CITATION: Swern v. Amazon Hardwood Centre Inc., 2015 ONSC 7590
DIVISIONAL COURT FILE NO.: 149/14 DATE: 20151222
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
TERESA LESLIE SWERN and LAWRENCE HARVEY SWERN
Plaintiffs
– and –
AMAZON HARDWOOD CENTRE INC., JOE PRESTA a.k.a. JP QUALITY PAINTING & GENERAL CONTRACTING, MERCIER WOOD FLOORING INC. a.k.a. LES PLANCHERS MERCIER INC.
Defendants
Stanley Turner, for the Plaintiffs/Respondents
David Seed, for the Defendant/Appellant, Amazon Hardwood Centre Inc.
HEARD at Toronto: December 4, 2015
Wilton-Siegel J.
[1] The appellant, Amazon Hardwood Centre Inc. (the “appellant”), appeals a decision of Deputy Judge McNeely dated February 27, 2014 (the “Decision”). In the Decision, the Deputy Judge found the appellant liable to pay the respondents, Teresa Swern and Lawrence Swern (the “respondents”), the amount of $6,378.62 plus HST and costs of $1,972.15 inclusive of disbursements.
Factual Background
[2] The appellant is a hardwood retailer. In June 2011, the appellant sold a Brazilian cherry hardwood flooring product, manufactured by the defendant Mercier Wood Flooring Inc. (“Mercier”), to the respondents.
[3] The respondents engaged the defendant Joe Presta (“Presta”) as their general contractor to arrange, among other things, for the installation of the flooring in connection with a renovation of their condominium. The hardwood flooring was installed in September 2011. Initially, the installation was done incorrectly and approximately one quarter of the floor had to be removed and replaced with new wood. The new wood was supplied by another retailer, Capital Hardware Flooring, rather than the appellant.
[4] The humidifier in the condominium did not work for a period of time. The humidifier was serviced in December 2011 and, apparently, the technician set the humidifier at a level that would produce 30% relative humidity.
[5] The flooring began to cupping and crack in January 2012. It is not repairable and must be replaced.
[6] The respondents complained about this product failure to Mercier. Mercier offers a product warranty, provided the purchasers complied with the terms of the warranty. In February 2012, a technical representative of Mercier determined that the respondents had failed to comply with conditions of the Mercier warranty and rejected the respondent’s complaint. In his report dated February 16, 2012 (the “Mercier Report”), the Mercier representative concluded that no manufacturing deficiencies caused the situation. The Mercier Report is discussed in greater detail below.
[7] The respondents retained a flooring expert, Flooring Forensics (“FF”), to inspect and investigate the cause of the product degradation. FF provided a report dated March 7, 2012 (the “FF Report”), which formed part of the respondents’ statement of claim in this action. As discussed further below, the FF Report appears to have reached a similar conclusion. The FF Report concluded that the problem likely arose because of either or both of the failure to maintain an adequate humidity level for one week in advance of the installation and the recommended humidity levels after the installation.
[8] The respondents brought this action claiming damages from Mercier for manufacturing a faulty product, from Amazon for selling a faulty product, and from Presta for faulty installation.
[9] After a two-day trial, the Deputy Judge dismissed the claim against Mercier for product liability. She also dismissed the claim against Presta for faulty installation. The Deputy Judge found Amazon liable for taking insufficient steps to advise the respondents of the need to maintain higher than ordinary levels of humidity in their condominium to protect the integrity of the floor product.
The Decision of the Deputy Judge
[10] The Deputy Judge dismissed the claim against Mercier on the basis that there was no contract existing between the plaintiffs and Mercier that had been breached. There was also no evidence of any manufacturing defect in the flooring product.
