Johnson v. Maritime Water Treatment Ltd.
New Brunswick Court of Queen's Bench
Trial Division
Judicial District of Saint John
Currently being edited for N.B.R.(2d) - judgment temporarily in rough form.
Temp. Cite: [1999] N.B.R.(2d) TBEd. DE.059
Reproduced with permission of Maritime Law Book Ltd.,
which claims copyright in the headnote and indexing.
Maritime Law Book Ltd. Summary:
The plaintiffs purchased a heat pump from the defendant for the purpose of heating their home. The heat pump failed to work properly, because the plaintiffs' well did not pump enough water to run the heat pump. The plaintiffs demanded removal of the heat pump and the return of the purchase price. The New Brunswick Court of Queen's Bench, Trial Division, allowed the plaintiffs' claim.
Consumer Law - Topic 1728
Sale of goods - Statutory warranties - Particular warranties - Of fitness for purpose - The plaintiffs purchased a heat pump from the defendant for the purpose of heating their home - The heat pump failed to work properly, because the plaintiffs' well did not pump enough water to run the heat pump - The plaintiffs demanded removal of the heat pump and the return of the purchase price - The New Brunswick Court of Queen's Bench, Trial Division, allowed the plaintiffs' claim - The defendant breached the implied warranty of fitness for the intended purpose under s, 10(1) of the Consumer Product Warranty and Liability Act - The plaintiffs were entitled to recover the losses they suffered because of the breach - See paragraphs 48 to 51.
Sale of Goods - Topic 4103
Conditions and warranties - Implied or statutory terms as to quality or fitness - Where applicable - The plaintiffs purchased a heat pump from the defendant for the purpose of heating their home - The heat pump failed to work properly, because the plaintiffs' well did not pump enough water to run the heat pump - The plaintiffs demanded removal of the heat pump and the return of the purchase price - The New Brunswick Court of Queen's Bench, Trial Division, allowed the plaintiffs' claim - The defendant breached the implied warranty of fitness for the purpose that arose under s. 15(a) of the Sale of Goods Act - See paragraphs 52 to 59.
Torts - Topic 4364
Suppliers of goods - Negligence - Retailers and wholesalers - Duty of warning respecting dangers - The plaintiffs purchased a heat pump from the defendant and had the defendant install it for the purpose of heating their home - The heat pump failed to work properly, because the plaintiffs' well did not pump enough water to run the heat pump - The defendant was aware of the importance of determining the water pressure, because if it was below a certain threshold, the heat pump would not work -The plaintiff did not know the water pressure of their well - The defendant gave no warning to the plaintiffs and took no steps to ascertain the water pressure - The New Brunswick Court of Queen's Bench, Trial Division, held that the defendant was negligent and liable for the plaintiffs' damages - The defendant knew that the plaintiffs relied on its skill and judgment - The defendant should have taken appropriate care by testing the water pressure of the plaintiffs' well before installing the heat pump - See paragraphs 60 to 63.
Cases Noticed
Crawford v. Agricultural Development Board (1997), 192 N.B.R.(2d) 68; 489 A.P.R. 68 (C.A.), refd to. [para. 43].
Polar Refrigeration Service Ltd. v. Moldenhauer (1967), 61 D.L.R.(2d) 462 (Sask. Q.B.), refd to. [para. 57].
Statutes Noticed
Consumer Product Warranty and Liability Act, S.N.B 1978, c. 18.1, sect. 11 [para. 50].
Sale of Goods Act, R.S.N.B. 1973, c. S- 1, sect. 15(1) [para. 54].
Authors and Works Noticed
Charlesworth and Percy, Negligence ( 7th Ed.), p. 50 [para. 63].
Fridman, Sale of Goods in Canada (2nd Ed.), pp. 206, 207 [para. 58].
Counsel
Kelly VanBuskirk, for the plaintiffs;
Peter J. Beardsworth, for the defendant.
This case was heard at Saint John, New Brunswick, on November 12, 1999, before Glennie, J., of the New Brunswick Court of Queen's Bench, Trial Division, Judicial District of Saint John, who delivered the following judgment on December 10, 1999.
[1] Glennie, J.: This matter arises from a claim by Ronald and Cecile Johnson for damages they allege resulted from the breach of an agreement by Maritime Water Treatment Ltd. ("Maritime") relating to the sale to the Johnsons of a heat pump together with duct work and related materials and services ( the "heat pump and materials") sold by Maritime and purchased by the Johnsons for the purpose of heating their residence in Musquash, N.B. (the " property").
[2] Ronald and Cecile Johnson purchased the heat pump and materials from Maritime on September 30, 1997. The total cost for the purchase and installation of the two and one-half ton heat pump plus duct work including installation and HST was $8,395.00. The heat pump was intended to heat the property and to reduce energy costs since the Johnsons had experienced high heating costs with electric power.
