Toromont Industries Ltd. et al v. DJSS Transport et al, 2014 ONSC 1124

CITATION: Toromont Industries Ltd. et al v. DJSS Transport et al, 2014 ONSC 1124

COURT FILE NO.: DC-12-00439

DATE: 20140219

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Toromont Industries Ltd. and Caterpillar of Canada Corp., Appellants/Defendants

-and-

DJSS Transport/1017907 Ontario Inc., Respondents/Plaintiff

BEFORE: The Honourable Justice P. Douglas

COUNSEL: A. Pantel, for the Appellant/Defendants Toromont Industries Ltd.

D. Swaine, Self-represented, for Respondents/Plaintiff

HEARD: February 5, 2014

ENDORSEMENT

[1] Toromont Industries Ltd. (“Toromont”) appeals from the decision of Deputy Judge Di Cecco dated June 18, 2012, wherein the trial judge:

(a) found that Toromont was negligent;

(b) found that the appellant Caterpillar of Canada Corporation (“Caterpillar”) was in breach of its warranty; and

(c) ordered Toromont and Caterpillar to pay damages to 1017907 Ontario Inc. operating as DJSS Transport (“1017907”), in the amount of $25,000 on a joint and several basis.

Background Facts and Key Evidence at Trial

[2] 1017907 owns a Peterbilt long haul highway tractor truck (“the truck”) which was purchased on February 28, 2006. It has a Caterpillar engine (“the engine”). It used the truck to haul loads of various materials. Repeated engine problems led 1017907 to bring the truck in for service and repair on various occasions. David Swain is the principal and directing mind of 1017907.

[3] Caterpillar manufactured the engine in question. Caterpillar and 1017907 were parties to two manufacturer’s warranty agreements in respect of the engine.

[4] Toromont carried out repairs to the truck as an authorized third party service provider to Caterpillar. Toromont was not a party to the warranty agreements (a standard warranty and an extended warranty).

[5] Under Toromont’s agreement with Caterpillar in order to be reimbursed for labour and parts, Toromont must comply with the terms of any Caterpillar warranty agreement. For any repair carried out under warranty 1017907 was not responsible for paying for parts or labour. Caterpillar has the complete and final authority to determine what repairs or part replacements are necessary. Toromont’s general practice in accordance with the Caterpillar warranty agreement is to perform and exhaust all lesser repair options before a total engine replacement.

[6] Dave Dyer, the fleet manager at Toromont, gave evidence at trial about repairs carried out by Toromont. Mr. Dyer has worked at Toromont since 1986. Prior to his employment at Toromont, Mr. Dyer was involved in the trucking industry as an owner operator. Mr. Dyer testified that Toromont performed numerous repairs to the respondent’s truck between May 20, 2009 and June 15, 2009. He explained each and every repair performed by Toromont in great detail. He testified that Toromont’s mechanics “spent a lot of time with the vehicle running up and down the highway”, and that he “personally drove the truck a couple times”. Mr. Dyer referred to Toromont’s responsibilities pursuant to the Caterpillar warranties as follows:

…we have – under the warranty, we have set diagnostic procedures that we get paid for. And then once we diagnose it, we have a set procedure through Caterpillar that needs to be paid for, and done properly, or we don’t get paid for it.

Mr. Dyer’s uncontroverted evidence was that the truck was always returned to the respondent in “running condition”.

[7] In cross-examination, Mr. Swaine admitted that after each and every Toromont repair, he was able to drive the truck off the lot in working condition. Moreover, Mr. Swaine admitted that the truck performed at least “six loads” between May and July 2009.

[8] Mr. Swaine conceded that there was no suggestion that he was not kept up to date on the diagnostic testing performed by Toromont, nor did Mr. Swaine suggest that he was dissatisfied with Toromont’s incremental testing and repair efforts at the time. Rather, Mr. Swaine noted that he was “communicating pretty much daily” with the Toromont mechanics because they were “trying to figure out what was going on”.

