CITATION: Simpson v. 603418 Ontario Inc., 2018 ONSC 5156
COURT FILE NO.: DC-16-118-00
DATE: 2018-08-31
ONTARIO
SUPERIOR COURT OF JUSTICE
(DIVISIONAL COURT)
B E T W E E N:
KATHLEEN SIMPSON
Self-represented
Plaintiff (Appellant)
- and -
603418 ONTARIO INC. o/a J.P. MOTORS SALES and LARRY PATTINSON
Justin M. Jakubiak and Martine S.W. Garland, for the Defendants (Respondents)
Defendants (Respondents)
HEARD: February 9, 2018,
at Brampton, Ontario.
Price J.
Reasons For Order
OVERVIEW
[1] In 2008, Kathleen Simpson bought a 2005 Volkswagen Jetta, which Larry Pattinson and J.P. Motor Sales advertised as “top of the line”. In fact, the Jetta, was not in “top of the line” condition and required substantial repairs over the ensuing seven years. On November 28, 2011, Ms. Simpson sued Mr. Pattinson and J.P. Motor Sales for damages in the amount of $25,000 for misrepresentation.
[2] The trial judge in the Small Claims Court in Brampton heard Ms. Simpson’s claim on October 27, November 5, and December 11, 2015. During the trial, the trial judge happened to follow the Jetta into the courthouse parking lot, and later, at his own instance, attended with agents for both parties to view the car.
[3] At the trial, Ms. Simpson’s agent stated that Ms. Simpson was not pursuing her action as against Mr. Pattinson. Accordingly, the trial judge dismissed the action as against Mr. Pattinson.
[4] In his October 12, 2016, judgment the trial judge found that Ms. Simpson had expected a vehicle “in at least average condition”, based on the defendants’ representations, and that the vehicle was not, in fact, in that condition. The trial judge awarded $5,000 in damages as an “equitable resolution to this misrepresentation”.
[5] Ms. Simpson appeals to this court from the judgment. She advances the following arguments:
(a) She never instructed her agent to abandon her claim against Mr. Pattinson;
(b) The trial judge erred in fact in finding she had expected “a vehicle in average condition”, having regard to the fact that the defendants sold the car as “top of the line”; and,
(c) The trial judge erred in law in not awarding her pre-judgment and post-judgment interest on her damages.
BACKGROUND FACTS
[6] On September 8, 2008, Ms. Simpson attended at J.P. Motors to buy a car. She had a low credit rating as a result of having been discharged from bankruptcy a year earlier. She chose J.P. Motors, in part, because they advertised themselves as a finance centre that specialized in helping people finance vehicles.
[7] Ms. Simpson told a salesman, John Quesnel, that she needed a car that was in excellent condition as she was going through cancer treatments and needed to rely on it. She also told him it was important that it be a non-smoker’s car. Mr. Quesnel showed her a used 2005 Volkswagen Jetta (“the Jetta”). She test drove the car and Mr. Quesnel gave her an AutoCheck car report, which showed no evidence of any damage or problem with the car. Mr. Quesnel also stated that it was a non-smoker’s car.
[8] The Jetta was first owned by a dealership in the United States. It was sold to J. P. Motors at an auction on August 21, 2008, for $12,340 USD. It had been driven 35,742 miles (approximately 57,187 kilometres).
[9] Ms. Simpson bought the Jetta from J.P. Motors on September 8, 2008, for $17,988.00 CAD, plus taxes and costs, for a total of $21,925.18 ($21,539.18 plus her deposit of $300.00 and lien registration fee of $86.00). The bill of sale included a 30-day mechanical warranty.
[10] J.P. Motors helped her get financing for the Jetta at 14% interest over a 72-month term. She testified that J.P. Motors told her that the financing could be renegotiated after one year.
[11] Shortly after taking possession of the Jetta, Ms. Simpson took it to the Oakville Volkswagen dealership to have it inspected. The dealership discovered several deficiencies, which J.P. Motors later repaired at no charge.
[12] In September 2009, a year after buying the Jetta, Ms. Simpson contacted J.P. Motors to renegotiate her financing. She was unable to speak with anyone at the dealership about her financing terms, so she renegotiated the terms with a bank, which reduced her interest rate to below 9%.
[13] Ms. Simpson experienced problems with the Jetta in December 2010, when the car shut down just after Ms. Simpson exited a highway. OAC Automotive inspected the car and charged $941.28 to replace the fuel pump. After re-testing the car following the repair, OAC advised Ms. Simpson that there were several error codes activated and that the main fuse/circuit board was corroded and needed to be replaced. There was evidence of water damage on the fuse panel and small holes all over the roof and trunk, as if the car had been in a hail storm. The car had not been in such a storm during Ms. Simpson’s ownership. At that point, the Jetta had been driven a total of 55,000 miles, or 88,513 kilometres. Ms. Simpson had driven the car 19,258 miles, or 30,992 kilometres.
