LeBlanc v. Brett (Lorne) Chev Olds Ltd.
(1986), 69 N.B.R. (2d) 193
New Brunswick Court of Queen's Bench
Trial Division
Judicial District of Saint John
Jones, J.
January 31, 1986
LeBLANC and LeBLANC v. LORNE BRETT CHEV OLDS LTD.
(No. S/C/1138/84)
LORNE BRETT CHEV OLDS LTD. v. LeBLANC and LeBIANC
(No. S/C/561/85)
Reproduced with permission of Maritime Law Book Ltd.,
which claims copyright in the headnote and indexing.
Maritime Law Book Ltd. Summary:
LeBlanc wished to purchase a new car. The car dealer sold him a car that had already been sold and returned, without disclosing the previous ownership. Upon discovering that the car was not new, LeBlanc promptly returned the car and brought an action for rescission of the sale plus damages. The car dealer brought a separate action for the balance owing under the conditional sales contract.
The New Brunswick Court of Queen's Bench, Trial Division, allowed LeBlanc's action and dismissed the car dealer's action. The court held that there was both a fundamental breach of contract and a major breach under the Consumer Product Warranty and Liability Act, both entitling LeBlanc to rescind the contract. The court assessed damages pursuant to ss. 17 and 19 of the Act.
Consumer Law -- Topic 1605
Sale of goods -- Major breach defined -- The New Brunswick Court of Queen's Bench, Trial Division, held that the definition of major breach under the Consumer Product Warranty and Liability Act was the same as that for fundamental breach, i.e. a breach "going to the root of the contract" -- see paragraph 32.
Consumer Law -- Topic 1805
Sale of goods -- Breach -- Remedies of buyer -- Rescission -- A buyer contracted for a new car and was sold a car that had been previously sold and returned after several weeks -- The New Brunswick Court of Queen's Bench, Trial Division, held that the representation that the car was new constituted an express warranty under s. 4 of the Consumer Product Warranty and Liability Act and that the breach was a major breach entitling the buyer to rescission of the contract.
Damages -- Topic 5839
Contracts -- Sale of goods -- Breach by seller -- Fundamental or major breach -- Consumer Product Warranty and Liability Act, S.N.B. 1978, c. C-18.1, ss. 17, 19 -- A car dealer committed a major breach, entitling the purchaser to rescind the contract -- The New Brunswick Court of Queen's Bench, Trial Division, calculated damages as the purchaser's out of pocket expenses (net value of traded-in car plus down payment plus four monthly payments) less an equitable amount for the benefit derived from the purchaser's use of the car dealer's car
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-- See paragraphs 34 to 40.
Sale of Goods -- Topic 6507
-- Breach -- Remedies of buyer -- Rescission -- Fundamental breach -- A purchaser contracted specifically for a new car -- The salesman sold him a car that he said was used as a demonstrator only -- In fact, the car had been previously sold, used for several weeks and returned to the dealer -- The New Brunswick Court of Queen's Bench, Trial Division, held that the breach of the warranty that the car was new constituted a fundamental breach entitling the purchaser to rescission -- See paragraphs 1 to 27.
Words and Phrases
Major breach -- The New Brunswick Court of Queen's Bench, Trial Division, held that "major breach", as found in the Consumer Product Warranty and Liability Act, S.N.B. 1978, c. C-18.1, meant fundamental breach -- See paragraph 32.
Cases Noticed
Craig (Paul) Enterprises Ltd. v. MPL Computer Products Ltd. and Parker (1986), 69 N.B.R.(2d) 181; 177 A.P.R. 181, refd to. [para. 24].
Gauvin v. Dryden Motors Limited (1981), 34 N.B.R.(2d) 143; 85 A.P.R. 143, appld. [para. 32].
Statutes Noticed
Consumer Product Warranty and Liability Act, S.N.B. 1978, c. C-18.1, ss. 4 [para. 29]; 14 [para. 32]; 16 [para. 33]; 17(1), 17(2), 17(3), 19(1), 19(2) [para. 34].
