Wall v. Dieppe Auto Ltd.
New Brunswick Court of Queen's Bench, Trial Division
Judicial District of Moncton
P. Creaghan, J.
January 11, 1990
(M/C/1291/88)
P. Creaghan, J.:
The Plaintiffs claim rescission of two contracts entered with the Defendant; the first for the purchase of a used car and the second for purchase of a service contract on the same vehicle. The relief specifically requested is return of the purchase price paid on the two contracts and reimbursement for costs incurred by the Plaintiffs to repair the vehicle while it has been in their possession.
Early in 1986 the Plaintiffs were in the market to purchase a used car. They shopped around the Moncton, N. B. and Amherst, N. S. area and early in February they looked at vehicles on the Defendant's used car lot.
The Plaintiffs explained to the Defendant's salesman that they were looking for a car that would give them reliable transportation, did not burn oil and offered good gas mileage. The salesman showed them a 1981 Honda with mileage of 87,320 kilometers. He indicated to them that it should be good on gas and was a one owner car. The Plaintiffs state the salesman told them the car did not burn oil. At trial the salesman states that he had no knowledge whether the car burned oil and denies that he made representations in this regard. He did tell the Plaintiffs the name of the previous owner. The Plaintiffs examined the car, took it for a short test drive and were offered the opportunity to have an independent mechanic look it over which they apparently decided not to do.
The evidence is that the Plaintiffs had purchased used cars before and were aware of potential problems associated with the purchase of a used vehicle five years old with mileage of over 87,000 kilometers. To minimize the risk inherent in such a purchase the salesman suggested that they also purchase a service contract to cover repairs that may be required to remedy defects in the vehicle for a period of the earlier of two years or 50,000 kilometers.
The evidence is that the Plaintiffs contacted the previous owner as to the condition of the vehicle and whether it burned oil and was good on gas. At trial, the Plaintiffs could not be sure whether they made these inquiries before or after they purchased the vehicle, although they believe they made these inquiries after they had completed the purchase. The evidence of Mr. Wall taken on Examination for Discovery, indicates that these inquiries were made before the Plaintiffs decided to purchase the car. It is only logical that the Plaintiffs would have made these inquiries of the previous owner prior to purchase and certainly they had the opportunity to do so. I find as a fact that they did, although they may well have made further inquiries subsequent to the purchase.
In any event, on February 7, 1986 they returned to the Defendant's place of business and purchased the vehicle for a price of $5,048.00, tax, licence and inspection included. In addition they purchased a "Thermocare" service contract from the Defendant for an additional $540.00.
The purchase contract signed by the Plaintiff Mr. Wall states in small print that he had read the conditions on the reverse side which are to form part of the agreement. The conditions on the reverse side, which are in very small print and in complicated legal verbiage, provide that there are no warranties on the vehicle; that the rights of the purchaser under the Consumer Product Warranty and Liability Act, R.S.N.B. 1973 c. C-18 are completely excluded and waived by the purchaser and that he is estopped from relying on the protection afforded by the Act.
Let me say that unless the evidence were to establish that these conditions were read to or by the purchaser who then clearly acknowledged that he was aware of the conditions and understood their meaning, then these conditions should not be seen to bind the purchaser since it would not be shown that there was a meeting of the minds as to their inclusion as an integral part of the contract in the face of a document that is clearly drafted by the vendor as an advantaged party entirely for its own benefit. Such evidence is not present in this instance; in fact the contrary is the case and I do not find that the conditions as printed on the reverse side of the purchase contract are a part of the agreement binding upon the purchasers in this case.
The evidence is however that the matter of warranty was discussed and understood as between the parties. Both the Plaintiffs and the Defendant were aware of the risk involved in purchasing and selling a used car.
The Defendant advised the Plaintiffs to purchase, and the Plaintiffs agreed to purchase, a service contract, the essential terms of which were explained to the Purchasers by the Defendant. The Defendant endorsed the contract of purchase "as is - no warranty" but the Plaintiffs refused to sign the endorsement.
