Gillespie v. MacDonald Pontiac Buick GMC Ltd.
(1986), 71 N.B.R. (2d) 1
Ryan, Angers and Rice, JJ.A.
June 3, 1986
Reproduced with permission of Maritime Law Book Ltd.,
which claims copyright in the headnote and indexing.
Maritime Law Book Ltd. Summary:
A purchaser bought a used car from a dealer allegedly on the condition that there was no warranty about the condition of the car, that the purchaser would ensure that the vehicle was in satisfactory condition and that the car was sold on an "as is" basis. Before payment of the purchase price the purchaser mentioned an oil leak to the dealer and was assured it would be repaired. The purchaser paid the purchase price, received the car and immediately encountered problems. The purchaser brought an action for the return of the purchase price. The dealer alleged that the car was sold on an "as is" basis, that the Consumer Product Warranty and Liability Act did not apply and that the dealer was not liable for the repair of the car.
The New Brunswick Court of Queen's Bench, Trial Division, in a decision reported in 64 N.B.R.(2d) 243; 165 A.P.R. 243, allowed the purchaser's action. The court held that the existence of the oil leak amounted to a breach of the implied warranty under the Act that the car was fit for the purpose of use as an automobile and that the failure to repair amounted to a breach of express warranty given to the purchaser that the car would be repaired. The dealer appealed.
The New Brunswick Court of Appeal dismissed the appeal. The Court of Appeal held that there was no implied warranty of fitness for purpose, but that there was an express warranty to repair the car, which was breached by the dealer.
Consumer Law -- Topic 1686
Sale of goods -- Statutory warranties -- General -- Contracting out of -- A purchaser bought a used car allegedly on an "as is" basis and without any warranty as to the condition of the car -- The purchaser was assured by the dealer that an oil leak would be repaired -- The purchase price was paid and the dealer subsequently refused to repair the car -- The purchaser brought an action for recovery of the purchase price -- The New Brunswick Court of Appeal affirmed that the action should be allowed and that although the purchaser could contract out of the Consumer Product Warranty and Liability Act, there was no intention by the purchaser to contract out where there were major defects -- See paragraph 17.
Consumer Law -- Topic 1728
Sale of goods -- Statutory warranties -- Particular warranties -- Fitness for purpose -- A purchaser bought a used car allegedly on an "as is" basis and without any warranty about the condition of the car -- The purchaser was assured by the dealer that an oil leak would be repaired -- The dealer subsequently refused to repair the purchased car -- The New Brunswick Court of Appeal held that there was no implied warranty of fitness for purpose where the purchaser test-drove the car and purchased it while knowing of the leak and on the express warranty that it would be repaired (the court applied s. 10(2)(c) of the Consumer Product Warranty and Liability Act) -- See paragraphs 15 to 16.
Cases Noticed
Holt v. McCutcheon (1986), 66 N.B.R. (2d) 5; 169 A.P.R. 5, refd to. [para. 17].
Statutes Noticed
Consumer Product Warranty and Liability Act, S.N.B. 1978, c. C-18.1, s. 10(2)(c) [paras. 15-16].
Counsel
M. Morley Rinzler, for the appellant;
James E. Fowler, for the respondent.
This appeal was heard before Ryan, Angers and Rice, JJ.A., of the New Brunswick Court of Appeal on October 16, 1985. The decision of the Court of Ap-
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peal was delivered on June 3, 1986, when the following opinions were filed:
Ryan, J.A. (Rice, J.A. , concurring) - see paragraphs 1 to 18;
Angers, J.A. - see paragraphs 19 to 21.
[1] Ryan, J.A.: This is an appeal by the defendant from a judgment of Dickson, J., of the Court of Queen's Bench, Trial Division, wherein he allowed the plaintiff's claim for damages against the defendant for breach of express and implied warranties relating to the purchase of an automobile by the plaintiff from the defendant.
[2] The trial judge directed that judgment be entered for the plaintiff against the defendant in the amount of $7,148.00 representing the purchase price of the car which was $6,000.00, and finance charges at the rate of 13 1/2% from June 17, 1983 to the date of judgment in the amount of $1,148.00.
[3] The facts are fully set out in the judgment of the trial judge reported in (1985), 64 N.B.R.(2d) 243; 165 A.P.R. 243, and in summary they are as follows.