[3] Prior to the installation of the heat pump and materials the Johnsons and Maritime had discussions concerning the water pressure in the Johnsons' well since well water was to be used to operate the heat pump.
[4] The Johnsons maintain that Maritime inquired about their well's water pressure and they advised Maritime that their well had been drilled some eighteen years previously and that they had no knowledge with respect to the actual water pressure of the well. The Johnsons say they told Maritime they had not experienced any water shortages in their well. They claim that on the day they signed the contract to purchase the heat pump and materials Maritime sought particular information concerning their home and well but none of the information sought by Maritime involved the water pressure of the well.
[5] For its part Maritime claims that the Johnsons said their well was 185 feet deep, that the water was pumped by a jet pump and that there was plenty of water. Maritime says it told the Johnsons that in order for the heat pump to work properly the Johnsons' well had to have a minimum water flow of 5.5 gallons per minute. Maritime also claims that although the Johnsons did not know their well's actual water pressure they assured Maritime that they had plenty of water and not to worry about the minimum requirements with respect to the proper operation of the heat pump and materials.
[6] The Johnsons borrowed the amount of the purchase price of the heat pump and materials from The Canadian Imperial Bank of Commerce (CIBC) and they are still making monthly payments on this loan. Immediately after the heat pump and materials were installed it became apparent to both the Johnsons and Maritime that they were not working properly. Maritime then recommended to the Johnsons that they purchase a submersible water pump from Maritime to replace the jet pump in their well.
[7] Even after the submersible pump was installed the heat pump and materials did not work properly. Maritime then tested the water pressure in the Johnsons' well and concluded that the Johnsons' well was only producing half a gallon per minute of water flow which was substantially less than the minimum requirement needed to operate the water source heat pump.
[8] The Johnsons then demanded their money back and requested that the heat pump and materials be removed from the property at Maritime's expense.
[9] Maritime takes the position that the heat pump and materials were not defective and that the problem was with the Johnsons' water source which was not within the responsibility of Maritime and consequently Maritime would not return the purchase price which was advanced to Maritime by CIBC.
[10] Maritime then recommended that the Johnsons replace the water to air heat pump unit with an air to air unit for the same price and at no extra cost for installation. The Johnsons have refused this offer and have demanded that the heat pump and materials be removed from the property and that they be refunded the purchase price. Maritime has refused.
[11] Maritime is a corporation located in Richibucto and its business is conducted primarily in the treatment of water for residential homes in that area. Maritime does not do business in Southern New Brunswick and the Johnsons were the only customers Maritime ever had in Southern New Brunswick. The reason that the Johnsons dealt with Maritime and why Maritime took on this contract is that the Johnsons' brother-in-law, Roger Vautour, who resides in St. Louis-de-Kent used to work for Maritime and he had shown the Johnsons a water to air heat pump in operation in his home. He told the Johnsons how the unit operated and gave them an idea of the energy cost savings with respect to the operation of this source of home energy.
[12] The water to air thermal pump was manufactured by C.B.L. Consultants Inc. which was operating in 1997 out of Dieppe, N.B. C.B.L. Consultants Inc. is no longer in this business. Maritime had become a dealer for C.B.L. Consultants Inc. in 1996.
[13] C.B.L. Consultants Inc. published a brochure on the water to air thermal pumps it manufactured and in that brochure in a section entitled " Technical Information" it stated that for the model purchased by the Johnsons (Model 30) the manufacturers recommended gallon per minute for the well which would service such a pump was seven gallons per minute.
[14] Charles LeBlanc, who was the owner and president of C.B.L. Consultants Inc., testified that the type of heat pump purchased by the Johnsons would run on three and a half gallons per minute but that the optimum level was seven gallons per minute. He said that if water pressure in a a well servicing a heat pump was less than three and a half gallons per minute it "will lock out". Mr. LeBlanc's company had manufactured a total of 150 of these units and he testified they had a couple that ran from wells with water pressure of three and a half to four gallons per minute.
[15] Val Daigle, the president of Maritime, testified that a two and a half ton heat pump would require water pressure of five gallons per minute. Mr. Daigle said the brochure produced by C.B.L. Consultants Inc. was never shown to the Johnsons and he did not think Maritime had the brochure at the point in time of the sale to the Johnsons.
[16] The heat pump itself was not defective. The problem is that the Johnsons' well does not produce the minimum requirement needed to operate the water source heat pump properly. Most of the facts in this case are not in dispute, however there is a dispute as to whose responsibility it was to make sure that the Johnsons' well met the minimum water pressure requirement needed to operate the water source heat pump.