The explanation given at trial, which I accept, was that both the Plaintiffs and the Defendant saw the risks of defects in the automobile as protected under the provisions of the type of service contract purchased. The Defendant saw this as an understanding that further warranty was unnecessary and excluded. The Plaintiffs saw this as a warranty they were purchasing against defects, absent normal wear and tear.
The Plaintiffs paid for the car and the service contract and immediately began to have problems with the vehicle. A faulty temperature gauge and spare tire had to be replaced immediately by the Defendant. The emergency brake "froze" and the rear brakes had to be repaired which work was done by the Plaintiffs themselves on obtaining a purchase order for the Honda parts from the Defendant.
More seriously, the car was burning oil. On February 20, 1986 they brought the car to Estabrooks Texaco, had the oil changed and a new filter added and had the car checked for oil leaks. There is no evidence that any leaks were apparent, but the car continued to burn oil. The Plaintiffs informed the Defendant of the problem and were told to bring the car in. On March 5, 1986 after the Plaintiffs had driven the car about 2,600 kilometers, the Defendant's work order shows that the car was in the shop with the notation "hard on oil - have to add at least 1 litre every 400 kilometers". The Defendant replaced the valve seals in hopes of solving the problem.
The car continued to burn oil. The vehicle broke down on April 4, 1986 and had to be towed into the Defendant's shop. The Defendant's work order for that date shows that the car had started roaring and vibrating loudly in the front end. It notes that although they had replaced the valve seals the car was still hard on oil. The Defendant repaired wires at the fuel pump to correct the mechanical problem and did a compression test to try to determine why the car was burning oil.
The car was back at the Defendant's shop on April 7, 1986 for repairs to the right front brakes. The work order also notes again to "check for burning oil - 1 quart every 300 miles (sic)". The Defendant installed a caliper kit to deal with the brake problem and put additive in the oil to see if that would help the oil problem.
On April 14, 1986 again the car persistently stalled and had to be towed again to the Defendant's shop. This was the fourth time the car had been in for repairs since March 5, 1986. On this occasion the Defendant replaced the fuel pump.
The Plaintiffs continued to complain about the oil problem and the Defendant suggested that an oil consumption test be run to establish whether there was clear evidence to suggest a problem that indicated an engine tear-down was required to determine the problem which was not otherwise apparent.
The Plaintiffs topped the oil on May 5, 1986 at 95,921 kilometers requiring 2 litres, on May 10, 1986 at 96,538 kilometers requiring 2 litres and on May 22, 1986 at 98,029 kilometers requiring 2 litres and reported these results to the Defendant.
The evidence before me is that on the basis of this test the Defendant recognized that there was a problem with oil consumption which was not apparent without tearing down the engine. Although the Defendant is not able to establish from its records what action it took, the procedure it says it would have followed was to advise Thermocare, as the principal behind the service contract, of the problem and obtain permission to do the work under the contract. In a case such as this it is the Defendant's evidence that they would obtain permission with the stipulation that Plaintiffs be advised that the repair contract would cover the work on condition that the problem arose from a mechanical defect or breakdown. However the Plaintiffs were to understand that should the problem be due to reduction in operating performance due to normal wear and tear the costs would have to be borne by the Plaintiffs. The Defendant's evidence is that it believes it communicated this to the Plaintiffs and that the Plaintiffs did not instruct the Defendant to proceed on this basis.
There is no evidence that would suggest that the Defendant did not advise the Plaintiffs accordingly and in fact the evidence of the Plaintiffs is that they sought and obtained permission from Thermocare to take the car to a Honda dealer to have an authorized Honda dealer check the car over for oil consumption. This was done in March of 1987 by Fisher Honda of Amherst. This action is compatible with knowledge in the Plaintiffs as to the condition under which they might bear the costs of an engine tear-down under the service contract.
