Savin Canada Inc. v. Wood
(1986), 72 N.B.R. (2d) 206; 183 A.P.R. 206
New Brunswick Court of Queen's Bench
Trial Division
Judicial District of Moncton
Daigle, J.
May 3, 1986
(M/C/831/84)
Reproduced with permission of Maritime Law Book Ltd.,
which claims copyright in the headnote and indexing.
Maritime Law Book Ltd. Summary
Savin manufactured photocopiers and marketed its product through Atherton, a dealer. Wood leased a photocopier on the basis of negotiations with Beatty, a salesman for Atherton. The words "eight year warranty lifetime" were handwritten by Beatty on the lease agreement. The photocopier malfunctioned and Wood stopped payments after Savin refused to honour the warranty. Savin brought an action against Wood for the rental payments. Wood relied on the express warranty given by Beatty on behalf of Atherton and claimed that pursuant to s. 4(2)(a) of the Consumer Product Warranty and Liability Act (C.P.W.L.A.) the warranty was deemed to have been given by Savin.
The New Brunswick Court of Queen's Bench, Trial Division, allowed the action. The court found that the C.P.W.L.A. did not apply because the photocopier was not a "consumer product". The express warranty was made by Atherton and any remedy for breach of warranty would be against Atherton.
Consumer Law -- Topic 1602
Sale of goods -- General -- Consumer product -- What constitutes -- The New Brunswick Court of Queen's Bench, Trial Division, held that the test to determine whether or not a product was a "consumer product" within the meaning of the Consumer Product Warranty and Liability Act was whether the product itself was the kind of product commonly used for personal, family or household purposes -- A photocopier did not meet the requirements of that test and was not a "consumer product" -- See paragraphs 10 to 12.
Personal Property -- Topic 4343
Rental agreements -- Service agreements -- Parties -- A consumer leased a photocopier from a manufacturer through a salesman of a dealer -- The salesman gave an express warranty for free parts and labour for a period of eight years -- The New Brunswick Court of Queen's Bench, Trial Division, found that the warranty was made by the dealer and any remedy which the consumer had was against the dealer -- The contract to service the equipment was made by the dealer and the agreement to lease the equipment was made by the manufacturer -- See paragraph 13.
Cases Noticed
Green v. D.R. Sutherland Ltd. and Sutherland (1982), 40 N.B.R. (2d) 27; 105 A.P.R. 27, folld. [para.10].
McNeil v. Shaw Ltd. (1984), 58 N.B.R. (2d) 361; 151 A.P.R. 361, refd to. [para. 10].
Nobel Leasing v. Walwyn (1982), 41 N.B.R.(2d) 291; 107 A.P.R. 291, refd to. [para. 15].
Statutes Noticed
Consumer Product Warranty and Liability Act, S.N.B. 1978, c. C-18.1, ss. 1(1) [para. 9]; 4(2)(a) [para. 8].
Authors and Works Noticed
Ivankovich, Ivan F., Consumer Products in New Brunswick -- Fidem Habeat Emtor [sic] Part I: The C.P.W.L.A. -- Its Scope and Warranties (1983), 32 U.N.B.L.J. 123 [para. 10].
Counsel
E. Emerson Mills, for the plaintiff;
George S. Rideout, for the defendant.
This case was heard on September 20, 1985, before Daigle, J., of the New Brunswick Court of Queen's Bench, Trial Division, Judicial District of Moncton, who delivered the following judgment on May 30, 1986.
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[1] Daigle, J.: In this action the plaintiff claims damages against the defendant for the balance of the rental payments and interest due and owing under a lease agreement entered into by the parties on April 14, 1981, for the lease of a Savin model 840 photocopier. The defendant, by way of defense, denies liability alleging that the plaintiff has breached an express warranty for free parts and labour for a period of eight years which resulted from representations made by the supplier and relies an the Consumer Product Warranty and Liability Act, S.N. B. 1978, c. C-18.1. The defendant further alleges that there has been a fundamental breach of the lease agreement by the plaintiff. The parties agreed at trial on a quantum of damages of $3,406.96.
[2] The plaintiff, Savin Canada Inc., is a manufacturer of photocopiers which markets its product through a network of dealers. One such dealer operating in the Moncton area in 1981 was Atherton Business Machines Ltd.