[17] In this regard Ronald Johnson testified that his brother-in-law, Roger Vautour, told him "you've got to have 3 to 4 gallons a minute". Mr. Johnson testified that he told his brother-in-law that he did not know how much water pressure he had in his well but that he had never "missed any water". He told him "my well never ran dry". He said he asked his brother- in-law how to check the water pressure to see how many gallons there were per minute. He said his brother-in-law told him he did not know how to check but what they did in similar situations in the St. Louis-de-Kent area was to phone the well driller. Mr. Johnson went back to Saint John and phoned the well driller who had drilled the Johnsons' well and was told that the well driller did not have the information on the Johnsons' well since they only kept information for a limited time period.
[18] On September 30, 1997 the Johnsons brother-in-law, Roger Vautour, and other employees of Maritime arrived at the Johnson property to commence installation of the heat pump and materials. Roger Vautour filled out a single sheet of paper for Maritime entitled 'Technical Informations' which was a printed fill in the blanks form prepared by Maritime. On that form Roger Vautour filled in such information as the house size, the size of the heat pump needed (2 ½ tons), the depth of the Johnsons' well (185 ft.) and the size and type of water pump (jet, ½). The president of Maritime testified that his company used this technical information form to decide what equipment to bring to a particular job site. But in the case of the Johnsons Maritime had already brought the equipment to the job site and this information was subsequently filled in shortly before the installation of the heat pump and materials commenced. It is relevant to note that the technical information sheet does not ask for any information with respect to water pressure from the customer's well which, in my opinion, is the most significant information to be ascertained before commencing the installation of a heat pump.
[19] Mr. Johnson testified that he told his brother-in-law that he had water "six feet from the surface". He said his brother-in-law told him that "should be enough".
[20] Duct work was installed throughout the Johnsons' home. The Johnsons claim that today this duct work is "an eyesore". There are grates in the living room, dining room, bedrooms, bathroom, on the floors in the upper level and on the ceilings in the basement. Evidence was adduced at the trial of this action that it would cost about $1,000.00 to fix the flooring in the Johnsons' home.
[21] Mr. Johnson testified that once the unit was installed it never worked right. Mr. Daigle told him he needed a submersible pump and tried to sell him one. Mr. Johnson purchased one from another company in Saint John. Maritime told the Johnsons that it would be better if they dug another well. The well digger told them this was not feasible. Maritime said it would install an air to air unit as a substitute but the Johnsons were not receptive to this suggestion since the air to air unit would have to be installed and located in the front of the property and as well an air to air unit is not as cost efficient as a water to air unit. Mr. Johnson testified that at one point Mr. Daigle said he would take it back and put the money in CIBC. Mrs. Johnson called CIBC on three occasions but was told that nothing had been done in this regard. The heat pump has been downstairs in the Johnsons' basement since September 1997 and has never been used. The Johnsons borrowed the purchase price of $8,395.00 from CIBC. Their cost of borrowing was $2,245.25, for a total of $10,640.25 repayable in sixty equal monthly installments of $177.33 each which the Johnsons have been paying monthly since October 30, 1997.
[22] On cross-examination Mr. Johnson said he remembered that Daye Well Drilling had told him back in 1979 that the Johnsons' well produced about four to five gallons a minute. He did not tell Roger Vautour this information. He called Daye Well Drilling and asked for a copy of the well certificate and talked to the owner's wife. He did not ask Daye Well Drilling to check the water pressure in the Johnsons' well.
[23] It is relevant to note that these water to air heat pumps are sourced by wells and that municipalities with water systems will not allow these units to be connected to a municipal water supply.
[24] On the issue of whether or not the Johnsons should have accepted Maritime's offer to install an air to air unit to mitigate their damages I am of the opinion that they are not required to do so. An air to air unit is not what the Johnsons had bargained for. The Johnsons were trying to save money on their monthly energy bill and that was the main reason for the purchase of the water to air unit after discussions with Roger Vautour and Mr. Daigle. The air to air unit is not as efficient as the water to air unit. I am of the opinion that the Johnsons should not have to take the air to air unit as a substitute for a water to air unit.
[25] Mr. Johnson testified that had the unit installed by Maritime at the property worked properly he was going to try to sell some of the units for Maritime in the Saint John area to his friends and neighbours.
[26] One of the other solutions that Maritime had recommended to the Johnsons after it was discovered that the heat pump and materials did not work was to run water into the Johnsons' well but Mrs. Johnson was concerned in this regard and she called Health & Safety officials who told her that doing so would not be the thing to do. At that point Mrs Johnson said she was "mentally and physically drained".
[27] Mrs. Johnson testified that she checked with CIBC at least three times to see if Maritime had returned any portion of the purchase price. She was advised by CIBC that it had not.
[28] Roger Vautour testified that he told the Johnsons that they had to make sure about water pressure because "you need a lot of water to run a heat pump". He could not remember if he mentioned the actual required amount of gallons per minute. He said Mr. Johnson told him he had a well that was 185 ft. deep with a jet pump and that he had water six feet from the ground.