Counsel
Richard A. Northrup, for Alexander LeBlanc and Elizabeth M. LeBlanc;
David R. Colwell, for Lorne Brett Chev Olds Ltd.
These actions were heard on December 10, 1985 before Jones, J., of the New Brunswick Court of Queen's Bench, Trial Division, Judicial District of Saint John, who delivered the following judgment on January 31, 1986.
[1] Jones, J.: These actions arise out of the purchase of a motor vehicle by Alexander and Elizabeth LeBlanc his wife from Lorne Brett Chev Olds Ltd. (hereinafter referred to as Brett Motors).
[2] On Saturday, June 16, 1984 Mr. and Mrs. LeBlanc went to Brett Motors to price new cars. They were the owners of a 1981 Toyota Tercel and at that time owed approximately $3,000.00 against the vehicle. They anticipated taking another year to pay this off and indicated that they were simply pricing new vehicles in anticipation of purchasing one in the future. At Brett Motors they met Charles Jewers a salesman with whom they were acquainted.
[3] Mr. Jewers initially showed them several used vehicles. They indicated
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to him that they were not interested in these but were interested in the price of new automobiles. He then told them that there was another vehicle a 1984 Chevrolet Monte Carlo which was driven as a demonstrator by Mr. Lorne Brett the owner of Brett Motors. Mr. Lorne Brett however was out at the time with this vehicle.
[4] Both Mr. and Mrs. LeBlanc were insistent that Mr. Jewers told them that the vehicle in question was a demonstrator and had low mileage and was used by Mr. Lorne Brett. The fact of the matter was as shall be set out hereunder that in a rather unusual circumstance this vehicle had been sold to another customer in May of 1984 and held by that customer for a short period of time following which the sale in question was rescinded and the vehicle returned to stock.
[5] Mr. and Mrs. LeBlanc are insistent that no mention was made of the previous ownership of this vehicle. Mr. Jewers in his examination for discovery at one point stated that he had not mentioned a previous owner. At another point in his discovery he stated that he told them that the car had been sold and was then cancelled. Mr. Jewers indicated at trial that he had told this to Mr. LeBlanc although on cross-examination he indicated that when he had spoken to Mr. LeBlanc he felt Mrs. LeBlanc was within hearing distance. As indicated Mr. and Mrs. LeBlanc are adamant that there was no suggestion of a previous owner.
[6] After Mr. Brett returned they examined the vehicle and were pleased with it. The vehicle in question had approximately 3100 km on it. This was known to Mr. and Mrs. LeBlanc and they have no dispute with this. In the meantime Mr. Jewers had checked with respect to refinancing of their own loan on their existing car and other
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costs and pointed out to Mr. and Mrs. LeBlanc that they could refinance their contract into a finance contract on the new car releasing their Toyota and be making payments approximately $20.00 a month more than they already were. They would be committing themselves to a four year contract as opposed to approximately one year remaining on their existing contract.
[7] There also was discussion concerning paint work and some dents which Mr. and Mrs. LeBlanc did not take to be more than what one would expect from its use as a demonstrator. Mr. LeBlanc signed the necessary papers that day and Mrs. LeBlanc returned on Monday to sign as well, Mr. LeBlanc having in the meantime gone to work and was away from home for some two weeks. It should be pointed out that when the vehicle had been returned to Brett Motors' premises on Saturday by Mr. Brett that Mr. Jewers offered the vehicle to Mr. and Mrs. LeBlanc for a test drive. Mr. LeBlanc did not have his glasses with him and therefore could not drive. He however accompanied his wife and they appeared satisfied with the operation of the vehicle.