[3] The defendant, Thomas Wood, was employed in 1981 as chairman for the Brotherhood of Railway Carmen for the Atlantic region. He also operated a small variety store and an apartment building and because his jobs and household activities required a fair deal of copying to be done, he began thinking in February of that year of getting a copier for his personal and business use. He was approached by a certain Phil Beatty, a salesman for Atherton, who convinced him that it was advantageous to lease rather than buy a copier because, as he was told by Beatty, the lease agreement carried an eight year full warranty for parts and labour on the equipment. On the basis of these negotiations with Beatty, the defendant signed a lease document (Exhibit P-1) on April 14, 1981, which shows in bold letters at the top the
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name of Savin Canada Inc. as lessor and the name of Thomas Wood written in the space marked "customer" and Atherton Business Machines in the space marked "supplier of equipment", this being a standard lease form provided by Savin to its dealers. Under the terms of the agreement, the defendant, referred to as lessee throughout the printed text of the agreement, agreed to pay to the plaintiff (lessor) 60 monthly rental payments of $92.08 plus sales tax of $7.37 for a total monthly payment of $99.45.
[4] Mr. Wood testified that when he negotiated the lease of the Savin photocopier with Beatty, he thought all along that Beatty was a salesman for Savin. He said that he only discovered later that Atherton was involved as the supplier and that Beatty was working for that company although it appears that he understood at the time of the negotiations that Atherton would do the servicing of the equipment. Mr. Wood's evidence as to his understanding of the statements and representations made by Beatty during their negotiations and on whose behalf they were made remains vague and leaves a great deal to be desired. As I understand his testimony, it appears that Mr. Wood stopped short of alleging that Beatty misrepresented that he was acting for Savin. The difficulty in assessing the evidence adduced on this point is compounded as Beatty was not called to testify because, as explained by the defendant's counsel, he could not be located. To establish the express warranty made by Beatty, the defendant relied, in the end, on a document (Exhibit D-1) which appears to be Atherton's standard equipment billing form. The name "Atherton Business Machines Ltd." appears in bold letters at the top and the blank spaces are filled with hand-written additions relating to the copier, the price and the words "8 year warranty lifetime". This document is signed by Phil Beatty
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and Thomas Wood.
[5] The photocopier was delivered to and installed at the defendant's home. It appears that the photocopier worked well during the initial period and when problems would develop, the equipment was satisfactorily serviced by Atherton. According to Mr. Wood, there was a marked change when Atherton went out of business in late 1982 and another company, Atlantic Office Equipment, took over the servicing of equipment. The quality of the copying deteriorated with lines and black spots appearing on copies and it became impossible to photocopy anything from a prior copy. Because of the malfunction of the copier and the inaction of Savin which was asked to honour its warranty and service the machine, payments were stopped. By letter of November 8, 1982, Savin advised Mr. Wood that he could either terminate the lease or reactivate it by paying the delinquent rental payments totalling $1,790.10. The second option was accepted and Mr. Wood brought the payments up to date and paid the following December and January 1983 payments, but made no other rental payments after that date. Mr. Wood explained that he withheld payment a second time because of the malfunction of the equipment and the quality of the copying was unacceptable. He also retained possession of the leased copier. By letter dated June 14, 1983, Savin demanded payment from Mr. Wood of the balance of the rental payments and interest due and owing under the terms of the lease agreement.
[6] The operational manager for Savin located at the regional office in Halifax, Nova Scotia, Mr. Paul Scanlan, testified that the lease agreement executed in this particular case was prepared by Atherton on a Savin's stan-
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dard lease form and that Savin had no dealings whatever with Mr. Wood, the lessee. He also said that it is the policy of Savin not to set or impose any prices to customers as this is left to be negotiated between the dealers and customers, that the dealers are responsible for servicing the Savin equipment and that Savin never warrants the sufficiency or quality of the equipment to customers. He acknowledged that Savin grants a 90 day warranty for parts and labour on all their equipment to dealers. He stated further that if a Savin photocopier is not properly serviced, the quality of its photocopying deteriorates rapidly.
[7] It should also be noted that the lease agreement specifically provides in paragraph 3 that the lessee agrees to keep the equipment "in first class condition and repair at lessee's expense" and that paragraph 2, which appears in large print on the face of the lease, contains an exclusionary or exception clause specifically excluding the lessor from liability for warranties, agreements or representations made by suppliers.
[8] The defendant's first contention is that the plaintiff has breached the express warranty for free parts and labour made by Atherton. Although he recognized that the warranty was given by Phil Beatty on behalf of the supplier Atherton, he relies on s. 4(2)(a) of the Consumer Product Warranty and Liability Act and submits that the warranty should be deemed to have been given by the plaintiff. The defendant further relies on the provisions of this Act to submit that other implied warranties have been breached by the plaintiff.