[9] Mr. Swaine admitted that there was “no question” about the timeliness of Toromont’s repairs, and that Toromont “absolutely” repaired the truck as quickly as possible.

[10] Mr. Swaine alleged that he told Toromont that the engine needed to be replaced. He testified that he understood that the warranty required a major component failure to trigger replacement.

[11] Mr. Dyer testified that between May and July 2009, he did not recall if the respondent requested that the engine be replaced. In any event, Mr. Dyer testified that in the respondent’s case, replacing the engine was never an option under the warranties. Mr. Dyer explained that in his 26 years at Toromont, repairing approximately 4,000 trucks per year, he was only aware of “5 or 6” engine replacements. Mr. Dyer explained that Toromont was restricted to Caterpillar’s guidelines regarding engine replacement as follows:

…it’s the repair versus replacement. Catastrophic failure, obviously, if the block is damaged beyond repair, then replacing the engine is the option. If it’s something that can be repaired, normally it was the cheapest route.

This Action

[12] 1017907 commenced an action against Toromont on May 12, 2010 alleging that Toromont “did not honour their warranty agreement with David Swaine”. 1017907 alleged that it was unable to honour a finance agreement with its finance company, and as a result, the truck was repossessed.

[13] In its pleadings, 1017907 did not allege any tortious conduct as against Toromont. The respondent first raised the issue of Toromont’s negligence during the evidence at trial of Mr. Swaine on November 28, 2011.

Standard of Review

[14] The leading case with respect to standard of review from a trial judge’s decision is Housen v. Nikolaisen, 2002 SCC 33, paras. 8, 10. The Supreme Court of Canada determined that on a pure question of law, the appeal court is free to substitute its decision for that of the trial judge, as on a question of law, the trial judge must be correct. Where findings of fact are concerned, the Supreme Court held that the reviewing court must be satisfied there is a “palpable and overriding error” before it interferes. Therefore, no deference is owed to the trial judge concerning errors of law.

[15] Where the issue is one of mixed fact and law, the standard of review is also one of palpable and overriding error, unless it is clear the trial judge made an error of principle in law that is independent of his application of the law to the facts. Then the standard reverts to correctness. Where the trier of fact has considered all the evidence required by law and still comes to the wrong conclusion, this is subject to a more stringent standard of review than for findings of fact

The Legal Test for Negligence

[16] To succeed in a claim of negligence a plaintiff must prove each element of the tort. The basic elements supporting a finding of negligence are the following: (i) there must be a duty of care arising out of a relationship between the parties; (ii) there must be a breach of said duty by some act or omission that constitutes a failure to observe the appropriate standard of care; and (iii) that breach must cause the proven loss or damage.

[17] The doctrine of res ipsa loquitur has not been valid law for a long time. When applicable the doctrine was “restricted to cases where the facts permitted an inference of negligence and there was no other reasonable explanation for the accident”. (See: Donoghue v. Stevenson, 1932 536 (FOREP), [1932] A.C. 562 at 599 cited in Hollis v. Birch, [1990] B.C.J. No. 1059 (S.C.))

[18] In negligence actions, a plaintiff must prove the defendant failed to meet the standard of care of a reasonable person. Opinion evidence is not necessary to decide the appropriate conduct of the average person in the community. However, where the defendant carries on “a technical profession” the proof of the standard must come from other experts in the same field – in this case the reasonable mechanic. The case law is clear it is not a standard of perfection. In its submissions Toromont invoked the standard of reasonable mechanic. 1017907 led no evidence of anything that Toromont ought to have done, or refrained from doing, which fell below any standard of care. Instead the trial judge relied on the doctrine of res ipsa loquitur. It was not open to the trial judge to conclude that Toromont was negligent because the engine problems speak for themselves, when Toromont led evidence as to the details of the repairs.