[8] Brett Motors did some initial work with respect to lubrication as well as the body work in June and July. The evidence is that at some point in July there were complaints concerning the operation of the vehicle and in fact the work order of Brett Motors exhibit #5 on July 25 indicates that in checking for dieseling and for "bucking" at approximately 30-40 m.p.h. Brett Motors' employees could not find anything wrong at this time. There was a further complaint in September. The work order for September 22nd exhibit #1 indicates that there was hesitation when accelerating and that other work was done. There was some indication that sugar [had] been put in the gas tank. At this time the insurers of Mr. and Mrs. LeBlanc paid for the work other than a deductible.
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[9] Mr. and Mrs. LeBlanc had further complaints concerning the vehicle and on October 15th it was taken back for more detailed motor work. The work did not commence until October 17th and the vehicle was not returned to Mr. and Mrs. LeBlanc until November 7th. Mr. Ralph Ashby, service manager of the defendant was called and his testimony with respect to the work which was done on the plaintiffs' vehicle at that time is as follows:
"Q. What was done in that interval, the 17th of October to the 6th of November?
A. The engine -- the engine was dismantled from the car, cylinder heads were taken off, the crankshaft was removed and it was sent out to a sublet machine shop to be polished because there had been some minor marks on it, it was polished, there was new bearings installed on the crankshaft, there was new rings installed on the pistons and the engine was put back together, the valves were re-seated and installed -- and the heads were installed back on the car. Also on the same work order, there was a piece put in the distributor and also there was a set of shock absorbers put on the car."
[10] All of the work which was done on the vehicle other than that part covered by insurance was covered through warranty with no charge to Mr. and Mrs. LeBlanc. They obviously were inconvenienced with this series of work and had become upset with continual complaints particularly with respect to the operation of the engine.
[11] At some point after November 7, 1984 Mrs. LeBlanc was going through the
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glove compartment in the vehicle and came across a New Brunswick Motor Vehicle Inspection Certificate for this car. This certificate was for the same vehicle and was dated May 7, 1984. It showed the owner as one Brian Worden of R.R. #3 in Norton. This indicated to Mr. and Mrs. LeBlanc that in fact there had been a previous owner of this vehicle. After seeking legal advice Mrs. LeBlanc attended at the premises of Brett Motors on November 19th and delivered up the vehicle together with a letter which had been provided to her by her lawyer.
[12] From that point on Mr. and Mrs. LeBlanc have taken the position that there has been a fundamental breach in their contract and that they are entitled to rescission of the original sale with either the return of their original vehicle or the equivalent compensation as well as the return of some four monthly installments which they have paid on the conditional sale contract with respect to the Monte Carlo.
[13] Brett Motors brought a separate action wherein they have sued for the balance an the conditional sale contract. They in fact have proceeded with the sale of the LeBlanc vehicle and claim for a deficiency of some $3,489.48.
[14] As alluded to above it was discovered by Mrs. LeBlanc that an inspection certificate had been issued showing a previous owner in May of 1984. Anne Walling of Bloomfield, N.B. was called as a witness by Mr. and Mrs. LeBlanc. She knows Brian Worden who was shown as the earlier owner of the vehicle in question. She testified that Brian Worden was a foster child who had been raised by her mother and that he is now 33 years of age. As her mother became unable to care for him she took over this responsibility. He is a deaf mute and Mrs. Walling testified that he has been diagnosed as having brain damage.
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[15] Around the end of April 1984 he came home with a new car. She advised that early in May he came back and she discovered that he had documentation showing that he was the owner of this car. A copy of a conditional sale contract has been entered as exhibit #12 and shows that the Monte Carlo later purchased by the plaintiffs was sold to Brian Worden for a base price of $13,123.00. He traded in his own vehicle a 1979 Mercury Capri.
[16] Mrs. Walling was concerned because Brian Worden's only source of income was Social Assistance and the monthly payment under the Conditional Sale Contract was approximately equal to this amount.
[17] After considering the situation Mrs. Walling made contact with representatives of Brett Motors and after discussion obtained their agreement to rescind that sale. She apparently met resistance from Brian Worden and it took her a period of time to obtain his agreement to return the vehicle.
