- [15] It should be noted that the vehicle is still licenced, and is used by the Claimant from time to time, though not as the family s primary vehicle, as they do not feel safe in it. Discussion and findings [16] This car had been driven all of 1,612 kilometres over about six weeks since it was bought by the Claimant from the Defendant. The position of the Claimant was that the vehicle carried an implied warranty under the Consumer Protection Act, to the effect that it would be merchantable, reasonably fit and reasonably durable. Indeed, sections 26(3) (e) (f) (h) and (j) of that statute provide: Implied conditions or warranties 26 (3) Notwithstanding any agreement to the contrary, the following conditions or warranties on the part of the seller are implied in every consumer sale:... (e) where the purchaser, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the purchaser relies on the seller's skill or judgement and the goods are of a description which it is in the course of the seller's business to supply, whether he be the manufacturer or not, a condition that the goods shall be reasonably fit for such purpose; provided that, in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose; (f) where goods are bought by description from a seller who deals in goods of that description, whether he be the manufacturer or not, a condition that the goods shall be of
-5- merchantable quality, provided that, if the purchaser has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed;... (h) a condition that the goods are of merchantable quality, except for such defects as are described;... (j) a condition that the goods shall be durable for a reasonable period of time having regard to the use to which they would normally be put and to all the surrounding circumstances of the sale. [17] The position put forward by the Defendant includes the following: a. The Defendant contends that what occurred was an accident of unknown cause - such as, by hitting a pothole. There was no evidence of this, and I reject this position. b. The Defendant contends that the crossmember was covered by the manufacturer s recall, and that the other work done was not logically connected to the corroded crossmember. I disagree. The failure of the crossmember created the damage to other parts of the vehicle. c. The Defendant says that the third party warranty ought to have responded to the claim. Whether or not that is the case, Lubrico did not respond and on its face the warranty does appear to be very limited.
-6- d. The Defendant says that the car was safety inspected and the Claimant ought to seek recovery from that third party inspector, and not from the Defendant. The inspector might well have been brought into the action, but the Claimant is still entitled to attempt to hold this Defendant responsible. e. The Defendant says that the car is now working, and actually being used, and as such the transaction should not be rescinded. I will consider this point below. The Law [18] Wilmot v. Toyota Canada Inc., 2011 NSSM 48 is a fairly recent case by one of my fellow adjudicators, which contains a useful discussion of the operation of the Consumer Protection Act: (56) The application of the sections of the Consumer Protection Act have been applied by the Courts in Nova Scotia. There are several key principles arising from the case law. These principles were summarized very well by my colleague, Adjudicator Patrick L. Casey, QC, in Boudreau v. Dooley, 2009 NSSM 64 (CanLII), where he stated the following at p. 5: MacIsaac v. Chebucto Ford Sales Ltd.,1989 CarswellNS 406, a decision of the Nova Scotia County Court, makes the following findings which apply to the case at hand: (a) The Consumer Protection Act applies to transactions of sale between persons engaged in the ordinary course of business in the sale of new and used motor vehicles. (b) The issue of whether the goods are of merchantable quality is to be decided on a case by case basis. (c) The defintion of merchantable quality is found in the case of Hardwick Game Farm v. Suffolk Agricultural and Poultry
-7- Producers Association (1969) 2 A.C. 31, (1968) 2 All E.R. 444 (H.L.) as follows:... the goods should be in such a state that a buyer, fully acquainted with the facts, and therefore knowing what hidden defects exist and not being limited to their apparent condition would buy them obtainable for such goods if in reasonable sound order and condition and without special terms. (d) The definition of reasonably durable for the purpose is also applied on a case to case basis. (e) The warranties under the Consumer Protection Act apply regardless of the existence or nonexistence of dealers warranties. In Penney v. Brett Pontiac Buick GMC Ltd., 1990 CarswellNS 531, Justice Boudreau of the Nova Scotia Supreme Court (Trial Division) also held that a finding that the vehicle is not durable for a reasonable period of time is a question of fact in each case. In that case, the Small Claims Court Adjudicator had found that the vehicle was not reasonably durable under Section 20C(3)(j) of the Consumer Protection Act even though the vehicle had been sold on an as is basis, and this finding was upheld on appeal. In McAsphalt Industries Ltd. v. Chapman Bros. Ltd., 2008 CarswellNS 754, Justice LeBlanc of the Nova Scotia Supreme Court, when dealing with the issue of merchantable quality pursuant to the Sale of Goods Act, referred to the definition of merchantability in the case of Murray v. Sperry Rand Corp. (1979) 1979 CanLII 2133 (ON SC), 96 D.L.R. (3d) 113 (Ont. H.C.) wherein the term was defined as meaning that the goods were reasonably fit for general purposes such goods serve. (57) The transmission was repaired on January 12, 2010. I accept the evidence of Mr. Oickle that the rusting of such a fitting was uncommon and not experienced by anyone at O Regan s up to the time of this incident. They did not check it when the transmission was replaced in 2010. A little over one year later, after less than 5 years of ownership and 89,447 km driven, the fitting failed. This occurred despite that the vehicle has been used for their personal use only and has been maintained. The failure of the fitting resulted in considerable damage and significant repair costs. To apply the tests espoused by the case law, I find that a fitting