[4] On the evening of June 14, 1983, the plaintiff visited the defendant's car-lot. He spoke with a Mr. Siddall, a salesman, and after having test-driven two vehicles, he expressed an interest in purchasing one of them, a 1980 Thunderbird. Siddall told the plaintiff that the price was $6,900.00, which the plaintiff refused to pay. After certain negotiations concerning the price the plaintiff offered to pay $6,000.00 with tax included, for the car and Mr. Siddall indicated that he would "write up" the offer and refer it to his superiors.
[5] The offer was written up on a printed form used by the defendant for
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such purposes. The "total due" was entered at $6,000.00 and a space on the form headed "vehicle condition and remarks" was left blank at this stage. The reverse side of the form contained a full page of "conditions" in small print which purported to exclude the application of the Consumer Product Warranty and Liability Act, S.N.B. 1978, c. 18.1 ("the Act"). There is no suggestion in the evidence that the reverse side of the offer was read by or drawn to the attention of the plaintiff in discussions between the parties. Mr. Siddall left the room and later returned with a Mr. Goguen, (general sales manager), who informed the plaintiff that his offer was too low. The plaintiff replied that $6,000.00 was his limit and left the premises.
[6] The following morning Siddall phoned the plaintiff indicating that his offer might be accepted and requested that he return. The plaintiff saw Siddall in his office and was informed there would be no warranty as to the condition of the vehicle and that it would be the plaintiff's responsibility to ensure that it was in satisfactory condition before "putting the money on the table". The plaintiff indicated that this was acceptable and Siddall wrote in the "vehicle condition and remarks" space "At reduced price customer assumes responsibility for any repairs -- as is condition". A copy of the offer was given to the plaintiff and the car was turned over to him pending the completion of the sale.
[7] The plaintiff testified that on the following Thursday he noticed a "puddle of oil" f rom the car in his driveway; he did not look under the car nor did he have a mechanic or any other person check the car, but that evening he phoned Siddall to advise him of a slight delay in obtaining
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financing and mentioned the oil leak to him. He testified that Siddall suggested that it was probably a minor problem and to bring the car in the next day to have it fixed.
[8] The following day, Friday, having obtained the funds, the plaintiff visited Siddall to complete the transaction. The plaintiff testified that he again mentioned the oil leak, but was told that the shop was busy and to bring the car in on Monday morning and they would repair the problem. The plaintiff paid the $6,000.00 and advised Siddall that he would be going to St. George, N.B. for the weekend but nothing was suggested about the care of the car or the checking of any possible leak problem.
[9] While on his trip to St. George the plaintiff experienced certain difficulties; on one occasion the car stalled and over the whole return trip he was obliged to add six or seven litres of oil.
[10] On Monday morning the plaintiff took the car to the defendant's garage as Siddall had told him to do. The car was checked and it was found that the "rear main oil seal" required replacement and that this repair would apparently involve several hours of work. The plaintiff testified that Siddall informed him that the defendant was not going to fix the car, but that if he would pay half of the costs, the defendant would assume responsibility for the balance. The plaintiff stated that this was not the deal and that Siddall had replied that he knew the agreement was to repair the car but that they were not prepared to do so.
[11] The plaintiff went home but returned after lunch to see Goguen who told him that they would fix the car on a 50-50 cost sharing basis only and if this was not acceptable to him they would give him his money back. The
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plaintiff then indicated that he would take his money back. Goguen then told him that Mr. Blakeney, the used car manager, was away until Wednesday and that he should return the vehicle on that day. On the assumption that his money would be returned that same day he went to another dealer and purchased another 1980 used car.
[12] On Wednesday, the plaintiff was introduced by Siddall to Blakeney, who, having been informed of the problem, took the position that the plaintiff was bound by what had been described as a "curb and gutter" (when you cross the curb, you got 'er) agreement and that they would neither repair the vehicle nor return the purchase price. The plaintiff then placed the vehicle's keys on the desk and indicated that he would consult a lawyer. The Thunderbird was left at the defendant's premises and the plaintiff retrieved and departed in his former car which he had left there.
[13] The defendant's defence was based largely on Siddall's evidence that when he had given the car to the plaintiff on Wednesday he told the plaintiff to have it checked by a mechanic or some other person; that he had told the plaintiff that the defendant would fix the oil leak only if it was a minor problem, not a major one.
[14] The learned trial judge after a careful review of the evidence said at p. 252:
"It is obvious here, and the plaintiff so acknowledges, that when on the 15th he offered to pay $6,000.00 for the car he appreciated that he would be accepting it on an 'as is' basis and with any warranties provided by the Consumer Product Warranty and Liability Act (hereinafter 'the Act') waived. Such a waiver is of course contemplated by s. 25(1) of
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the Act. The sale was not in fact consummated at that time because the defendant, through its salesman, fully contemplated that the plaintiff could withdraw his offer should the plaintiff discover any defect up to the time of paying the purchase price.