[18] Mrs. Walling testified that she was just thankful to have Brian Worden's obligations under the conditional sale contract terminated. She testified that his 1979 Mercury Capri traded in on the Monte Carlo was not returned to him although it was indicated by Brett Motors that if he would pay $600.00, that is $300.00 to represent rent of the Monte Carlo and $300.00 for work they had done on the Capri that he could have this vehicle back. As far as she knows he never got it back.
[19] She indicated that during the period that Brian Worden had the Monte Carlo he drove it during the day. She has no knowledge as to where he went or what he did. Mrs. Walling estimates
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that he had the vehicle from two to four weeks and no one really disputes that. I note in this connection that at the time Brett Motors assessed the value of rental to him at $300.00 which I think indicates three or four weeks' use of the vehicle.
[20] Apparently the vehicle was used as a demonstrator after that point. Brett Motors were able to arrange with General Motors Acceptance Corporation who were the financial body involved to reverse the Conditional Sales transaction and also able to arrange that a new car warranty would be available to whoever purchased the vehicle, in this case Mr. and Mrs. LeBlanc.
[21] Mr. and Mrs. LeBlanc argued that they had stated that they wanted a new car and it never occurred to them they were being sold a car which had already been through one transaction even though of rather brief nature and that this would have been important to them had they known. It is argued on behalf of Brett Motors that the mileage of approximately 3,100 km. was known to the [sic] Mr. and Mrs. LeBlanc and that it made little difference whether it was Lorne Brett or some other person who had driven the vehicle during this time.
[22] I am satisfied that Mr. and Mrs. LeBlanc had no appreciation in June of 1984 that this vehicle had a previous ownership even of a brief duration. Mr. Jewer [sic] says that he indicated that there had been a sale which was reversed or cancelled. Mr. and Mrs. LeBlanc deny having been told this and I accept their evidence. I am satisfied that the sales personnel here were less than frank with Mr. and Mrs. LeBlanc.
[23] In this action the plaintiff's claim for rescission of the purchase agreement. Their statement of claim
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refers both to repair work needed to be done to the vehicle as well as breach of the agreement that the vehicle was a new vehicle and had only been used as a demonstrator as being grounds for rescission. As previously indicated there were several instances of repair of the vehicle and in one case a rather substantial one. These repairs however were done and would not in my opinion form the basis of fundamental breach for rescission of the contract.
[24] All breaches of contract are not grounds for discharging an innocent party. A breach of contract must be a fundamental breach. This was dealt with by me in a recent unreported decision Craig (Paul) Enterprises Ltd. v. MPL Computer Products Ltd. and Parker (1986), 69 N.B.R.(2d) 181; 177 A.P.R. 181:
"The defendant is correct in making the argument that not all breaches of contract are grounds for discharging an innocent party under the terms of a contract and that what one must have is a fundamental breach being that of such importance that it entitles the innocent party to treat himself as discharged.
"It has been said that a default in performance of a contract will be grounds for discharge of the contract where it goes 'to the root of the contract', Mersey Steel and Iron Co. Y. Naylor Benzon and Co., (House of Lords) [1883-4] 9 A.C. 434, at p. 443.
"In dealing with a claim for a declaration to rescind a contract of sale with respect to a motor vehicle, Hughes, C.J.N.B. stated in Peters v. Parkway Mercury Sales Ltd. 10 N.B.R. (2d) 703; 4 A.P.R. 703, at p. 710 that in order for a party to be
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entitled to rescission of a contract of sale there must be a fundamental breach and said in particular:
'A fundamental breach has been described in many ways. The breach must be of a very serious nature. It must go to the root of the contract and the goods must not be merely defective in some way, shape or form but suffer from such a defect or a 'congeries of defects' as to make the thing delivered not the thing bought by the purchaser. Pollock & Co. v. Macrae, [1922] S.C. (H.L.) 192, at p. 200.'"