-8- such as this must be able to withstand ordinary conditions as long as the other parts of the transmission would continue to perform. Where it did not, it cannot be said to be in a reasonable sound order. In my opinion, a reasonable purchaser would not have accepted the vehicle with such a fitting. It is also reasonable to expect that the fitting would have been checked and replaced at the time the transmission was repaired in 2010. If the part was off warranty beyond 3 years or 60,000 kilometres, which I do not find, the Claimant should have been given an opportunity to have the fitting replaced at her expense so that this could have possibly been avoided. (58) In the circumstances, I find the fitting was not durable for a reasonable period of time and not of merchantable quality. As a result, I find the Defendant, O Regan s Toyota Dartmouth liable under s. 26(3)(h) and (j) of the Consumer Protection Act. Further, I find their service level breached the implied warranty of the services being performed in a skillful and workmanlike manner. A breach of any of these implied warranties is sufficient to render O Regan s liable under the Consumer Protection Act. [19] Guided by these principles, on all of the evidence, I find that this vehicle was not reasonably fit for the purpose, nor merchantable nor durable, and as such the Consumer Protection Act allows the Claimant to enforce the implied warranties and/or conditions. [20] The Claimant and his wife appear to have been fairly naive. It did not occur to them to have an independent inspection. They relied on the word of Mr. Lysenko and the fact that there was a warranty being offered. Little did they suspect that the warranty was as narrow as it appears to have been, and that it would offer nothing to cover the losses when a wheel fell off in a dramatic fashion mere weeks after purchase. The Defendant may be wise to offer this type of warranty as part of its sales, but it does not absolve them of all responsibility for defects that are not covered under the Lubricl warranty. [21] The Consumer Protection Act is a statute that provides limited relief for people - even naive ones - who do not take sufficient steps to protect
-9- themselves. I have observed, as have other adjudicators and judges, that whether or not the implied warranty has been breached is a question of fact. In my experience, some consumers will attempt to invoke the Consumer Protection Act as a cover for the fact that they did not exercise any due diligence, often long after the transaction. In the case of an older used car, the protection of the Consumer Protection Act warranties will usually be found to be short-lived. [22] In the case here, I find that the underside of the vehicle was in a state of corrosion that caused it to fail a mere six weeks, and very few kilometres, after the sale. There is some evidence that black paint was used to conceal the corrosion, though there is no direct evidence that this was done by the Defendant. The person who inspected the vehicle shortly before the sale - who was not before the court - appears to have been either excessively lenient in his assessment, or was only looking at other things. The Defendant ought to have known that this vehicle had a corrosion problem, but whether or not it knew is actually irrelevant vis a vis the Consumer Protection Act. The obligations under that Act do not depend on actual knowledge. What is the appropriate remedy [23] The Consumer Protection Act treats its provisions as implied warranties or conditions. There is a reason why these two words are used. A warranty gives rise to a claim for damages. A condition potentially voids the sale entirely, giving rise to a right to rescind the sale. Whether something should be treated as a warranty or condition will depend on all of the circumstances. [24] In my opinion, the facts of this case do not merit treating the beach of the Act as a breach of condition, entitling the party to void the sale. I would treat it as a breach of warranty, giving rise to a right in damages. The car ran into trouble
-10- because of corrosion on the underside, which caused the dramatic incident that the Claimant experienced. That problem was repaired. There is no evidence that the vehicle is otherwise any less durable or fit for the purpose than one would expect of a nine year old vehicle with over 115,000 kilometres driven. As such, damages are an appropriate remedy. Voiding the sale would, in my opinion, overcompensate the Claimant and over-penalize the Defendant. The car that would be returned is another year older and less valuable. [25] The Claimant and his family have undoubtedly lost confidence in the vehicle, but the vehicle is apparently roadworthy. If they do not want it, they can sell it or use it in a trade in. [26] I therefore find that the Defendant was in breach of the implied warranties, and is liable for the consequential costs. I am ordering the Defendant to pay to the Claimant $852.58 for the repairs by Halifax Chrysler (less the $200.00 contributed by the Defendant), $159.25 for the additional parts purchased, and $143.75 for the towing charge, for a total of $955.58. The Claimant is also entitled to his costs of $99.70, for a total order of $1,055.28. Eric K. Slone, Adjudicator