[29] Maritime knew that the Johnsons were borrowing the funds to purchase the heat pump and materials. In fact, Maritime had referred the Johnsons to CIBC which was Maritime's banker at the time.
[30] Maritime takes the position that it was the Johnsons' responsibility to check the water pressure from their well and to satisfy themselves as to its adequacy. Mr. Johnson testified that Maritime was "supposed to be the expert".
[31] Mr. Vautour testified that he did not remember discussing water pressure with the Johnsons and did not remember quoting any numbers to them. He said he asked Mr. Johnson if he had ever run out of water and Mr. Johnson replied "No, I water my garden".
[32] Mr. LeBlanc, who was the president of C.B.L. Consultants Inc., commented on the technical information sheet used by Maritime and confirmed there was nothing in the form relating to water pressure. He said it would have been "nice to have it". I will go even further than that and say it should have contained a clear warning or disclaimer in this regard. He also testified that a well driller should have come in to check the water pressure. He referred to the analogy of a car and said "if you don't have gas the car will not run". Mr. Daigle testified that he thought he had told Mr. Johnson that he needed water pressure of five gallons per minute.
[33] Mr. Daigle said that Maritime could have tested the water flow and that Maritime had the ability to conduct such a test. Eventually a very simple test was conducted on the Johnsons' well and as a result of that test it was determined that their well was only producing one half a gallon per minute of water pressure which was substantially below the minimum requirement needed to operate the water source heat pump.
[34] Mr. Daigle said that Maritime had previously tested water flows for other customers in Northern New Brunswick who did not know what their water pressure was.
[35] Even though the parties take different positions as to whose responsibility it was to make sure there was enough water pressure in the Johnsons' well, one thing is clear without contradiction: within an hour after installation of the heat pump both Maritime and the Johnsons knew there was a problem. In my opinion, at that moment in time, Maritime had an obligation to the Johnsons to advise them to stop and check the water pressure in their well. Instead Maritime told the Johnsons that they should go one financial step further and purchase a submersible pump from Maritime for their well.
[36] At that point in time Maritime had not been paid for the heat pump and materials since the purchase price was to come from CIBC, Maritime's banker, which was to advance the funds to Maritime pursuant to a credit application and promissory note signed by the Johnsons on the same day they signed their agreement of purchase and sale with Maritime.
[37] It is relevant to note that Maritime had employees on site at the property when the water pressure problem with the Johnsons' well was ascertained immediately before and after installation of the heat pump and materials. After Maritime became aware of the problem and before CIBC advanced its funds to Maritime Mr. Daigle said he received a call from CIBC to see if the heat pump and materials had been installed. He testified he replied "Yes". The actual question that was put initially to Mr. Daigle by counsel for the Johnsons was whether or not CIBC had contacted him to see if "there were problems". Mr. Daigle was quick to respond that CIBC had contacted him "to see if it was installed". Maritime is no longer dealing with CIBC as it now deals with another Canadian chartered bank.
[38] With respect to the call from CIBC, Mr. Daigle modified his story somewhat later in his testimony and said that CIBC had either contacted him or he filled out a form. On this issue he said: "I don't really remember". He said at one time CIBC had a form that a customer had to sign before CIBC would release the funds. Then he said "the law was changed" and CIBC began to phone instead. But in direct answer to a question from counsel for the Johnsons suggesting that Mr. Daigle did not tell CIBC about the water pressure problem, Mr. Daigle testified "they asked if installation was done and we did it". The testimony indicates that there was a telephone call from CIBC to Mr. Daigle and I accept this version of what actually happened. Later, when this telephone call was focused upon, Mr. Daigle tried to backtrack by talking about a form that the customer had to sign and he thought that was the process that happened in this case. Later he testified that CIBC "might have called me but I think it was a form... I apologize if I said that ... I don't think they called me ... I'd have to check with Carolyn".
[39] I am of the opinion that Mr. Daigle was being evasive on this issue and I conclude that he did in fact receive a phone call from CIBC rather than a printed form. It is inconceivable that the Johnsons would sign a form confirming installation of the heat pump and materials after they were aware that the heat pump did not work properly. The Johnsons both testified that Mr. Daigle said he would take the heat pump back after they became aware of the problem and that he would "put money in CIBC". He told them that Maritime could not get the HST back, however Mrs. Johnson called Revenue Canada and was told that Maritime could get the HST back. Mr. Daigle testified that Maritime can in fact get the HST back on this transaction. The HST amounted to $1,095. Mrs. Johnson testified that she checked with CIBC three times to see if Maritime had put money in the bank for the Johnsons as Mr. Daigle said he would do and was advised by CIBC that nothing had been paid or deposited in this regard.