[9] The defendant's submission raises firstly the question of the applicability of the Act relied on to the matter before this court. This will de-
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pend of course on whether the photocopier, which is the subject matter of this lease, comes within the definition of "consumer product" as provided for in the Act. In paragraph 1(1) of the Act, the following definition can be found:
"'consumer product' means any tangible personal property, new or used, of a kind that is commonly used for personal, family or household purposes."
[10] To determine whether the photocopier is a consumer product, I adopt and apply the test described by Mr. Justice Creaghan in Green v. D.R. Sutherland Ltd. and Sutherland (1982), 40 N.B.R.(2d) 27; 105 A.P.R. 27, in the following passage at p. 30:
"The Act stated [sic] that the test to be applied in determining whether the Act applies, that is, whether the article is in law a consumer product, is not the use intended to be made by the buyer, but is the article itself the kind of product that is commonly used for personal, family or household purposes.
"By definition it is my opinion that the court must determine as a question of fact if the article or product purchased is of a kind that is commonly used for personal purposes. This would include a car, a van, a family type trailer but not necessarily a transport truck or road grader."
(See also McNeil v. Shaw Ltd. (1984), 58 N.B.R.(2d) 361; 151 A.P.R. 361, and an article entitled Consumer Products in New Brunswick -- Fidem Habeat Emtor [sic] Part I: The C.P.W.L.A. -- Its Scope and Warranties by Ivan F. Ivankovich (1983), 32 U.N.B.L.J. 123.)
[11] The defendant submits that the photocopier falls within the ambit of the Act. It was argued that in the age of advanced technology and lower costs, what would formerly be con-
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sidered business products are now becoming household or personal products. For example, large and expensive IBM computers formerly used only by business and governments are now being used in homes. In this case, it was thus argued that the leased photocopier is of the small, table top, portable type and as such should be considered appropriately designed for household use. The intended use for personal purposes is also supported by the evidence of both the defendant and his wife.
[12] I cannot accept the defendant's argument. In my view, photocopiers were not in 1981, the time the lease was made, and are not even today commonly used for personal, family or household purposes nor are they advertised or promoted as such. The computer example given by the parties points to a significant difference with respect to copiers. While the large computers of years past would definitely not be considered consumer products within the definition of the Act, it is clear that personal computers as they exist today would fall within the definition. I am not at all satisfied however that the computer example applies to photocopiers and that they have been so modified as to be commonly used for personal purposes. I therefore find that this particular copier, the subject matter of the lease, is not a consumer product and the Act has no application to this case.
[13] I find further in the present case that the express warranty relied upon by the defendant is the written statement made with respect to the photocopier by Atherton (Exhibit D-1) to the lessee, the defendant, and therefore any remedy he may have for its breach would be against Atherton,
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not against Savin. The contract to service the equipment with free parts and labour for a period of eight years was made by Atherton while the agreement to lease the equipment was by Savin. I can find no evidence suggesting that Atherton was acting as agent for Savin in this regard.
[14] The defendant further submitted in his amended statement of defence that the lease agreement has been fundamentally breached. The defendant seemed for this reason to be repudiating the contract although this is not expressly pleaded. In the alternative, he claimed a setoff equal to the monthly payments as a warranty allowance against Savin because of the malfunction of the copier.
[15] In the present case I find that the defendant has not established that there was in fact a fundamental breach of the lease agreement by the plaintiff. Both the defendant and his wife recognized during their testimony that the leased photcopier [sic] was functioning but was producing a poor copy. In fact, samples of copies were received in evidence. It also appears, although it was not admitted, that the copier is not currently being properly serviced. Mr. Scanlan stated that it is imperative that a copier be periodically serviced for its proper functioning. It is also clear from the terms of the lease agreement that the defendant is responsible to keep it in first class working condition. In these circumstances, I cannot find fundamental breach and this defence fails. (See: Nobel Leasing v. Walwyn (1982), 41 N.B.R.(2d) 291; 107 A.P.R. 291.)
[16] It is not necessary, in view of the above finding, to deal with the
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question of the effect of the exclusionary clause included in the lease agreement when a fundamental breach is established.
[17] For these reasons, the plaintiff shall have judgment against the defendant in the agreed amount of $3,406.96. The plaintiff is also entitled to costs which I fix at $750.00 (scale 3 for an amount involved of $3,000.00) plus proper disbursements.
Action allowed.
Editor: Denise A. LeBlanc
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