[14] Shortly after the OAC repair, Ms. Simpson took the car to Oakville Volkswagen, as the trunk and sun-roof intermittently opened on their own, and the vehicle locked on its own. Oakville inspected the fuse panel and confirmed that it had sustained water damage. On January 12, 2011, Oakville Volkswagen charged Ms. Simpson $342.33 for the inspection and to replace the ignition coil. They advised it would cost a further $371 to replace her door lock. At that point, the Jetta had been driven a total of 56,625 miles, or 91,129 kilometres. Ms. Simpson had driven the car 20,883 miles, or 33,607 kilometres.
[15] On January 12, 2011, Ms. Simpson took the Jetta to an auto body repair shop, Carstar Oakville, who inspected the small holes in the roof and trunk and estimated that it would cost $1,453.41 to repair them.
[16] At that time, Ms. Simpson made further inquiries to Volkswagen U.S. about the history of the Jetta. At their suggestion, she obtained a Carfax Report, which did not disclose any reported damage, any odometer rollbacks, nor any manufacturer recalls.
[17] Ms. Simpson then contacted the U.S. dealership that sold the Jetta to J.P. Motors at auction. The dealer advised her that it would not sell the car on its lot because of the damage, and that it had gone to auction for that reason. On January 10, 2011, the dealer gave her a report from the auction company, Manheim, dated August 8, 2008, regarding the history of the car. The Manheim Report stated that the Jetta was “below average”, and was drivable, but not certifiable. The report stated that it was a smoker’s car, and that it was in “substandard repair”, including deficiencies in the roof, the left and right quarter panels, the deck lid, and the right rear door.
[18] Ms. Simpson took the car to Mississauga Volkswagen and, without disclosing the history of the car, asked for an appraisal of it for trade-in purposes. A Mr. Wallace valued the car at $9,200 based on the options and the fact that it appeared to be in “good condition”. When Ms. Simpson then told Mr. Wallace the history of the car and showed him the Manheim Auction Report, he advised her that the car was worthless because no one would buy the car from her if she disclosed its history. He added that if he had to give the car a value, he would say $3,500, but told her that he had a problem even with that value, and would not take the car at all as a trade-in.
[19] Mr. Simpson then approached the owner and founder of J.P. Motors, Larry Pattinson, to request restitution for the damage that had not been disclosed to her. She showed him the Manheim Report, and his response was, “I’d like to find the person who gave you that. You needed to be a dealer to get that and I would love to get my hands on him.”
[20] At trial, Ms. Simpson presented several methods for determining her damages. In one, she calculated the percentage reduction in value that Mr. Wallace attributed to the vehicle’s condition. In other words, she compared Mr. Wallace’s valuation before he knew the Jetta’s condition with his more informed valuation. She then applied that percentage reduction to her original purchase price, to arrive at the price she believed would have been fair. For several reasons, this method is less preferable than her alternative method.
[21] Ms. Simpson’s alternate method of calculating her damages was based on the “Black Book Value” of the Jetta. She submitted as an exhibit at trial a print-out of the Black Book Values of a 2005 Volkswagen Jetta 4 Door Sedan, with similar mileage to her own, as of the date when she bought her car from J.P. Motors. A Jetta in “excellent condition” was valued at $17,325, and at $13,075 if in “rough condition”, the only category lower than average. To arrive at the price she should have been charged, Ms. Simpson added to the “rough condition” value of the car the following extra charges from the bill of sale:
(a) Chemical Package: $ 799.00
(b) Administrative fee: $ 399.00
(c) P.S.T. (8% of $13,075): $1,046.00
(d) G.S.T. (7% of $13,075): $ 915.35
(e) License Fee: $ 48.00
(f) Gasoline: $ 25.00
TOTAL: $3,232.35
[22] Based on these calculations, Ms. Simpson should have been charged $16,307.35 ($13,075 + $3,232.35 in extra charges) instead of the original total sale price of $21,759.18, a difference of $5,451.83. Ms. Simpson noted that if she had been paying financing charges based on the true Black Book Value of the Jetta, she would have been paying substantially less in interest. She calculated that she would have been paying $184.15 per month instead of the actual amount of $443.83 per month.
[23] Ms. Simpson also submitted as an exhibit at trial the Black Book Values for a Jetta as of March 28, 2011, when she discovered the damage to the vehicle. The Black Book listed the retail value of the car at $13,350 in “extra clean condition”, $12,275 in “clean condition”, $10,450 in “average condition”, and $7,800 in “rough condition.” To arrive at her estimated loss, Ms. Simpson added to the “rough condition” value of the car the following extra charges from the bill of sale:
(a) Chemical Package: $ 799.00
(b) Administrative fee: $ 399.00
(c) P.S.T. (8% of $7,800): $ 624.00
(d) G.S.T. (7% of $7,800): $ 546.00
(e) License Fee: $ 48.00
(f) Gasoline: $ 25.00
TOTAL: $2,441.00
[24] With these additions, the Jetta, in its true condition, would have had a retail price of $10,241 before the lien charge and deposit, instead of the $21,539.18. Ms. Simpson was therefore charged an excess of $11,298.18.
[25] Ms. Simpson testified that in addition to the repairs following the break-down in December 2010, she incurred other repair expenses, including a timing chain problem, fixed for $549.18, and a new motor, for which Oakville Volkswagen quoted her $9,000. She instead had OAC install a used motor for $3,316.55.