[11] The Deputy Judge also dismissed the claim against Presta. In the course of doing so, the Deputy Judge made two determinations of significance for this appeal. First, she found there was no evidence that Presta’s conduct in the installation of the flooring product caused the product failure. In making this determination, the Deputy Judge concluded that there was no evidence of a problem with the relative humidity in the condominium during the installation period in September 2011. Second, she found there was no evidence that Presta knew of the elevated recommended humidity for the flooring described below and failed to communicate this knowledge to the plaintiff. In reaching this conclusion, the Deputy Judge also held that she did not think that “the pieces of paper that were put in circulation on this product warned of the actual issue and the severity of the issue”. Her findings on this issue were set out in greater detail later in the Decision, as described below.
[12] As mentioned, the Deputy Judge held the appellant liable for failure to advise the respondents of the recommended humidity range and the likely consequences of a failure to adhere to such a recommendation. The Deputy Judge accepted the evidence of the respondents that they were not aware of the recommended elevated humidity level for the flooring product and that, if they had been made aware of such requirements prior to purchase, they would not have purchased the flooring product. In reaching her conclusion, the Deputy Judge rejected the appellant’s submission that the respondents had actual knowledge of this information. This is discussed further below.
The Standard of Review
[13] The appeal is brought pursuant to section 31 of the Courts of Justice Act, R.S.O. 1990, c. C.43. The standard of review is set out in Housen v. Nikolaisen 2002 SCC 33, [2002] 2 S.C.R. 235 in paras. 6-10 and 36-37. On a pure question of law, the standard of review is correctness. The standard of review for findings of fact is that such findings are not to be reversed unless it can be established that the trial judge made a "palpable and overriding error". Questions of mixed fact and law are subject to the “palpable and overriding error” standard, unless it is clear that the trial judge made an error of law or principle that can be identified independently in the judge's application of the law to the facts of the case.
Analysis and Conclusion
[14] The appellants raise seven issues on this appeal which I will address in turn after setting out certain preliminary observations that inform the conclusions below.
Preliminary Conclusions
[15] The following conclusions regarding the Decision are important for the determination of this appeal.
[16] First, the Deputy Judge held that the degradation of the flooring product was due to the failure of the respondents to maintain an adequate humidity level in their condominium for the particular flooring product. There was a reasonable basis for such a conclusion in the evidence before the Deputy Judge.
[17] The Mercier representative observed that the humidifier in the respondents’ condominium was not set correctly and not running at the time of inspection. He also observed that the ambient moisture level was 29%. According to the Mercier Report, normal environmental conditions for the flooring product were between 40% and 55% relative humidity. The Mercier representative concluded that the overly dry environment had caused the product degradation.
[18] FF also noted that the manufacturer’s recommended humidity range for the flooring product was 40% to 55% and that this was higher than the normal industry standard, which was 30% to 50%. FF also noted that the relative humidity level at the time of its inspection was 30.7%. The FF Report concluded that the recommended relative humidity levels for both the installation of the flooring product (being 35% to 55% for at least a week) and the environment in the condominium thereafter (being 40% to 55%) had not been met. The FF Report appears to conclude that the failure to maintain these recommended humidity levels caused the product degradation. The FF Report also concludes that such degradation occurred in the three months following the installation prior to the servicing of the humidifier in the condominium, after which the humidifier was set at 30% relative humidity. Rather opaquely, the FF Report adds “[t]he fact that the manufacturer requires an additional 10% [relative humidity] is another matter.”
[19] While the FF Report expanded the timeframe during which the inadequate relative humidity level could have caused the product degradation, the conclusions of the FF Report are consistent with a finding that the principal cause of the product degradation was the inadequate humidity level in the condominium in the period following installation. In particular, the FF Report did not find that any other cause was the principal cause. While FF also concluded that the installer used an adhesive not listed by the manufacturer as recommended, there is no evidence in the FF Report or otherwise that this caused or contributed to the product degradation, or indeed, was even inappropriate, and there is no suggestion to this effect. Similarly, the FF Report noted that the installer had not used a roller. However, this observation related to some areas of floating, which may reflect faulty installation but was unrelated to the product degradation.
[20] Second, the Deputy Judge found that, in the circumstances, the appellant had a duty to advise the respondents of the humidity requirements for the flooring product.
