COURT OF APPEAL FOR ONTARIO
RE: Lutfi Kornes (Appellant/Plaintiff) – and – D.B.Z. HOLDINGS LTD., carrying on business as PARAMOUNT TRUCK SALES and THE BANK OF NOVA SCOTIA (Respondents/Defendants)
BEFORE: McMurtry C.J.O., Armstrong and Lang JJ.A.
COUNSEL:
Lutfi Kornes, in person
Patrick Di Monte, for D.B.Z. Holdings Ltd. c.o.b. as Paramount Truck Sales
Martin Sclisizzi, for the Bank of Nova Scotia
IN WRITING: March 11, 2005
On appeal from the decision of Justice L. Brennan of the Superior Court of Justice dated May 29, 2003.
E N D O R S E M E N T
1This is an appeal from the decision of Brennan J. disposing of claims arising from Lufti Kornes’s purchase of a used truck. In his judgment, the trial judge awarded Mr. Kornes $8,000.00 for damages against the vendor of the truck, D.B.Z. Holdings Ltd. carrying on business as Paramount Truck Sales (“Paramount”). He also awarded the Bank of Nova Scotia (the “Bank”) $36,523.00 on its counterclaim against Mr. Kornes arising from its financing of the truck’s purchase through its standard form conditional sales contract.
Trial Proceedings
2The trial before Justice Brennan was the second trial. The first trial, which took three days, was declared a mistrial when Justice Lamek died while his decision was under reserve. At the second trial, the parties agreed to rely on the transcribed evidence from the first trial and made additional submissions with respect to the evidence and the law.
3In January 1996, Paramount purchased the used truck from an individual. In February 1996, Mr. Kornes purchased the truck from Paramount for $28,354.00 and executed the conditional sales contract in favour of the Bank. At the time of the transaction, the truck’s odometer read 164,780 kilometres.
4Within days of taking delivery, Mr. Kornes complained to Paramount about the truck’s engine performance. Paramount offered to repair the engine at its own expense but Mr. Kornes declined that offer and would not take the truck to Paramount.
5Later in February, Mr. Kornes ascertained that in 1994, when the truck’s engine was replaced, the truck’s odometer was recorded at 173,195 kilometres. It is common ground that before the truck came into Paramount’s possession a previous owner had rolled back the odometer. Mr. Kornes did not, however, tell Paramount about this until later.
6In the meantime, Mr. Kornes kept the truck insured, sporadically used it for his business, lent it to friends, and, until July 1996, made payments to the Bank. In August or September 1996, Mr. Kornes took the truck to another dealership for unrelated repairs. At that time, the dealership estimated that it would cost $13,990.61 to repair the engine. Mr. Kornes left the truck at the other dealership, did not pay that dealership’s invoice, and did not advise either Paramount or the Bank that he had effectively abandoned the truck. The truck remained parked at the other dealership for six months and, at the time it was released, had an odometer reading of 195,587 kilometres, about 30,000 more kilometres than it had when it was acquired by Mr. Kornes. Two years after it was abandoned, the Bank received notice that the truck was being auctioned to satisfy a lien for repairs and storage.
7At trial, Mr. Kornes abandoned his claim for rescission, a claim that could not have succeeded in any event given Mr. Kornes’s continued use of the vehicle in the months following its purchase. Mr. Kornes also argued that Paramount and the Bank were complicit in a calculated fraud, that they knew about the false odometer reading, and that they had replaced the truck he intended to buy with a different truck. Mr. Kornes sought damages of $10,000 a month based on what he alleged were the lost earnings from his business, which business he said that he was unable to pursue without the truck. The evidence disclosed that a third dealership had eventually installed a used engine in the truck at a cost of about $8,000 and subsequently sold the truck for $24,500.00.
8The trial judge held that Paramount had a duty to remedy the truck’s engine deficiencies and found $8,000 as the appropriate figure to compensate Mr. Kornes for that expense. He dismissed Mr. Kornes’s claim for consequential damages on two grounds: a lack of causal connection and an absence of evidence. Finally, he awarded the Bank the amount owing to it under the conditional sales contract.