"Purchase on an 'as is' basis and with waiver of the benefits of the Act was still essentially the basis of the agreement when the plaintiff took delivery and paid the purchase price on the 17th. The only question here for resolution is whether or not that agreement was modified at that time by the giving of a warranty that the oil problem would be rectified. The existence of the problem had been pointed out to the salesman on the 16th and again when the money was paid. The plaintiff had been told that the car would be examined in the shop on Friday and then was told to bring it in at the first of the week. I am satisfied, under the circumstances, that such a warranty was given and that the plaintiff was entitled to assume that the car would be repaired. I am also satisfied that there was no intention on the part of the plaintiff, should the problem turn out to be other than a minor one, to waive that implied warranty prescribed by s. 10(1)(a) of the Act that the car would be fit for the purpose of use as an automobile. The existence of the defective oil seal amounted to a breach of the implied warranty and the failure to repair amounted to a breach of the express warranty which I have found was given."
[15] The defendant alleges the trial judge erred in holding that there was an implied warranty as to fitness when in the circumstances he should have considered the provisions of s. 10(2) of the Act, in particular paragraph (c).
"10(1) Subject to subsection (2), in every contract for the sale or sup-
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ply of a consumer product there is an implied warranty given by the seller to the buyer
(a) that the product is of such quality, in such state or condition, and as fit for the purpose or purposes for which products of that kind are normally used as it is reasonable to expect having regard to the seller's description of the product, if any, the price, when relevant, and all other relevant circumstances; and
(b) that the product complies with all mandatory federal and provincial standards in relation to health, safety and quality.
"10(2) There is no implied warranty under paragraph (1)(a)
(a) as regards any defect that is known to the buyer before the contract is made;
(b) as regards any defect that the seller has reason to believe exists and that he discloses to the buyer before the contract is made;
(c) if the product is a used product and the buyer examines it before the contract is made, as regards any defect that that examination ought to reveal; or
(d) if there is a sale or supply by sample, as regards any defect that a reasonable examination of the sample ought to reveal."
[16] The submission of the defendant, in my opinion, has merit. The plaintiff before purchasing the car had test-driven it; he knew that there was an oil leak to the extent that it created a "puddle" of oil in his driveway. Notwithstanding this he chose to purchase the car relying on Siddall's undertaking that the leak would be
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repaired. In my opinion, this was a proper case for the application of para. (c) of s.10(2) of the Act and the defendant's submission on this aspect of the case must prevail.
[17] The trial judge did, however, conclude that the defendant had given the plaintiff an express warranty to repair the car when Siddall told the plaintiff that the defendant would repair the oil leak. Obviously the trial judge accepted the plaintiff's evidence about the extent of the repair job in preference to that of Siddall's who had testified that the defendant would repair the leak only if it was a minor problem. It is, of course, a well-established principle of law that this court must not interfere with the trial judge's findings of fact unless it has been demonstrated that he has made some palpable or overriding error in his assessment of them. In my opinion, defendant has failed to show that the trial judge's findings were in error. See Holt v. McCutcheon (1986), 66 N.B.R.(2d) 5; 169 A.P.R. 5.
[18] In the result, I would dismiss the appeal with costs which I would fix and allow at $400.00. The plaintiff will also have interest at the rate of 10% per annum on the judgment to the date hereof.
[19] Angers, J.A.: It is my opinion that an agreement for the purchase of a motor vehicle as we have in this case, appropriately called a "curb and gutter" agreement or as the trial judge described it a purchase on an "as is" basis, has the effect of waiving all remedies provided in the Act for breach of an express warranty as contemplated by s. 25 of the Act.
[20] In the present case, however, I do not think it is necessary to deal with the effect of such an agreement on an implied warranty of fitness "for the purpose ... for which products of
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that kind are normally used" as defined in s. 10(1) of the Act. Indeed, as I understand the evidence, an oil leak as we have here does not render a car unfit for the purpose of being used as a car. The leak was caused by a defective main oil seal which, although difficult of access, is easily replaced.
[21] In any event, I endorse the findings of the trial judge with which my colleague Mr. Justice Ryan agrees that the appellant is liable by virtue of its express warranty, made before the completion of the sale, to repair the leaking oil problem. I would therefore dispose of this appeal as proposed by Ryan, J.A.
Appeal dismissed.
Editor: Debra F. MacCausland
Case comment on this decision
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