[21] As mentioned, both the Mercier Report and the FF Report specifically state that the recommended humidity level for this flooring product is between 40% and 55%. This is different from normal industry standards which, according to the FF Report, range between 30% and 50%. Therefore, there was product-specific information that differentiated this flooring product from most other flooring products that were available to the respondents. While the need to maintain humidity levels within the range of normal industry standards might be common knowledge, the special characteristics of this product were not.
[22] These circumstances establish a reasonable basis for the imposition of a duty of disclosure on the part of the appellant. As such information was not a matter of public knowledge, the Deputy Judge could reasonably find that the respondents, as consumers, reasonably relied on their retailer to advise them of any such product-specific information and that the retailer ought to have understood that this was the case. Although the Deputy Judge did not express her finding in this manner, the Deputy Judge essentially found the appellant liable for negligent misrepresentation based on the negligent omission to advise the respondents of material facts in circumstances in which the respondents were reasonably relying on the appellant.
[23] The appellant argues that it is unfair to impose liability on it in the circumstances of this case although it does not support this position with any case law. It says that the damages awarded substantially exceed the profits it made on the sale of the flooring. That is not, however, a basis for denying a duty of care. It also says that the consumer should bear the responsibility of researching the product before buying it. This ignores the reality that any such research relied heavily on the appellant.
[24] The appellant also says that a duty of care to direct prospective purchasers to prudent purchases imposes too high a standard on retailers. I would note that this argument directly contradicts the appellant’s position that it informed the respondents of the recommended humidity range for this flooring product in accordance with its normal practice. Setting that aside, the case involves a very specific issue – the condition of product-specific information that departs from normal industry standards. The Deputy Judge did not find a duty to direct purchasers to prudent purchases. The effect of the Decision is limited to requiring disclosure of information that is unique to a particular product and therefore would not be known to a reasonable consumer.
[25] Accordingly, I find that, in the particular circumstances of this case, the Deputy Judge did not err in finding that the appellant owed a duty of disclosure to the respondents.
The Grounds of Appeal
[26] The appellant raises six grounds of appeal pertaining to the finding of liability and one ground of appeal pertaining to the quantum of liability. I propose to address each ground of appeal in turn.
Actual Knowledge
[27] The appellant says that the Deputy Judge made a palpable and overriding error in failing to find, as a matter of fact, that the respondents had actual knowledge of the facts pertaining to the humidity requirements for the flooring. They make two arguments which I will address in turn.
[28] First, the appellant says that the respondents had actual knowledge based on the documentation received by the appellant. The Deputy Judge concluded that the documentation provided by Mercier and the appellant did not adequately warn the respondents of the risk of catastrophic failure if the humidity level in their condominium was not maintained within the specific recommended range for this flooring product – being 40% to 55%. Put another way, the Deputy Judge held that the documentation did not discharge the obligation of the appellant to communicate the need to maintain a higher than ordinary humidity range and the consequences of a failure to do so such that the respondents had actual knowledge of these matters.
[29] The Deputy Judge addressed three principal documents which the appellant says alerted the respondents to the need to maintain the recommended humidity level in their condominium. With respect to the Mercier warranty, the Deputy Judge held that the disclaimer of liability was not the same as a clear warning that the product will fail if the humidity is not maintained. With respect to the installation guide, the Deputy Judge held that the language of the recommendation regarding humidity levels was not a clear statement of required humidity levels. With respect to the maintenance guide, the Deputy Judge concluded that the use of language referring to the “dimensional stability” of the flooring also failed to convey the fact that the result of a failure to follow the recommendation would be the product failure that occurred. There was a reasonable basis for such conclusions. I observe that, given these findings, it is irrelevant whether or not the respondents actually saw the installation guide or the maintenance guide prior to the product failure. The Deputy Judge found that, even if the respondents had read such documentation prior to such time, they would not have had actual knowledge of the necessary information regarding the humidity levels for this flooring.