[40] I accept the Johnsons' testimony in this regard. They both were direct and forthright witnesses. There is no other plausible reason why Mrs. Johnson would be calling CIBC (which was not Maritime's banker) other than to check to see if Mr. Daigle had done what he had promised to do.
[41] I am of the opinion that Maritime had control of the advance of funds from CIBC to Maritime and that the advance of funds was activated by Mr. Daigle after Maritime was aware of the problem with the lack of water pressure in the Johnsons' well. This was deceptive and in my opinion Maritime acted in bad faith. Mr. Daigle testified that with respect to the water pressure problem "it's not his fault that he didn't have water but it's not our fault either". But even if knowledge of the water pressure problem before installation of the heat pump and materials was an honest mistake or misunderstanding as to who was supposed to check the water pressure in the Johnsons' well, nevertheless within one hour after installation of the heat pump Maritime knew there was a problem yet Mr. Daigle subsequently advised CIBC that the installation was complete and as a consequence the funds were then advanced from CIBC to Maritime.
[42] I am of the opinion that as soon as the problem with water pressure in the Johnsons' well became known to Maritime it had an obligation to the Johnsons to stop the process and to check the water pressure. The heat pump and materials may have been "technically installed" to satisfy the CIBC inquiry but the heat pump and materials were clearly not working properly and were not fit for the purpose intended.
[43] That good faith is a requirement in the performance of many sorts of contracts is a settled concept. In Crawford v. Agricultural Development Board, [1997] Law Post N.B.C. No. 4280 (C.A.) Bastarache J.A. writing for the Court discussed the issue as follows at para. 7:
"[para 7] The requirement to act in good faith when performing duties owed under a contract is well established (see Gibson v. Parkes District Hospital (1991), 26 N.S.W.L.R. 9; Houle v. Canadian National Bank. [1990] 3 S/C/R/ 122). The duty to act in good faith in the exercise of a discretionary power is also well recognized (see Gateway Realty Ltd. v. Arton Holdings Ltd., supra; Mesa Operating Ltd. Partnerships v. Amoco Canada Resources Ltd., supra; McKenna's Express Ltd. v. Air Canada (1992), 102 Nfld. & P.E.I.R. 185; Greenberg v. Meffert et al (1985) 50 O.R. (2d) 755 (C.A.), leave to appeal to the S.C.C. dismissed 56 O.R. (2d) 320; Brule Construction Ltd. v. Ottawa (City) (1991), 51 O.A.C. 260). In the decision of the Supreme Court of Canada in Lac Minerals Ltd. v. (International Corona Resources Ltd., [1989] 2 S.C.R. 574, the obligation to bargain in good faith was accepted, reasonable expectations within the bargaining process being used to define the content of the good faith obligation. This Court has also ruled that there is a duty of good faith in the execution of a mortgage sale (see Banque Nationale du Canada v. Desrosiers (1996), 167 N.B.R. (2d) 241)."
[44] Rather than stop the process and check the water pressure in the Johnsons' well, Maritime tried to sell the Johnsons a submergible pump instead.
[45] Maritime is no longer using the technical information form it used in the case of the Johnsons on September 30, 1997. Mr. Daigle said that form had been copied from a form used by an air to air company but "Maritime is a water treatment company". He testified that some times Maritime needs to know the well depth when it is installing a water softener. He said that is the reason Maritime converted the form used by the air to air company and put such items on the form as "Dept (sic) of well and size and type of water pump".
[46] Maritime had sold about thirty water to air thermal pumps prior to the sale to the Johnsons. Mr. Daigle was asked at the examination for discovery in this action if he had tested any water volumes for other customers prior to installing any of those thirty units. He answered: " Maybe on a couple of occasions because they asked us to". When he was asked "And was it solely because the customers asked you to?", he answered " Yes, because they weren't sure how much water they had or whatever reason". When asked this question at trial Mr. Daigle answered "I don't remember". When asked at the Discovery if he had suggested to Mr. Johnson that he should have the water volume tested Mr. Daigle answered "Why should we? He had plenty of water according to him." When asked if he told Mr. Johnson to have his well tested, Mr. Daigle responded: "It's not our job to do that. It's his well."
[47] I am of the opinion that Maritime had an obligation to advise the Johnsons to have their well's water pressure checked if they did not know what the water pressure was. Maritime was experienced in this business and knew the consequences if a customer did not have adequate water pressure. It was fatal to the operation of the heat pump and materials. Maritime had already installed thirty units and in some cases, for other customers, Maritime did have their well water pressure tested. It was not a difficult process to do and Maritime knew how to do it.
ISSUES
Is Maritime liable to the Johnsons under the Consumer Product Warranty and Liability Act?
Is Maritime liable to the Johnsons under the Sale of Goods Act?
Is Maritime liable to the Johnsons under the common law principles of negligence?