In any event the evidence does not disclose further contact between the Plaintiffs and the Defendant until this action was commenced. The Plaintiffs operated the car until October, 1986 when they laid it up as Mrs. Wall was on maternity leave and did not require it to drive to work. The Plaintiffs put the car on the road again in February of 1987 and drove it until April of 1987 when they again experienced problems with the front brakes. The oil burning problem apparently still continued.
With the new brake problem in April of 1987 the car was no longer operational. They took it off the road, parked it in the yard and instructed counsel to commence this action for rescission of the contracts. To this date the car remains in the possession of the Plaintiffs and they have made no further requests of the Defendant to have the car repaired under the service contract.
When the car was laid up in April of 1987 approximately thirteen months had expired on the contract and the car had been driven by the Plaintiffs for approximately 30,000 kilometers.
The Plaintiffs admit in their testimony that Defendant had dealt with all the requests made of it with respect to mechanical defects of the vehicle except that it had not resolved the problem of the car burning oil.
On the facts of this case I cannot find a basis for rescission of the contract either of the sale of the car or of the agreement to service. I do not see where it has been established that there has been a fundamental breach of either contract by the Defendant such as to support the remedy of rescission of the contract.
The Plaintiffs rely heavily on the provisions of the Consumer Product Warranty and Liability Act.
First the Plaintiffs argue that they purchased the car under an express warranty on the representation of the Defendant's salesman that the car did not burn oil. I do not find that the evidence establishes that the salesman made such an unqualified representation. He denies that he did. The Plaintiffs further made enquiries of the former owner as to oil consumption and also went about protecting themselves from mechanical defect, absent normal wear and tear, through the service contract. It has not been established on the preponderance of evidence that the Plaintiffs received an express warranty through oral representations of the Defendant that the car did not burn oil and that they relied, and had reasonable cause to rely, on such a warranty.
The Plaintiffs further argue that they are entitled to rely on an implied warranty under section 11 of the Act that the vehicle was reasonably fit for the purpose for which it was to be used.
The Plaintiffs purchased a used car, five years old and with mileage showing of over 87,000 kilometers. They drove the vehicle, albeit experiencing some problems, for a period of some nine months, allowing for the time it was not used, and put mileage of approximately 30,000 additional kilometers an the car. At the time of purchase they had the opportunity to examine it, test drive it and to have it gone over by an independent mechanic. They knew the problems inherent in buying a used car and they were advised by the Defendant that such problems might be expected. Hence the decision to purchase the service contract on the advice of the Defendant.
I cannot see how on the facts of this case it has been established that the Defendant breached an implied warranty on the basis that the car was sold in a condition where it was not reasonably fit for the purpose for which it was intended.
The Plaintiffs direct this court, and rely heavily on, the decision of the New Brunswick Court of Appeal in Gillespie v. MacDonald Pontiac Buick GMC Ltd. (1986), 71 N.B.R. (2d) 1. The facts in that case are clearly distinguishable from the facts here. That case turned on a finding that the Plaintiff was entitled to rely on an express warranty that an apparent oil leak would be fixed as a condition of sale under circumstances where the Plaintiff moved immediately to rescind the contract when the Defendant refused to comply. Such is not the case here.
I should add that on the facts before me I cannot see where the Plaintiffs are entitled to damages in the alternative for breach of contract. They got possession and the use of the car they purchased. They received the benefit they were entitled to under the service contract they purchased for all services they requested the Defendant to perform. The Defendant cannot be held responsible for the services which may well have been available to the Plaintiffs under the service contract in April of 1987 when it was still in effect and valid where the Plaintiffs chose not to make any further demands against it.
The action of the Plaintiffs is dismissed.
The Defendant is entitled to its costs which I fix in the sum of $1, 000. 00 based on an amount involved of $5, 000. 00 under scale 2 together with allowable disbursements.