[25] In the present case the plaintiffs Mr. and Mrs. LeBlanc were clearly looking for a new car. They settled upon a car which they were told was a demonstrator which to them meant a demonstrator driven by the principal officer of the defendant company. They would recognize that this involved some use but of a restrictive nature. To be given a car which had been sold to another party and remained in his hands for several weeks would be a matter of some importance to any purchaser and a matter which would be treated with concern. It is my finding that the sales representative of the defendant company did not tell the plaintiffs of the car's history and I consider that they were not left in the dark by mere inadvertence but rather because it was a significant matter.
[26] It is argued on behalf of Brett Motors that by arranging to have full warranty available to Mr. and Mrs. LeBlanc as though they were a first purchaser they had in any event been protected. This in my opinion does not answer the fault or breach in failing to inform them that in fact they were not buying a new car as they had clearly expressed their intention to
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do.
[27] I find this breach of condition to be fundamental within the meaning of the law referred to above. As soon as this fact became known to Mr. and Mrs. LeBlanc they proceeded promptly to obtain legal advice and purported to rescind the contract which in my opinion they were entitled to do.
[28] In addition the plaintiff has pleaded the provisions of the Consumer Product Warranty and Liability Act, S.N.B. 1978, c. C-18.1, and certain enumerated sections. The sale in question is governed by the provisions of this Act.
[29] Section 4 of this Act provides that among other matters an oral statement which the seller makes to the buyer in relation to the product unless not relied upon by the buyer or otherwise excluded is an express warranty. This includes statements by agents or employees in the scope of their actual, usual or apparent authority. Under the provisions of s. 4(4)(b) a statement "means a promise or representation of fact or intention that is made before or at the time of the contract".
[30] In the present case the plaintiffs expressed a clear desire to price a new car. They were shown some cars which were not new and again expressed their desire. The car in question was then presented to them as being new subject to the use by the president of the defendant company as a demonstrator. This was clearly a representation of fact made by the sales person an agent of the defendant and comes within the definition of an express warranty under s. 4 of the Consumer Product Warranty and Liability Act. The defendant was clearly in breach of this warranty in failing to disclose to the plaintiffs that this vehicle had in fact had a previous owner.
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[31] Where there is a breach of warranty and it is not a major breach a buyer may give the owner a reasonable opportunity to rectify the breach. It is difficult to see how a breach of this nature could be rectified other than negotiating for what was in fact bargained for, i.e. a vehicle that had not had a previous owner.
[32] The term major breach has not been the subject of court decision other than the case of Gauvin v. Dryden Motors Limited (1981), 34 N.B.R.(2d) 143; 85 A.P.R. 143, where Meldrum, J., stated at p. 148 "For the purposes of this action I treat 'major breach' as 'going to the root of the contract' ." It appears that in this case the court has taken the definition of major breach as being the same as that for fundamental breach. Certainly a fundamental breach of contract would amount to a major breach and I having found that in fact the defendant in the present case is guilty of fundamental breach hold that there is a major breach within the provisions of s. 14.
[33] The breach of warranty in this case came to the attention of the plaintiffs in November of 1984 and within a very short time thereafter the vehicle was returned to Brett Motors clearly complying with s. 16 of the Consumer Product Warranty and Liability Act.
[34] The calculation of damages in this event under the Consumer Product Warranty and Liability Act is set out in ss. 17 and 19 as follows:
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"17(1) Subject to subsections (2) and (3), where the buyer rejects the product pursuant to section 16, he is released from his obligations under the contract and may recover from the seller any payments that he has made on the price and damages for any other loss that he has suffered because of the breach and that was reasonably foreseeable at the time of the contract as liable to result from the breach.
"17(2) The seller may deduct from the refund of any payments on the price or recover from the buyer, or both, an amount that is equitable in the circumstances for the benefit, if any, that the buyer derived from use of the product.