LIABILITY UNDER THE CONSUMER PRODUCT WARRANTY AND LIABILITY ACT
[48] As part of its regular business Maritime supplies consumer products. It is accordingly a distributor pursuant to subsection 1(1) of the Consumer Product Warranty and Liability Act SNB 1978 c-18.1. As the supplier of the heat pump and materials Maritime is a seller under subsection 1(1). As a consequence of being both a distributor and a seller under the Consumer Product Warranty and Liability Act both express and implied warranties arise with respect to the agreement of sale between Maritime and the Johnsons.
[49] Subsection 4(1) of the Consumer Product Warranty and Liability Act requires that any oral statement made in relation to the product by the seller to the buyer (unless the buyer does not rely upon the statement) is an express warranty given by the seller. I am of the opinion that Maritime sold the heat pump and materials to the Johnsons even in light of Maritime's knowledge that the Johnsons were unaware of the water pressure of their well. The fact that the heat pump and materials did not operate properly constitutes a breach of the agreement of the agreement of purchase and sale between Maritime and the Johnsons. Under section 10(1) of the Consumer Product Warranty and Liability Act Maritime is deemed to have given the Johnsons an implied warranty that the heat pump and materials were fit for the intended purpose, namely heating the Johnsons' home.
[50] Since the heat pump and materials did not operate properly at the property and did not operate in the manner in which they were supposed to operate Maritime breached its implied warranty in its agreement of purchase and sale with the Johnsons. I am of the further opinion that because the Johnsons had advised Maritime that they did not know the extent of their well's water pressure, a duty was imposed upon Maritime to exercise its skill and judgment as to the suitability of the heat pump and materials in the circumstances and accordingly another implied warranty arose in this regard, namely that contained in section 11 of the Consumer and Product Warranty and Liability Act:
"11 Where before the contract is made the buyer expressly or by implication makes known to the seller any particular purpose for which the product is to be used, there is an implied warranty given by the seller to the buyer that the product is reasonably fit for that purpose. [sic] Whether or not that is a purpose for which such a product is normally used, unless the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, or that it is unreasonable for him to rely, [sic] on the seller's skill or judgment."
[51] The Johnsons became aware of the fact that the heat pump and materials were not suited for the purpose intended, namely the provision of heat to their home, within sixty days of making their agreement with Maritime. At that point the Johnsons rejected the heat pump and materials and advised Maritime of such rejection. Accordingly, I am of the opinion that given that rejection the Johnsons are entitled under subsection 17(1) of the Consumer Product Warranty and Liability Act to recover the purchase price from Maritime as well as other losses suffered by them as a result of Maritime's breach. Since Maritime was fully aware of the CIBC loan (in fact Maritime had arranged the loan through CIBC, Maritime's banker) the added expenses incurred by the Johnsons as a result, namely the interest incurred, were foreseeable by Maritime and should be recovered by the Johnsons.
LIABILITY UNDER THE SALE OF GOODS ACT
[52] The Johnsons made known to Maritime that they required the heat pump and materials for heating their home in order to save energy costs and that their water supply came from a well of unknown water pressure. Maritime had the ability to test the water pressure in the Johnsons' well. Mr. Daigle testified that if someone was unsure of their water pressure it would be a good idea to test it. Both Maritime and C.B.L. Consultants Inc. knew how critical the issue of water pressure was. Mr. LeBlanc testified that if it was less than three and a half gallons per minute a heat pump would lock out. His company had manufactured 150 of these units. Maritime had sold and installed about thirty. Maritime had the expertise and knew how absolutely critical the issue of water pressure was. Mr. Daigle testified that if Maritime had known the Johnsons' water pressure was only half a gallon a minute Maritime would not have recommended the submersible pump.
[53] At that point in time, less than an hour after the installation of the heat pump and materials, Maritime knew there was a problem with water pressure from the Johnson's well. Maritime could have, and in my opinion, should have, conducted the simple water pressure test on the Johnsons' well which Maritime knew how to conduct, at that point in time rather than recommending to the Johnsons that they buy a submersible pump and in the next breath advising CIBC that the installation at the property of the heat pump and materials was complete. That was clearly deceptive and Maritime knew at that point in time, before the advance of funds from CIBC to Maritime, that the heat pump and materials were not fit for the purpose.
[54] Under the Sale of Goods Act, R.S.N.B. 1973, c. S-1 an implied warranty or condition as to the fitness of goods (in this case the heat pump and materials) for a particular purpose (in this case heating the Johnsons' home) arises due to the reliance of the purchaser on the skill or judgment of the seller. Section 15(a) states:
"15 Subject to the provisions of this Act and of any Statute in that behalf, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows:
(a) where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller's skill or judgment, and the goods are of a description that it is in the course of the seller's business to supply, whether he is the manufacturer or not, there is an implied condition that the goods are reasonably fit for the purpose, but 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."
