Ryan v Milligan's Cycle Works
New Brunswick Court of Queen's Bench
Trial Division
Judicial District of Moncton
[2006] N.B.R.(2d) Uned. 22
New Brunswick Court of Queen's Bench
Trial Division
Judicial District of Moncton
Creaghan, J.
February 17, 2006.
Reproduced with permission of Maritime Law Book Ltd.,
which claims copyright in the headnote and indexing.
Counsel
Jason T. Dempsey, for the claimants;
Michael Milligan, for the defendant.
[1] Creaghan, J.: This is an appeal from the decision of a small claims adjudicator by way of trial de novo.
[2] The facts as I find from the evidence before me are as follows.
[3] The Claimants Carolyn Ryan and Douglas McDavid have a son Jaret who is 14 years old. Jaret and his parents have been involved in riding and maintaining all terrain vehicles and motor cross motorcycles for many years.
[4] In March of 2005 Jaret had saved some money and he and his mother started looking for a motor cross bike of his own that he could race competitively.
[5] It must be taken that they were knowledgeable of motor cross racing and the demands that are put on the 2-cycle machines that are used to compete.
[6] After looking at the models available, the Ryans decided to purchase a 2005 Gas Gas MC 125 from the Defendant Milligan's Cycle on April 1, 2005. The Ryans knew Mike Milligan, the owner of Milligan's Cycle. He had considerable experience in the motor cycle industry and had been the owner of his own business since 1998.
[7] Mr. Milligan had researched the Spanish made "Gas Gas" as a 2-cycle motor cross machine and felt it was a good product. He took on the dealership in the Moncton area and wanted to promote the machine.
[8] He encouraged the Ryan's to purchase the "Gas Gas" bike and he offered them incentives to do so. The purchase price was $6,200.00 plus $980.00 HST, which was at dealer cost. He also offered to Ryan a sponsorship agreement that gave them reduced costs for equipment, parts and labour. He also offered them a warranty on the machine that they purchased.
[9] The evidence before me, which I accept, is that motor cross motorcycles are usually sold without any warranty in the normal course of business. These machines are subject to very difficult and arduous operating use and conditions. Both the seller and buyer understand that purchase of a motor cross bike involves conditions of wear and tear where the seller cannot warrant that the machine will not break down and may require maintenance and repair on a frequent basis.
[10] In this case however, because the Defendant, and indeed the manufacturer, were anxious to get the product into the market a warranty was given. The Claimants state that in the final analysis that was why they settled on the Defendant's machine.
[11] The Claimants maintain they were offered an unlimited warranty guaranteeing that both materials and manufacturing were free of defects in accordance with highest standard of quality and that the Defendant would repair, free of charge, any defect that may result from faulty manufacture for a period of six months. The warranty the Claimants say was offered was oral, but generally was as set out in Exhibit P-1. It must be noted that the written warranty referred to, which was not given to the Claimants at the time of purchase, states that any claim under warranty might be rejected if the motorcycle was used for special purposes other than ordinary use such as competition or races, which was in fact the purpose for which this motorcycle was intended.
[12] The Defendants admit that a warranty was offered but that it was a three-month warranty covering parts only, that it excluded labour, worn parts or damage to parts due to neglect of maintenance. The Defendants say this limited warranty was given orally, but generally was as is set out in D-2.
[13] In fact however the Defendants have accepted responsibility to repair at their cost any manufacturer's defects which become apparent during the period the Claimants had possession of the motorcycle regardless of what express warranty was given.
[14] The Claimants took possession of the bike on April 1, 2005. For a couple of weeks Jaret could not drive it because of weather. Around April 15, 2005 he drove the machine for practice around his family's property. The engine lost compression and the Claimants took the bike back to the Defendants.
[15] The Defendants discovered that the engine cylinder had cracked causing the engine to overheat and lose compression. They were of the opinion that Jaret had got water into the bike and this was the reason the engine failed.
[16] They installed a new piston kit and recoated the cylinder. They refused to do the repairs under warranty as they felt the damage was due to use and failure to maintain. As the Claimants did purchase other unrelated items when the machine was ready around the end of April, I find that the cost invoiced and related to the engine failure was $499.77.
[17] The Claimants objected to paying this bill and were told to contact the distributor in Dartmouth.
[18] The Claimants paid the bill and took the motorcycle to Nova Scotia to race on May 1, 2005 and had no problems, however on return to New Brunswick Jaret was practicing with the machine on May 3, 2005 when the engine lost compression and failed again in the same manner.
[19] Again the Claimants brought the motorcycle back to the Defendants. This time the Defendants realized that with recurrence of the same problem of lost compression due to a cracked cylinder and scuffed pistons, there probably was some defect in the machine.
[20] This time the Defendants did the repairs at no charge, even though they maintained that no warranty existed to cover labour.
[21] Jaret got the bike back and raced without problem at River Glade, N.B., on May 14, 2005. The machine operated satisfactorily for that race.
[22] A couple of days later he was practicing at the Fox Hollow, N.B. track, when the same problem occurred. The engine lot compression and would not run.
[23] On May 16, 2005 the motorcycle was back at the Defendants' shop for the third time with the same problem, a cracked cylinder and scuffed pistons. This time the Defendants shipped the machine to its distributor in Dartmouth, N.S.
[24] Here it was determined that the repeating problem was indeed caused by a manufacturer's defect.