[30] As a related matter, the appellant submits that the Deputy Judge erred in failing to conclude that the appellant’s own invoice communicated the need to maintain the higher humidity levels. I do not agree. It cannot reasonably be argued that the exclusionary language in the invoice, which is addressed below, constituted communication of the necessary facts regarding the humidity requirements of the flooring product.
[31] Second, the appellant argues that the Deputy Judge erred in failing to find that the appellant’s salesman, Mr. Belfrutto, communicated the necessary facts to the respondents, in particular Mrs. Swern, during their first visit to the appellant’s store. That is, the Deputy Judge erred in failing to find that the appellant discharged its duty and was not negligent. This was essentially an issue of credibility.
[32] On this issue, the Deputy Judge preferred the evidence of Mrs. Swern to that of Mr. Belfrutto. She found the former’s evidence to be “clear, concise, careful, not overstated, not understated” as well as “detailed, very dispassionate giving her advice”. She also considered that the importance of the flooring to her was likely to result in a more vivid recall than a salesman who dealt with many people and situations. In addition, the assessment of the Deputy Judge was that, if the respondents had been advised of the elevated humidity level requirement, they would not have left the humidity level where it was maintained and told no one about it.
[33] The Deputy Judge presided over a two-day trial and had an opportunity to observe the parties and consider their testimony. In such circumstances, considerable deference is owed to any credibility finding of a trial judge. In this case, the Deputy Judge could reasonably make the finding that she did on the foregoing grounds.
[34] In addition, however, Mr. Belfrutto’s evidence is only that he would have communicated the need to maintain humidity to protect flooring products. Mr. Belfrutto’s evidence falls short of stating that he communicated the specific and special recommendation of Mercier that elevated humidity levels of between 40% and 55% be maintained with respect to the particular flooring product. I note that the Deputy Judge made the same observation in reaching her conclusion.
[35] Based on the foregoing, I conclude that there was a reasonable basis for the conclusion of the Deputy Judge that the respondents did not have actual knowledge of the required humidity level for the flooring product prior to the time the product degraded, whether from Mr. Belfrutto or from the documentation provided to them or delivered with the flooring product.
Alleged Conflict Between the Expert Opinions
[36] As mentioned, the Deputy Judge found that the principal cause of the degradation of the flooring was the maintenance of an inadequate humidity level in the plaintiffs’ condominium after installation. The appellant says that the Deputy Judge erred in failing to make a determination of the cause of the product degradation in the face of conflicting evidence from the two experts.
[37] I do not agree. For the reasons set out above, I am of the opinion that the evidence of the Mercier Report and the FF Report do not conflict regarding the principal cause of the product degradation. In this regard, as I read the FF Report, it says no more than that inadequate humidity levels in the period commencing one week prior to installation and ending with the repair of the humidifier caused the product degradation. It leaves undetermined when exactly the inadequate conditions were present that triggered the problem. Insofar as the FF Report suggested that humidity conditions at the time of installation could also have caused the product degradation, there was evidence that the humidity conditions in September were acceptable and, by implication, that the colder weather after installation resulted in the product degradation. Insofar as it is suggested that the FF Report raised other possible causes of the product degradation, the Deputy Judge had reasonable grounds for concluding otherwise. As mentioned, there is no evidence that the use of an adhesive not recommended by the manufacturer, uncertainty as to the trowel used, and the failure to use a roller had any relation to the specific product degradation at issue in this action – cupping and cracking of the flooring.
[38] The appellant also says that the Deputy Judge failed to resolve a conflict in the evidence regarding whether the flooring was stored outside on the condominium balcony prior to installation. I do not think this is correct. While the Deputy Judge does not expressly make a finding on this issue, her determination of the cause of the product degradation implies a finding that storage of the flooring outside prior to the installation did not contribute to the problem. There was evidence from Presta that he stored the product inside upon which the Deputy Judge could reasonably rely in making this finding.