The Appeal
9In his notice of appeal, Mr. Kornes sought rescission of the contract and damages at $10,000 monthly from the date he purchased the truck. At the hearing of the appeal, Mr. Kornes declined to make oral argument, indicating that he was unable to do so in the time allotted to him. He was content to rely on written submissions filed at the hearing as supplementary to his factum. The respondents, who each filed a factum, were content that the court treat the matter as an appeal in writing. Accordingly, we accepted Mr. Kornes’s written submissions, in addition to his factum, and have carefully reviewed that material in arriving at our decision.
10In his written submissions, although they are not a model of clarity, Mr. Kornes appears to rely on the allegation that he was fraudulently sold a different truck, one with a different vehicle identification number than the one he bargained to purchase. He reiterates that he learned of the false odometer reading within days of acquiring the truck, at about the same time as he learned of the expiration of the warranty on the engine.
11Mr. Kornes sees the Bank as complicit in the alleged fraud and alleges that it “modified” documents with the intention of causing him harm. The fraud allegedly committed by the respondents, submits Mr. Kornes, vitiates the contracts. He explains his initial payments on the conditional sales contract as necessary to avoid damage to his credit rating. With respect to his use of the truck after its purchase, Mr. Kornes alleges that the dealership with which he left the truck fraudulently rolled its odometer forward. Mr. Kornes alleges that the combined frauds deprived him of his ability to continue in business, causing him the damages claimed in his action.
Standard of Review
12On appeal, a trial judge’s factual findings cannot be reversed absent palpable and overriding error. Similarly, the inferences a trial judge draws from those factual findings are entitled to a high degree of deference. See Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235.
Analysis
13Mr. Kornes’s appeal rests on three errors he says arise from the trial judgment:
The trial judge failed to find that the respondents sub-stituted another truck for the truck he had agreed to purchase;
The trial judge failed to find that the respondents conspired against him to commit fraud; and
The trial judge failed to assess his damages in keeping with his losses.
14On the first point, there was no evidence called at trial to support Mr. Kornes’s allegation of a switch in vehicles. On this appeal, Mr. Kornes included “Written Attestations” with his written submissions as support for his position that there was a switch in vehicles. Even if those attestations were admissible as fresh evidence, which they are not as the evidence would have been available at the time of trial, they do not allege facts capable of supporting the switch in vehicles alleged by Mr. Kornes.
15On the second point, there was no evidence to support the allegation of a conspiracy by Paramount in conjunction with the Bank to defraud Mr. Kornes. While understandably Mr. Kornes’s suspicions were raised when he learned of the false odometer reading, there was no evidence before the trial judge to support a finding that either respondent was aware of that information or that it participated with the other in a scheme to defraud Mr. Kornes. The evidence disclosed only that the Bank was an arm’s length lender to Mr. Kornes and that the Bank never met with Mr. Kornes directly in approving his application for financing. On the evidence, the Bank made no representations to him.
16On the third point, the trial judge addressed the question of damages noting the absence of evidence to support the damages claimed by Mr. Kornes. Further, the evidence disclosed that Mr. Kornes refused to take the steps available to him to mitigate any damage that he may have suffered.
17The trial judge gave cogent reasons for his decision to dismiss Mr. Kornes’s claim. Those reasons disclose no palpable and overriding factual error or any error of law. At trial, Mr. Kornes did not pursue rescission nor was rescission feasible given Mr. Kornes’s ongoing use of the truck and his refusal to return it to Paramount. The trial judge adequately compensated Mr. Kornes for the amount it would have cost to repair the engine. In these circumstances, the appeal must be dismissed.
18In the unusual circumstances of this case, we make no order as to costs of the appeal.
“Roy McMurtry C.J.O.”
“Robert P. Armstrong J.A.”
“Susan E. Lang J.A.”