[25] The defect was repaired at the distributor's shop in Dartmouth.
[26] The fact of the manufacturer's defect is admitted by the Defendants and they also accept responsibility to pay for the full cost to repair the defect including labour, which they have done with the exception of the $499.77 which was charged on the first repair and which the Defendants are prepared to refund.
[27] The Claimants drove to Dartmouth to pick up the machine and then went on to a race at Mill Hill, Nova Scotia on June 12, 2005. Jaret raced the bike there and it was fine.
[28] He was practicing prior to a race at Fox Hollow, N.B. on June 16, 2005 when he again had problems with the motorcycle. This time the clutch was not working properly and there was more problem with engine compression. Again the bike went into the Defendants' shop and a new clutch was installed. While in the shop it was also discovered that while it had been previously at the distributor's shop in Dartmouth, a cover on some part had been incorrectly replaced which could have affected engine power. That problem was corrected by the Defendants.
[29] The problem with the clutch has to be seen as a regular repair arising from normal motor cross use. It was not under any claim for warranty and was paid for by the Claimants.
[30] On June 26, 2005 the bike was still at the Defendants' shop. Jaret had a race at Burt's Corner, New Brunswick. He borrowed a motorcycle from his cousin and raced it.
[31] By this time the Claimants were requesting the Defendants to give them back the purchase price of the motorcycle or give them a new machine. The Defendants refused.
[32] Around July 1, 2005 the Claimants got the bike back from the Defendants.
[33] In mid July, Jaret raced the motorcycle at Pleasant Valley, Nova Scotia. During that race he found that again the clutch was not operating properly.
[34] The bike was returned to the Defendants shop on July 12 or 13, 2005 and the Claimants again paid to repair the clutch.
[35] On July 28, 2005 Jaret was again on the track for a race. The engine would rev up but he could not shift gears.
[36] On August 10, 2006 the Claimants stripped the machine of any new parts they had acquired, replaced them with the original parts that had worn out and returned the bike to the Defendants' shop. They demanded return of the purchase price. They were refused. They left the bike.
[37] The Defendants considered the motorcycle left with them on consignment for sale. To mitigate any damages and to protect the value in the bike they refurbished it at a cost of $1,996.83 and are presently offering it for sale at a price of $5,899.00.
[38] The Defendants stand willing to remit to the Claimants the sale price less the cost of refurbishment of $1,996.83 plus the cost of the first engine repair of $499.77. Alternatively the Claimants can take repossession of the bike on paying $1,497.06.
[39] The Claimants maintain they are entitled to return of the purchase price of $6,400.00 plus $960.00 HST or a total of $7,360.00. They abandon $1,360.00 of that claim to bring this matter within the small claims limit.
[40] The Claimants rely on both common law and the Consumer Product Warranty and Liability Act that there was in the case both an express and implied warranty that the motorcycle they purchased was fit for the purpose intended, specifically motor cross racing. In today's development of consumer law that proposition has become traite law.
[41] The issues that require resolution are whether the Defendants breached the warranty of fitness and if so whether such breach was such that would entitle the Claimants to rescind the contract of purchase and obtain return of the purchase price, plus the money paid for repair under warranty.
[42] We must remember we are dealing here with a two-cycle motor cross racing bike. The evidence, which I accept, is that in the course of a season repairs and part replacement are the norm. It is to be expected to replace tires, chains, sprockets, and even pistons in the normal course of wear and tear. The repairs required to the clutch on the machine in question would fall into this category.
[43] The complaint that gives rise to the Claimants' claim for rescission and return of the purchase price goes to the manufacturer's defect concerning the repeated problem with the cylinder and pistons caused by engine overheating.
[44] The relevant section of the Consumer Product Warranty and Liability Act is section 16, which provides as follows:
16(1) Where the seller is in breach of a warranty provided by this Act and does not rectify the breach pursuant to any opportunity that the buyer gives him under section 14 or otherwise, the buyer may reject the product if he does so within a reasonable time after he discovers the breach and he discovers the breach not later than sixty days after delivery of the product.
[45] The only breach I see was the failure to repair the motorcycle without charge under warranty when the problem first occurred. That breach the Defendants argue occurred because they could not initially recognize a manufacturer's defect and further the Defendants say they stand ready to refund the amount paid by the Claimants in this regard.
[46] Even if we accept that the manufacturer's defect gave rise to a warranty claim, I fail to see that it amounted to a fundamental or major breach of the contract of purchase that would give the Claimants the right to rescind the contract. The Defendants acted in a reasonable and timely manner to cure the defect. Except for one race in the season, the Claimants did not lose any opportunity to race the bike. In fact they not only raced the motorcycle during the time the Defendants were repairing the motorcycle under the warranty, but young Jaret also seems to have been quite successful in the result.
[47] I can find no basis at law that would allow the Claimants to rescind the purchase contract and demand return of the purchase price.
[48] Accordingly, the decision of the small claims adjudicator is set aside and the claim is dismissed. I fail to see the basis of the counterclaim as stated and it too is dismissed.
[49] As a matter of directions, the Claimants may either allow the Defendants to sell the motorcycle at the best possible price to be remitted to them, subject to the adjustments for refurbishment and repayment of the amount due them for the first warranty repair or they may retake possession of the motorcycle from the Defendants upon payment to the Defendants of $1,497.06.
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