[26] At the time of trial, Ms. Simpson still owned the Jetta. The trial judge viewed the car in the company of agents for Ms. Simpson and for J.P. Motors. He also received evidence from Ms. Simpson regarding repair bills for the Jetta between 2008 and 2015, which had totaled $5,534.78, or about $790.00 per year of ownership.
[27] At trial, Ms. Simpson presented evidence from Ken Norin, a senior manager at Manheim, and Mark Marjonovich, a mechanic. She also presented opinion evidence from Robert Wallace, the manager of Mississauga Volkswagen who had appraised the Jetta. Mr. Wallace testified that the wholesale value of the Jetta as of March 2011 was $3,500, and that the approximate retail value of a Jetta with similar options and mileage was approximately $9,200.
[28] The trial judge made the following material findings of fact:
The Mannheim [sic] Report sets out the condition of the car when it was purchased by the Defendant [sic]. This report was prepared by the Auction House.
The report discloses that the vehicle was classified as being “Grade 2.0 below average”. The report further discloses an interior smoke odor and classifies the interior condition as “average”.
Mr. Pattinson and J.P. Motors knew or ought to have known of the Mannheim [sic] Report and the specific condition of this vehicle.
I find as a fact that the Plaintiff expected that she was to purchase a vehicle that was in at least average condition. The Plaintiff further expected a “Non-Smokers Vehicle”.
I find as a fact that the Defendants represented this vehicle to have been in a [sic] least average condition and to have been a non-smokers vehicle when they know [sic] or ought to have known that this was not the case.
[29] Based on those findings, the trial judge concluded:
- In all of the circumstances, I am of the view that the equitable resolution to this misrepresentation is that the Plaintiff shall have judgment against 603418 Ontario Inc. c.o.b. J.P. Motors sales in the amount of $5,000.00.
ISSUES
[30] In reviewing this decision, this court must determine whether the trial judge erred in fact or in law and, if so, what remedy is appropriate.
PARTIES’ POSITIONS
[31] Ms. Simpson argues that she never instructed her agent to abandon her claim against Mr. Pattinson. She therefore seeks judgment against Mr. Pattinson personally, as well as against J.P. Motors.
[32] Ms. Simpson argues that the trial judge erred in fact in finding that, when buying the Jetta, she expected that she was buying “a vehicle in average condition”. She argues that this was a palpable and overriding error, because the defendants sold her the car as “top of the line and price”.
[33] Ms. Simpson also argues that the trial judge erred in law in not awarding her pre-judgment and post-judgment interest on her damages.
[34] The defendants argue that the trial judge provided full and proper reasons for his decision. They argue that his findings were fully supported by the evidence and that he awarded damages in an amount that reflected the difficulties and uncertainties regarding Ms. Simpson’s calculations. Thus, they argue the trial judge’s findings do not reflect a “palpable and overriding error”, and that the judgment should not be set aside on that basis.
ANALYSIS AND EVIDENCE
a) The dismissal of the action as against Mr. Pattinson
[35] At paragraph 3 of his judgment, the trial judge states:
On April 8, 2015, this matter was in front of Trial Judge Payne. At that time, the Court was advised that the Defendants, Larry Pattinson, John Quesnal, Krista Pattinson, and Ryan Pattinson were released from the Claim.
[36] At the appeal hearing, Ms. Simpson stated that she never agreed to release Mr. Pattinson from her claim. She said she never instructed her agent to abandon her claim against Mr. Pattinson.
[37] Ms. Simpson did not raise the release of Mr. Pattinson from the action in her Notice of Appeal. She also did not file a transcript of the proceeding on April 8, 2015, before Justice Payne. Had she filed a transcript this court could determine whether Ms. Simpson’s agent took the position the trial judge ascribed to her. For these reasons, I conclude that there is no basis for interfering with the dismissal of Ms. Simpson’s claims against the other defendants, including Mr. Pattinson.
b) The trial judge’s findings of fact
[38] As noted above, the trial judge found that the defendants “represented this vehicle to have been in [at] least average condition and to have been a non-smokers vehicle when they [knew] or ought to have known that this was not the case.” He further found that Ms. Simpson expected the car to be in that condition when she made the purchase.
[39] These are findings of fact, or inferences drawn from findings of fact. Both are entitled to deference by reviewing courts. This court cannot interfere unless the findings disclose a palpable and overriding error.
[40] The majority of the Supreme Court of Canada, in Housen v. Nikolaisen, (2002), held that inferences of fact attract the same level of deference as findings of fact. They cautioned that distinguishing between the two could lead appellate courts to improperly re-weigh evidence. They concluded:
… it is not the role of appellate courts to second-guess the weight to be assigned to the various items of evidence. If there is no palpable and overriding error with respect to the underlying facts that the trial judge relies on to draw the inference, then it is only where the inference-drawing process itself is palpably in error that an appellate court can interfere with the factual conclusion. The appellate court is not free to interfere with a factual conclusion that it disagrees with where such disagreement stems from a difference of opinion over the weight to be assigned to the underlying facts.[^1]
[Emphasis original]
c) The trial judge’s dismissal of Ms. Simpson’s claim based on the defendants’ failure to reduce her interest rate after the first year of her loan
[41] At trial, Ms. Simpson argued that the defendants breached an agreement with her to reduce the interest rate in her financing agreement after a year. The trial judge dismissed Ms. Simpson’s claim, stating:
Having considered all of the evidence, submissions and exhibits, I am unable to find that there was a contract between the parties to reduce the interest rate after the first year of the loan.