The Appellant’s Invoice
[39] The appellant says that the Deputy Judge failed to give effect to the exclusionary clause set out on its invoice, which read as follows:
Amazon Hardwood is not responsible for damaged boards due to improper humidity conditions during storage or at the installation site. Any board installed shall be considered acceptable to the installer/owner and will be excluded from any claims.
[40] The language “at the installation site” is susceptible of several interpretations. When read in the context of the entire clause – which refers to “during storage or at the installation site”, it could reasonably be understood to refer only to humidity conditions up to and including the time of installation, but not thereafter.
[41] The exclusionary clause is set out on the invoice. There is no negotiation possible between the parties regarding the application of the clause. It is imposed at the time of payment. As such, this is a situation in which the contra proferentum rule would apply. On this basis, I think that the clause should be interpreted narrowly to address only humidity conditions at the time of installation and not to on-going conditions thereafter.
[42] In the present case, Deputy Judge found that the principal cause of the degradation of the flooring was the maintenance of an inadequate humidity level in the respondents’ unit after installation, that is, was attributable to on-going conditions in the condominium after installation. On this basis, the exclusionary clause did not apply to the circumstances that resulted in the respondents’ loss.
The Sale of Goods Act
[43] The appellant says that the Deputy Judge erred in law in failing to conclude that the Sale of Goods Act, R.S.O. 1990, c. S.1, Part III (the “Act”) applied to deem the duties of the defendant to have been fulfilled.
[44] I accept that this was a transaction to which the Act applies and that the Deputy Judge found that the goods supplied were of merchantable quality and in conformity with the sample previously provided to the plaintiffs. As such, the defendant satisfied the implied conditions in the contract between the parties set out in section 16 of the Act.
[45] However, the Act does not provide that no other terms or representations may be implied into any particular agreement for the sale of goods or into the relationship between the parties. In particular, the Act does not exclude the possibility of tort liability for negligent misrepresentation.
The Quantum of Liability
[46] In addition to the foregoing grounds of appeal dealing with the issue of liability generally, the appellant also appeals the Decision insofar as the Deputy Judge held the appellant liable for the cost of approximately 25% of the flooring product.
[47] As noted above, the installer had to replace approximately 25% of the flooring product during the installation as a result of having used an unacceptable method of installation. The replacement flooring product for this work was acquired from another retailer rather than from the appellant. The respondents did not, however, pay for this replacement flooring or have any contact with the retailer of this replacement product.
[48] The appellant says the Deputy Judge ignored this evidence in finding the appellant liable for the cost of all of the flooring product purchased by the respondents. The appellant says that it should not be responsible for the replacement cost of the flooring purchased from the other retailer.
[49] The Deputy Judge held the appellant liable in tort. The measure of damages in tort would ordinarily be that amount which would put a plaintiff in the position it would have been if the tort had not been committed. In this case, the Deputy Judge accepted the position of the respondents that, if the appellant had advised them of the specific recommended humidity requirements of the flooring product, they would not have purchased the product. As such, the respondent would not have incurred the loss in its entirety.
[50] Based on the foregoing, the Deputy Judge could reasonably have found the appellant liable for the full amount of the respondents’ loss.
Conclusion
[51] Based on the foregoing, the appellant’s appeal is denied in its entirety. Costs in the agreed amount of $2,500 are awarded in favour of the respondents.
___________________________ Wilton-Siegel J.
Released: December 22, 2015
CITATION: Swern v. Amazon Hardwood Centre Inc., 2015 ONSC 7590 DIVISIONAL COURT FILE NO.: 149/14 DATE: 20151222
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
TERESA LESLIE SWERN and LAWRENCE HARVEY SWERN
Plaintiffs/Respondents
– and –
AMAZON HARDWOOD CENTRE INC., JOE PRESTA a.k.a. JP QUALITY PAINTING & GENERAL CONTRACTING, MERCIER WOOD FLOORING INC. a.k.a. LES PALNCHERS MERCIER INC.
Defendants/Appellant
REASONS FOR DECISION
Wilton-Siegel J.
Released: December 22, 2015