Requirement to Articulate Standard of Care

[19] In Fullowka v. Royal Oak Ventures, 2010 SCC 5, [2010] 1 S.C.R. 132, the Supreme Court held that the trial judge made an error of law for the following reasons:

With respect to the law, my view is that the trial judge erred by failing to articulate the standard of care to which Pinkerton’s was to be held. ... Moreover, the trial judge does not indicate what “properly” guarding the entrances required Pinkerton’s to do. Lacking in the trial judge’s reasons is any articulation of what constituted reasonable care on Pinkerton’s part given the limitation of resources imposed by its contract with the mine owner and Mr. Warren’s determination to commit an intentional, criminal act. ... The trial judge’s analysis in that respect, I should add, was found to have been incorrect by the Court of Appeal and there is no appeal from that finding.

[20] The trial judge did not articulate the standard of care to which Toromont was to be held.

The Requirement to Plead Negligence

[21] Rule 7.01(2) of the Rules of the Small Claims Court requires that the plaintiff’s claim plead “the nature of the claim, with reasonable certainty and detail, including the date, place and nature of the occurrences on which the claim is based”.

[22] Pursuant to Rule 12.01 of the Rules of the Small Claims Court, 1017907 was entitled to amend its claim. Rule 12.01(3) of the Rules of the Small Claims Court requires that amended claims shall be filed and served “at least 30 days before the originally scheduled trial date”. The requirement for advance notice of amendments at least 30 days before trial presumably ensures that parties will not be prejudiced by new allegations at trial, and allows the responding party an opportunity to review and respond to the new allegations. However, the only amendment made by the respondent was to add Caterpillar, the actual party to the warranty agreements, as a defendant. At trial the trial judge asked 1017907 whether its claim was a breach of warranty or in negligence in performance of the warranty work and the first time the respondent advised of its claim for damages against Toromont for negligence.

Joint and Several

[23] It is settled law that “parties cannot be joint tortfeadsors if the torts they commit are different.” See Constructions Scarmar Limitée v. Geddes Conracting Co. [1989] BCJ No. 1496 (CA).

Damages

[24] The damages must flow naturally from the act or omission complained of, subject to plaintiff’s duty to mitigate.

[25] It is trite law that proof of damages is an essential element of any claim for negligence.

Analysis and Decision

[26] I have reviewed the Reasons for Decision of the learned trial judge in light of the legal framework summarized above.

[27] In my view the trial judge erred in permitting the respondent to advance a claim in negligence against Toromont when Toromont had no notice of such claim until November 28, 2011, the first day of trial. Counsel for Toromont did express her concern to the Court in this regard in her submissions at conclusion of the evidence. Both the Rules of the Small Claims Court and procedural fairness entitled Toromont to a reasonable opportunity to advance a defence. Until the first day of trial Toromont had every right to expect the claim it was defending was based on an alleged breach of warranty. A negligence claim is very different.

[28] Further, the respondent’s claim against Toromont for negligence may well be statute barred by operation of the Limitations Act, 2002. Dealings between the parties had ceased by June or July, 2009 and the negligence claim was not raised until November 28, 2011, over 2 years following.

[29] I am also of the view the trial judge erred in finding Toromont liable in negligence in the absence of evidence regarding standard of care, and findings as to how Toromont fell short of that standard.

[30] If I am wrong regarding the issue of negligence I am also of the view that the trial judge erred in relying upon very scant and vague evidence regarding damages. The evidence at trial in this regard does not, in my view, establish any link between Toromont’s acts or omissions and the damages alleged; furthermore, the respondent produced no meaningful documentary evidence to support its damage claims, such as business financial statements, time logs, and fuel expenses.

[31] Also, I conclude that the trial judge erred in finding Toromont “jointly and severally” liable with its co-defendant as the claims against the defendants were very different and the trial judge in his reasons made it clear that liability rested on different bases for the 2 defendants.

[32] For all of the foregoing reasons the Appeal is allowed, the judgment at trial against Toromont is set aside and in its place a dismissal of claims against Toromont is entered.

[33] The parties may make brief written submissions for me within 2 weeks if they are unable to agree on costs.

Justice P. Douglas

Released: February 19, 2014