The Defendants’ role in financing was limited to introducing Ms. Simpson to the lender.
The loan in question was open. The Court heard no evidence of any attempt to re-negotiate this loan.
[42] In determining the standard of review to apply in an appeal from a trial judgment, the court distinguishes between questions of fact, questions of law, and questions of mixed fact and law. There is a well-established distinction between questions of law and questions of mixed fact and law. In Canada (Director of Investigation and Research, Competition Act) v. Southam Inc., (1997), the Supreme Court of Canada noted that questions of law are about the correct legal test, whereas questions of mixed fact and law are about whether the facts satisfy the legal test.[^2]
[43] The Supreme Court confirmed this distinction in Housen v. Nikolaisen, (2002), noting that errors of law involve an incorrect statement of the legal standard, or a flawed application of the legal test.[^3] For example, it is an error of law if a decision maker only considers factors A, B, and C, but the legal test also requires the decision maker to consider factor D. Questions of mixed fact and law involve the application of a legal standard to a set of facts. Sometimes, the Court acknowledged, it is possible to extricate a pure legal question from what appears to be a question of mixed fact and law.[^4]
[44] The trial judge’s finding that there was no contract between the parties regarding the reduction of Ms. Simpson’s interest rate involved a mixed question of fact and law. Feldman J.A., in refusing leave to appeal on behalf of the Ontario Court of Appeal in Picavet v. Clute, (2012), held that the trial judge’s finding that a contract did not exist involved findings of fact and of mixed fact and law.[^5] The Alberta Queen’s Bench, in Homes by Avi Ltd. v. Alberta (Workers' Compensation Board, Appeals Commission), (2007), held that the Tribunal’s finding as to whether the parties had entered into a service contract involved a question of mixed fact and law, as it involved the application of the legal test for a valid contract to the particular facts of the case.[^6] Hurley J., of this court, in 2270739 Ontario Ltd. v. 1499998 Ontario Inc., (2017), held that “A finding that a contract exists between the parties and the terms of that contract are questions of mixed fact and law and the standard of review is palpable and overriding error.”[^7]
[45] Some contractual issues, like whether an interest rate is legally permissible, can be questions of law. This is not such a case. The issue in the present case is whether J.P. Motors had a contractual agreement to reduce Ms. Simpson’s interest rate after a year. This involved applying the facts of the case to the legal test for the existence of a contract.
[46] Ms. Simpson testified that J.P. Motors’ business manager, Krista Pattinson, told her that the financing “was open 100 percent; that we would relook at it any time.” She added, “I wrote in right there in front of Krista that I have been told by Ryan that he would negotiate a bank rate for me in one year and I was to call him.”
[47] Considering J.P. Motors was not a party to the financing agreement, and that Ryan only told Ms. Simpson that he would negotiate a bank rate for her, but did not specify the rate, there was ample basis for the Trial judge to find no contractual agreement between J.P. Motors and Ms. Simpson to reduce her interest rate after a year.
d) The trial judge’s award of damages
[48] The trial judge stated, regarding Ms. Simpson’s damages:
In all of the circumstances any portion of this claim relating to interest payments fails.
The Court is also unable to conclude that the repairs incurred by the Plaintiff hare [sic] excessive and unreasonable in the circumstances.
The opinion evidence proffered in the trial is of no real assistance to the Court. The opinion offered to the Court relates to the value of the vehicle a significant time after it was purchased.
What does concern the Court however, is the failure to disclose the Mannheim [sic] Report and its details.
I find as a fact that the Defendants represented this vehicle to have been in a least average condition and to have been a non-smokers vehicle when they know or ought to have known that this was not the case.
In all of the circumstances, I am of the view that the equitable resolution to this misrepresentation is that the Plaintiff shall have judgment against 603418 Ontario Inc. c.o.b. as J.P. Motors sales in the amount of $5,000.00.
[49] The quantification of damages is either a question of fact or of mixed fact and law, and as the Court of Appeal for Ontario held in Martenfeld v. Collins Barrow Toronto LLP, (2014), “[a]bsent palpable and overriding error, appellate intervention with these findings is precluded.”[^8]
[50] While the Court’s reasoning in Martenfeld may be explained, in part, by the fact that the quantification of damages in that case hinged on the interpretation of a contract, appellate courts in other provinces have characterized the quantification of damages in the same way in other contexts.