"17(3) Where before rejection the product has deteriorated to a state beyond that attributable to reasonable wear and tear for the period of time that the product was used by the buyer, or has been damaged by causes that are not attributable to the seller's breach, the seller may deduct from the refund of any payments on the price or recover from the buyer, or both, an amount for compensation for the difference between the value of the product as it is and the value that it would have but for that deterioration or damage.
"19(1) For the purposes of sections 17 and 18, payments an the price shall be deemed to include
(a) any finance charges or other credit costs that the buyer has reasonably incurred in relation to the product, whether paid to the seller or to another person;
and
(b) any consideration that the
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buyer gives to the seller, whether or not it is money.
"19(2) Where the buyer gives consideration other than money, in whole or in part, the seller or the buyer may elect to treat it as if it were money, the amount of which shall be deemed to be the monetary value of such consideration at the time it was given."
[35] The plaintiffs traded in their 1981 Toyota Tercel at the time of purchase of the automobile from the defendant. This trade-in however was subject to an outstanding indebtedness which was retired and thus the net value of the trade-in was $1,020.00. In addition to this the plaintiffs made a downpayment of $1,000.00. The evidence is that the plaintiffs made four monthly installments under the conditional sale contract of $340.67 per month being the months of July to October inclusive 1984.
[36] Therefore the total out of pocket expense of the plaintiffs is as follows:
Net value of 1981 Toyota $1,020.00
Down payment 1,000.00
Four monthly payments under finance contract $1,362.68
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$3,382.68
[37] Under the provisions of a. 17(2) of the Consumer Product Warranty and Liability Act credit may be given for an amount that would be equitable for any benefit derived by the buyer from the use of the product. In this case Mr. and Mrs. LeBlanc had the vehicle in question from June 18th until Mrs. LeBlanc returned it on November 19th being a period of five months. During the period that the vehicle was in for its major repair from October 15th to November 7th the defendant provided an
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alternate vehicle without expense. The vehicle was in for repair on earlier occasions but these were not for lengthy periods.
[38] There were 3100 kilometers on the odometer when the vehicle was purchased by Mr. and Mrs. LeBlanc. A reading on October 15, 1984 when the vehicle went in for the final repair was 14,318, see exhibit #2. The plaintiffs had the use of this vehicle or a replacement over a period of five months and appeared to use the vehicle regularly. Taking all these matters into consideration I would assess the sum of $300.00 per month or $1,500.00 as a reasonable allowance for the benefit received by the plaintiffs for the use of this vehicle. I note in this connection this appears to be the figure used by the defendant in assessing the value of the use of the vehicle to Mr. Worden for the period during his purchase.
[39] After allowing for the sum of $3,382.68 being the amount of out of pocket funds paid by the plaintiffs to the defendant and deducting $1,500.00 as reasonable compensation for their use of this vehicle for five months I would direct that the plaintiffs have judgment against the defendant for the sum of $1,882.68 together with interest thereon at 10% per annum from November 19, 1984 being the date of return of the automobile.
[40] The above amount has been calculated in accordance with the provisions of the Consumer Product Warranty and Liability Act. It does further represent a reasonable assessment of the loss sustained by the plaintiffs as a result of rescission of this contract had the same been assessed on the basis of a rescission being granted pursuant
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to a fundamental breach.
[41] Brett Motors' action against the plaintiffs for a deficiency under the conditional sale contract is dismissed the aforementioned breach entitling the plaintiffs to rescission of this contract being an answer to that claim.
[42] Alexander LeBlanc and Elizabeth M. LeBlanc shall have costs in this matter against Lorne Brett Chev Olds Ltd. They shall be entitled to one bill of costs and for the purpose of assessment of costs I set the amount involved at $5,000.00. Alexander LeBlanc and Elizabeth M. LeBlanc will have costs against Lorne Brett Chev Olds Ltd. under Scale 3 of $1,250.00 for solicitors' services in addition to disbursements.
LeBlanc's action allowed;
Brett's action dismissed.
Editor: Steven C. McMinniman
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