[55] I am of the opinion that the warranty as to the performance of the heat pump and materials was breached. Accordingly, pursuant to section 50( 1) of the Sale of Goods Act the Johnsons may set up against Maritime the breach of warranty in diminution or extinction of the purchase price or they may maintain an action against Maritime for damages for the breach of warranty. Pursuant to section 50(2) of the Sale of Goods Act the measure of damages for breach of warranty is the estimate of loss directly and naturally resulting from the breach of warranty in the ordinary course of events.
[56] There is no question from the evidence before me that the Johnsons had communicated to Maritime their intention and reason for purchasing the heat pump and materials, namely to heat their home and to save on energy costs. The Johnsons had been led to believe by Maritime that the water source heat pump would provide an efficient operation on both heating and cooling cycles. Another advantage of the unit which had been mentioned to the Johnsons was air conditioning and air filtration.
[57] In Polar Refrigeration Service Ltd. v. Moldenhauer (1967) 61 D.L.R. (2d) 462 the Saskatchewan Queen's Bench held that where the owner of a beer parlour made known to a seller of fans and air conditioning equipment the dimensions of the room and his intention to buy some equipment capable of keeping the room clear of smoke, there was by virtue of section 16(1) of the Saskatchewan Sale of Goods Act an implied undertaking by the seller in delivering certain equipment of a kind specified by him in the course of his business that the equipment would be reasonably fit for the disclosed purpose. The wording in section 16(1) of the Saskatchewan Sale of Goods Act dealt with in that case is identical to the wording in the first part of section 15(a) of the New Brunswick Sale of Goods Act.
[58] In Sale of Goods in Canada, Fridman, 2 nd edition, the author states at pp. 206-207:
"On the other hand, if no purpose is expressly stated, it may nonetheless be obvious from the character of the goods. Thus a bottle of coca-cola is normally for drinking: therefore the purpose for which it was bought was sufficiently known to the seller in Yelland v. National Café. So, too, where a buyer was purchasing a motor car, it was held to be implied that it was for the purpose of travel from place to place. Similarly with the purchase of a milch cow; "guaranteed used cars", weed killer; air conditioning equipment; and a hearing aid.
The distinction is made clear in the leading case of Preist v. Last. There what was in question was a hot-water bottle which burst, causing injury to the purchaser's wife. It was held that there was a breach of this implied condition. Although nothing was said about the purpose of the goods, there was knowledge of such purpose on the part of the seller. The reason for this is made clear in the judgment of Collins M.R. where it is said that in the case of a purchase of goods, capable of general use for a multitude of purposes, in order to give rise to the implication of a term under this subsection, it was necessary to show that, although the article sold was capable of general use for many purposes, in the particular case it was sold with reference to a particular purpose. Thus, in a sale of goods of such kind, some positive statement must be shown from which it can be deduced that the actual intended purpose was brought to the seller's notice. "But in a case where the discussion begins with the fact that the description of the goods, by which they are sold, points to one particular purpose only ... the first requirement [of this provision] is satisfied, namely, that the particular purpose for which the goods are required should be made known to the seller".
Two important House of Lords decisions, which have often been cited with approval in Canada, must be noted. In Manchester Liners Ltd. v. Rea Ltd. the sale was of coal to be used in a ship. The coal delivered by the seller was unsuitable for the steamer for which the buyer intended it to be used. It was held by the House of Lords that there was a breach of the implied condition under this sub-section. The buyer had disclosed that he wanted the coal for use in this particular ship, and the seller, by undertaking to provide such coal and accepting the task of providing coal for the named ship, contracted to supply coal suitable for the purpose of such ship. To the same effect is the decision in Cammell Laird & Co. Ltd. v. Manganese Bronze & Brass Co. Ltd. where the contract was for the provision of two propellers for a specified ship. It was held that the sellers knew the purpose for which the propellers were required, i.e., that they should be suitable for the ship in question. Hence they were liable for breach of this implied condition when one propeller, being defective, caused excessive noise."
[59] No need arises to define or limit the word "particular" contained in the New Brunswick Sale of Goods Act. I am satisfied that the only reason the Johnsons wanted to buy the heat pump and materials was to heat their home with this equipment and to save on energy costs. The Johnsons did not know their well's water pressure and they so advised Maritime. I am therefore of the opinion that an implied warranty of fitness for the purpose of heating the Johnsons' home arose under section 15(a) of the Sale of Goods Act.