[51] In Lukács v. United Airlines Inc. et al., (2009), the Manitoba Court of Appeal, in denying leave to appeal, considered the applicant’s argument that a claim for missed opportunity could not attract general damages in a carriage-by-air context. Chartier J.A. rejected the argument that this raised a pure question of law, holding that, “the characterization of the damages, as either special or general, involved an examination of the factual elements of the damage claim.” [^9] Notably, Chartier J.A. continued, the trial judge examined whether the applicant lost income as a result of his “missed opportunity” and found his calculations “speculative” and “not supported by evidence.”[^10]
[52] In Directcash Management Inc. v. Seven Oaks Inn Partnership, (2014), the Saskatchewan Court of Appeal held:
… the interpretation of the commencement date of the Agreement and the amount of damages are either findings of fact or findings of mixed fact and law. Thus, following the principles enunciated in Sattva, significant deference is to be given to the findings of the trial judge. In the absence of palpable and overriding error, the Court should not intervene.[^11]
[Emphasis added]
[53] Questions of mixed fact and law lie along a continuum, depending on the level of generality or particularity they involve. The majority of the Supreme Court in Housen v. Nikolaisen supported this principle. The more general a proposition, the more likely it is to be considered nearer to a question of law. The more specific and particular to the facts of the case at hand, the more likely it will be seen as an “unqualified question of mixed law and fact.” [^12]
[54] In Magnussen Furniture Inc. v. Mylex Limited, (2008), the Court of Appeal for Ontario stated, regarding the standard of review on an appeal from a damages award:
This court’s review of the damages award in this case must proceed on the basis that, absent legal error, a trial judge’s assessment of damages attracts great deference from an appellate court. This court is not entitled to substitute its own view of a proper award unless it is demonstrated that the trial judge made an error in principle, misapprehended the evidence, failed to consider relevant factors, considered irrelevant factors, made an award without any evidentiary foundation, or otherwise made a wholly erroneous assessment of the damages.[^13] [citations omitted, emphasis added]
[55] In Queen v. Cognos Inc., (1987), the Ontario High Court of Justice set out the test for assessing damages for negligent misrepresentation. White J. stated:
Assuming that negligent misrepresentations were made to the plaintiff inducing him to enter into the contract of employment, what is the measure of the plaintiff's damages? I adopt … the words of Zelling J. in a case of negligent misrepresentation inducing a contract: "In general in assessing damages I have to put the plaintiff in the same position as he would have been if the negligent misrepresentation had not been made."
As Lord Denning stated at p. 16 in the Esso Petroleum case, discussing the plaintiff's loss arising out of a negligent misrepresentation inducing the plaintiff to enter a contract:
[The loss] is to be measured in a similar way as the loss due to a personal injury. You should look into the future so as to forecast what would have been likely to happen if he had never entered into this contract; and contrast it with his position now as a result of entering into it. The future is necessarily problematical and can only be a rough-and-ready estimate. But it must be done in assessing the loss.[^14]
[Emphasis added]
[56] In the present case, the trial judge gave no reasons for his assessment of damages apart from stating that “any portion of this claim relating to interest payments fails”. To the extent that this conclusion explains his assessment, I find that it discloses an error in principle. The trial judge was entitled to dismiss Ms. Simpson’s claim that J.P. Motors breached an agreement with her to reduce her interest rate of interest after one year. However, he was required to consider the interest she paid, at whatever rate her financing agreement provided, based on the excess the defendants charged, and the excess Ms. Simpson paid, as a result of their misrepresentation. This interest clearly formed part of the pecuniary loss suffered as a result of the defendants’ misrepresentation.
[57] The trial judge found that Ms. Simpson’s repair costs were not excessive and/or unreasonable in the circumstances. While I find this finding problematic, I defer to it, as it is a finding of fact.
[58] The trial judge appears to have based his assessment of Ms. Simpson’s damages on the Jetta’s reduced value as a result of it being a smoker’s car in “below average” condition, when, as a result of the defendants’ misrepresentations, she had expected it to be the opposite.
[59] The trial judge found, in para. 20 of his judgment, that the opinion evidence given at trial was of no assistance, as it related to the value of the vehicle a significant time after it was purchased. However, he appears to have accepted that the vehicle’s condition was worse than the defendants had represented.
[60] The trial judge found, at paragraph 25, that Ms. Simpson expected a vehicle that was of “at least average condition” and that it had been driven by a non-smoker. He further found, at paragraph 24, that the defendants knew or ought to have known of the Manheim Report and, at paragraph 26, that they represented to Ms. Simpson that the Jetta was in at least average condition and that it was a non-smoker’s vehicle, when they knew or ought to have known that it was not.
[61] In failing to determine the value of the Jetta at the time when Ms. Simpson’s bought it, the trial judge disregarded the fact, as he found, that the condition of the car was “below average”, and that the Black Book assigned a retail value of $13,425 to a Jetta of that year and mileage in “rough condition”. “Rough condition” being the only category below average. He neither accepted this evidence nor rejected it.
[62] Ms. Simpson paid 14% interest from October 13, 2008, according to the Wells Fargo Correction Notice dated September 19, 2008. She testified that the bank reduced her interest rate to prime plus 3.5% two months before the end of the loan. At the appeal hearing, she stated that she had consulted her records since the trial, and acknowledged that she had paid the higher interest rate for 3 years. $5,451.83 is the difference between what Ms. Simpson paid for the Jetta ($21,759.18) and the Black Book value for a Jetta plus extra charges ($13,075 + $3,232.35 = $16,307.35. Three years of 14% interest on that difference would amount to approximately $2,289.77.[^15] Adding that interest paid to the difference in value, Ms. Simpson’s loss was approximately $7,741.60, leaving aside repair costs.
[63] The defendants assert that the Black Book Value of the Jetta in 2008 fails to account for Ms. Simpson’s use of the vehicle for three years. While this is true, the Value she proposed also does not take account of further depreciation in the value of the Jetta during those three years and the expenses Ms. Simpson incurred for repairs during that time.
[64] The trial judge granted judgment against J.P. Motors in the amount of $5,000.00 as “the equitable resolution to this misrepresentation.”[^16] This assessment of damages is reviewable only if there is a “wholly erroneous” amount or a misstatement or misapplication of a principle of law.[^17] The trial judge’s award was substantially less than even the difference between the sale price and its “rough condition” Black Book Value not including the extra interest over three years. I conclude that the trial judge’s assessment
of damages was wholly erroneous and resulted from a misapplication of the principles upon which an assessment of damages for misrepresentation must be based.
[65] I am mindful of the principles applicable to Small Claims Court reasons. The Court of Appeal in Maple Ridge Community Management Ltd. v. Peel Condominium Corporation No. 231, (2015), stated that “appellate consideration of Small Claims Court cases must recognize the informal nature of that court, as well as the volume of cases it handles and its statutory mandate to deal with these cases efficiently,” and that “reasons from the Small Claims Court will not always be as thorough as those in Superior Court decisions”.[^18] Nevertheless, the informal nature of the Small Claims Court and the volume of cases it handles is no justification for an absence of reasons. Without such reasons, this court is unable to make a meaningful determination as to whether he took a principled approach to assessing the plaintiff’s damages.
[66] The Court of Appeal in Maple Ridge Community Management Ltd. stated:
The leading case on sufficiency of judicial reasons, R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869, at paras. 43-47 treats insufficient reasons as an error of law, reviewable on a correctness standard, and makes no mention of a deferential standard of review.[^19]
[67] The Court of Appeal held that the Divisional Court had correctly cited the principle, derived from the Court of Appeal’s decision in Law Society of Upper Canada v. Neinstein, (2010), that in order to permit meaningful appellate review, the reasons of a court must adequately express “what” was decided and “why” it was decided, but erred in applying that standard to the facts of the case.[^20]
[68] The Court of Appeal held that the trial judge’s reasons were insufficient to allow for meaningful appellate review, as required by the test set out by the Supreme Court of Canada in R. v. R.E.M., (2008).[^21] While R.E.M. was a criminal case, the principles it set out apply equally to reasons given in civil cases.[^22]
[69] This is not a case where the trial court simply did a poor job expressing itself. Even a minimal amount of detail might have been sufficient. Here, there was an absence of reasons for the trial judge’s assessment of damages.
[70] In the present case, the evidentiary record provided several options to quantify damages. Ms. Simpson argued that if the Court declined to quantify her damages based on her repair expenses, the Court could assess damages based on the difference between the Black Book Value of the Jetta in its true condition as disclosed by the Manheim Report and the sale price.
[71] Courts across Canada have accepted Black Book Values as evidence in determining a vehicle’s value. In Lubin v. Lubin, (2012), the Supreme Court of Nova Scotia (Family Court) accepted the Black Book Value of the parties’ vehicle over the uncorroborated opinion of the husband for the purpose of a family property division.[^23]
[72] In Avco Financial Services Canada Ltd. v. Thompson, (1996), the New Brunswick Queen’s Bench, in the absence of evidence of the value of a vehicle seized by the plaintiff lender as security for its loan, credited the debtor with an arbitrary amount against his loan. Riordon C.J.Q.B. found that the onus was on the lender to prove the value of the vehicle and that it had failed to discharge this onus, in part because the lender failed to produce evidence of a Black Book Value.[^24]
[73] In Golden Auto Sell Corp. v. 2011320 Ontario Inc., (2009), Corbett J. echoed that sentiment: “I was not provided with independent opinion evidence of the value of the vehicles. … I was not referred to a “red book” or “black book” value for any of the cars.”[^25]
[74] In Philippe v. Bertrand, (2015), this court rejected the value the husband assigned to his car in his Financial Statement, because it did not conform to the vehicle’s Black Book Value.[^26] In Papasodaro v. Papasodaro, (2014), this court adjusted the pleaded value of the wife’s vehicle in a family property division in order to reflect the Black Book Value.[^27] In Siddiqui v. Anwar, (2018), this court accepted the Black Book Value of the husband’s vehicle over the husband’s evidence as to the price for which he sold it to a friend. LeMay J. noted that “the black book value is a better, more neutral value of the car.”[^28]
[75] In Bentley v Bentley, (2017), the Alberta Queen’s Bench accepted the Black Book Value for a vehicle for the purpose of determining the division of family property.[^29] In Brook v. Billabong Road & Bridge Maintenance Inc., (2010), the British Columbia Provincial Court assessed the plaintiff’s damages based, in part, on the Black Book Value of the vehicle in question.[^30]
[76] Considering Ms. Simpson’s trial evidence trial of the Jetta’s Black Book Value both at the time she purchased it and at the time when she discovered the undisclosed damage three years later, and the Manheim Report on the condition of the vehicle when J.P. Motors purchased it at auction, shortly before selling it to Ms. Simpson, the trial judge had an evidentiary record that permitted him to place the value of the Jetta within the range of Black Book Values at the time Ms. Simpson purchased it. In these circumstances, it was incumbent on the trial judge either to base his assessment of Ms. Simpson’s loss on the Black Book Value or provide some reason for not doing so. He did neither.