LIABILITY UNDER THE COMMON LAW PRINCIPLE OF NEGLIGENCE
[60] Among its various activities, Maritime was in the business of selling and installing water to air heat pumps and related equipment. Prior to the sale to the Johnsons Maritime had sold and installed approximately thirty units to other customers of Maritime. Maritime knew the importance of determining water pressure since if it was below a certain threshold, which according to the evidence of Mr. LeBlanc is three and a half gallons per minute, the unit would not operate and would in fact "lock out". Mr. Daigle testified that a spec sheet was published after the sale to the Johnsons. The four page brochure produced by C.B.L. Consultants Inc., according to Mr. Daigle, was never shown to the Johnsons. In fact Mr. Daigle did not think Maritime had the brochure produced by C.B.L. Consultants Inc. at that point in time. The C.B.L. Consultants Inc. brochure contained a section entitled "WSS and WSA Series Heating Information". In that section there is reference to Model 30 (which is the unit the Johnsons purchased) and it states GPM (gallons per minute) at " 7.0". There is an asterisk and below in small type it states: " Manufacturer's Recommended GPM" (emphasis added). Although the Johnsons were never given a copy of this brochure and although C.B.L. Consultants Inc. is no longer in the business of assembling or manufacturing these units I am of the opinion that in order to have complete and fair disclosure to the consumer and to protect the seller the brochure should have contained a section warning the consumer that the unit would not operate on a well with a water pressure less than three and a half to four gallons per minute.
[61] The one page contract form used by Maritime on the sale to the Johnsons contains no information or warning with respect to water pressure in the customer's well. The contract form used by Maritime is one used with respect to sales conducted pursuant to the Direct Sellers Act , R.S.N.B. 1973, c. D-10. Although this was not a sale governed by the Direct Sellers Act the president of Maritime testified about CIBC's practice of either calling a seller or having a form signed after a particular time period leads to the conclusion that CIBC had to satisfy itself that the customer had not rescinded the contract financed by CIBC during the so-called " cooling off period" contained in the Direct Sellers Act. When Mr. Daigle testified that the law had been changed with respect to that time period I am of the opinion that he was referring to the Direct Sellers Act. Notwithstanding that the Direct Sellers Act does not apply in this particular case, the CIBC telephone call is relevant because in all likelihood it was made several days after the installation by Maritime of the heat pump and materials. It was made by CIBC to Mr. Daigle and he knew at the time of that inquiry that there was a problem with water pressure from the Johnsons' well. In my opinion, Maritime had an obligation to the Johnsons to let CIBC know there was a problem since it was the Johnsons who were going on the hook with CIBC and had the most to lose.
[62] I am of the opinion that Maritime ought to have known that the Johnsons would rely on Maritime's skill and judgment. When the Johnsons advised Maritime that they did not know the water pressure of their well, Maritime could have and should have exercised appropriate care by testing the water pressure in the Johnsons' well before installing the heat pump and materials on the property.
[63] In Charlesworth and Percy on Negligence, 7th edition, the authors state at p. 50:
"If, in the ordinary course of business including professional affairs, a person seeks advice or information from another, who is not under any contractual or fiduciary obligation to give it, in circumstances in which a reasonable man so asked would know that he was being trusted or that his skill or judgment was being relied upon, and such person then chooses to give the requested advice or information without clearly disclaiming responsibility for it, then he accepts a legal duty to exercise such care as the circumstances require in making his reply."
CONCLUSION AND DIRECTIONS FOR JUDGMENT
[64] I find that the Johnsons have complied with and are entitled to remedies under the Consumer Product Warranty and Liability Act. As well I am of the opinion that Maritime is liable to the Johnsons under the common law principle of negligent misrepresentation. I find the Johnsons have suffered damages and are entitled to redress under section 17 of the Consumer Product Warranty and Liability Act on the following basis:
Original purchase price of the Heat Pump and Materials $8,395.00
Cost of the submersible pump recommended by Maritime $700.00
Interest at the rate of 9.75% from October 1, 1997 to date $1,942.00
General damages (to compensate for the cost of repairing
the Johnsons' home) $1,000.00
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Total $12,037.00
[65] Since I have allowed interest from October 1, 1997 I make no award with respect to the finance costs of $2,245.25 incurred by the Johnsons with CIBC since upon receipt of a cheque from Maritime to satisfy this judgment the Johnsons would presumably be paying the CIBC loan and under the circumstances presumably without penalty or prepayment interest and they would only be responsible for interest on the CIBC loan from October 1, 1997 to the date of payment. The monthly payments on that loan are $177.33 and run to September 30, 2002. If CIBC insists upon penalty interest because it is being prepaid then, in such event, I also award the Johnsons the amount of such penalty interest.
[66] In the result there will be judgment for the Johnsons against Maritime in the sum of $12,037.00 plus costs which I fix in the sum of $2, 000.00 together with reasonable disbursements. Upon payment of this judgment Maritime is entitled to the return to it of the water to air thermal pump at the property together with any material which is removed as a result of the Johnsons repairing the vent holes as per the quotation of Gerard J. Parent.
[67] I direct that judgment be entered accordingly.
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