[77] The trial judge characterized the amount he awarded for damages as an “equitable resolution to this misrepresentation”. The plaintiff’s claim was for damages, a common law remedy to which she was entitled, based on the trial judge’s findings that the defendants had misrepresented the condition of the Jetta, and that Ms. Simpson had relied on this misrepresentation in paying the higher price.
[78] Ms. Simpson was entitled to a decision which quantified the loss she suffered. Given that the evidentiary record permitted her loss to be quantified in that manner, it was a palpable error for the trial judge to base his award on what he considered was “an equitable resolution of the misrepresentation”.
[79] The trial judge’s characterization of the damages as an “equitable resolution” are insufficient to allow for meaningful appellate review. His reasons do not contain a principled analysis of damages.
[80] In spite of the informal nature of proceedings in Small Claims Court, the high volume of cases it deals with, and the imperative of moving them forward efficiently, the Court must provide some explanation of how it arrived at its assessment of damages. The trial judge failed to do so.
[81] The trial judge failed to establish key determinants of a calculation of Ms. Simpson’s damages. In particular:
a) He did not explain how he arrived at the original value of the vehicle, apart from saying that it was an “equitable resolution” of the issue. He stated that Ms. Simpson had a reasonable expectation that she was getting a car of “at least average value”, without determining whether such a car was, as Ms. Simpson maintained, at the top end of the range of Black Book values, or the mid-range.
b) He did not make a finding regarding the amount of repairs attributable to the car’s defects disclosed in the Manheim Report, which J.P. Motors knew or ought to have known and misrepresented to Ms. Simpson.
c) He did not reject Ms. Simpson’s evidence of the cost of “extraordinary repairs” she incurred or her evidence that her accounting of the repairs was incomplete. However, he appears to have drawn the inference that all of the repair costs were reasonable.
d) He did not make a determination as to the original value of the Jetta based on the price Ms. Simpson paid, the cost she incurred for repairs, and the value she derived from using it.
e) He did not make a determination, in the alternative, as to the actual value of the Jetta when Ms. Simpson purchased it, based on the Black Book Value and accounting for its inferior condition. Nor did he deduct that value from the price she paid to determine her over-payment, and apply the interest rate she paid to that over-payment.
e) The trial judge’s failure to award pre-judgment or post-judgment interest
[82] The standard of review of a trial judge’s decision on a question of law is correctness. The exercise of discretion – such as awarding pre-judgment interest – is reviewable, absent an error of law or principle, for reasonableness.[^31]
[83] The trial judge gave no reason for depriving Ms. Simpson of the pre-judgment or post-judgment interest to which a successful plaintiff is presumptively entitled on her damages. I find his failure to award interest to be unreasonable and an error of law.
[84] Section 128 of the Courts of Justice Act, R.S.O. 1990, c. C.43 governs the awarding of pre-judgment interest. This provision creates a presumptive entitlement to pre-judgment interest arising from the date the cause of action arose and provides as follows:
Prejudgment interest
128 (1) A person who is entitled to an order for the payment of money is entitled to claim and have included in the order an award of interest thereon at the prejudgment interest rate, calculated from the date the cause of action arose to the date of the order.
[85] Section 130 gives the court broad discretion to depart from the prescribed rate where it is just to do so. This section provides that the court shall take into account a number of factors when departing from the prescribed rate, including the conduct of a party which has delayed or shortened the proceeding. Section 130 of the CJA provides as follows:
Discretion of court
130 (1) The court may, where it considers it just to do so, in respect of the whole or any part of the amount on which interest is payable under section 128 or 129,
(a) disallow interest under either section;
(b) allow interest at a rate higher or lower than that provided in either section;
(c) allow interest for a period other than that provided in either section.
Same
(2) For the purpose of subsection (1), the court shall take into account,
(a) changes in market interest rates;
(b) the circumstances of the case;
(c) the fact that an advance payment was made;
(d) the circumstances of medical disclosure by the plaintiff;
(e) the amount claimed and the amount recovered in the proceeding;
(f) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding; and
(g) any other relevant consideration.
[86] None of the above factors arise in the circumstances of the present case to justify depriving Ms. Simpson of her presumptive entitlement to pre-judgment interest. Nor is there justification to increase or reduce the interest allowed from that prescribed in s. 127 of the CJA.
[87] Ms. Simpson caused her claim to be issued on November 28, 2011. The pre-judgment interest rate for actions arising in the fourth quarter of 2011, as provided by s. 127, is 1.3% per year. The cause of interest in the present case arose on September 13, 2008, when Ms. Simpson purchased the Jetta.
[88] The post-judgment interest rate is 3%.
f) The Remedy
[89] The Courts of Justice Act sets out the orders that an appellate court may make in the disposition of an appeal. It provides:
134 (1) Unless otherwise provided, a court to which an appeal is taken may,
(a) make any order or decision that ought to or could have been made by the court or tribunal appealed from;
(b) order a new trial;
(c) make any other order or decision that is considered just.
[90] The respondents submit that “a further trial in this matter would not be justified or appropriate.” They note that this was the second trial of the claim, and argue that putting “the parties though a third trial would be contrary to principles applicable to the Small Claims Court process, which is intended to be an expeditious resolution of legal disputes.”
[91] In TMS Lighting v. KJS Transport Inc., (2012), this court applied a formula for the calculation of damages which was not advanced by the parties at trial, on the basis that the plaintiff had not led the necessary evidence to support its proposed damages calculation.[^32] In setting aside the assessment of damages and directing a new trial of that issue, the Court of Appeal cited Martin v. Goldfarb, (1998), to describe the difficulties relating to the calculation of damages, and the appropriate approach and remedy for each. First, where the difficulty in quantifying damages is inherent in the nature of the damages, “the difficulty of assessment is no ground for refusing substantial damages even to the point of resorting to guess work”. Second, however, “where the absence of evidence makes it impossible to assess damages, the litigant is entitled to nominal damages at best”.[^33]
[92] The Court of Appeal in TMS Lighting held that where there is no evidence to support the calculations proposed by the parties, the trial judge correctly examined whether the evidentiary record on damages afforded a reasonable alternative basis to quantify damages. The Court went on to say:
That said, in my opinion, it is not open to a trial judge to postulate a method for the quantification of damages that is not supported by the evidence at trial. Nor is it open to a trial judge to employ an approach to the quantification of damages that the parties did not advance and had no opportunity to test or challenge at trial. To hold otherwise would sanction trial unfairness.[^34]
[Citations omitted]
[93] The trial judge additionally made no determination regarding pre-judgment or post-judgment interest, although Ms. Simpson claimed such interest. He made no determination as to whether she was entitled to interest at the rate contained in her original financing, or at the rate that resulted from her later re-financing of the vehicle, or at the statutory interest rates prescribed by the Courts of Justice Act.
g) Costs
[94] At the appeal hearing of her appeal, Ms. Simpson stated her costs as $2,908.83 + HST. The defendants gave their costs, on a partial indemnity scale, as $7,282.87 inclusive of HST. Their actual costs, they say, were $9,262.15. I find that the costs claimed by Ms. Simpson were reasonable, and they shall be allowed in the amount claimed.
CONCLUSION AND ORDER
[95] I find that the trial judge made a palpable and overriding error when he failed to give adequate reasons for his damages award. Further, I find he made an error of law in refusing to award pre-judgment and post-judgment interest. For the foregoing reasons, I order:
The plaintiff’s appeal is allowed.
The defendant J.P. Motors shall pay to the plaintiff damages in the amount of $7,741.60, which represents the difference between the Jetta’s sale price and the Black Book Value for a Jetta in “rough condition”, and includes additional interest paid on that amount.
The defendant J.P. Motors shall pay pre-judgment interest on the said damages at 1.3% from September 13, 2008 to today’s date.
The defendant J.P. Motors shall pay post-judgment interest at the rate of 3% from today’s date.
The defendant J.P. Motors shall pay to the plaintiff her costs of this appeal, fixed in the amount of $2,908.83 + HST (13%).
Price J.
Released: August 31, 2018
CITATION: Simpson v. 603418 Ontario Inc., 2018 ONSC 5156
COURT FILE NO.: DC-16-118-00
DATE: 2018-08-31
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
KATHLEEN SIMPSON
Plaintiff (Appellant)
- and –
603418 ONTARIO INC. o/a J.P. MOTORS SALES and LARRY PATTINSON
Defendants (Respondents)
REASONS FOR ORDER
Price J.
Released: August 31, 2018
[^1]: Housen v Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 at para. 23. See also paras. 19-22.
[^2]: Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748 at paras. 35-37.
[^3]: Housen v. Nikolaisen, at paras. 33-34.
[^4]: Housen v. Nikolaisen, at para. 34.
[^5]: Picavet v. Clute, 2012 ONCA 441 at para. 8.
[^6]: Homes by Avi Ltd. v. Alberta (Workers' Compensation Board, Appeals Commission), 2007 ABQB 203 at para. 56
[^7]: 2270739 Ontario Ltd. v. 1499998 Ontario Inc., 2017 ONSC 5913 at para. 12.
[^8]: Martenfeld v. Collins Barrow Toronto LLP, 2014 ONCA 625 at para. 42.
[^9]: Lukács v. United Airlines Inc. et al., 2009 MBCA 111 at para. 13.
[^10]: Lukács v. United Airlines Inc. et al. at paras. 13-14.
[^11]: Directcash Management Inc. v Seven Oaks Inn Partnership, 2014 SKCA 106 at para. 12.
[^12]: Housen v. Nikolaisen at para. 28.
[^13]: Magnussen Furniture Inc. v. Mylex Ltd., 2008 ONCA 186 at para. 71.
[^14]: Queen v. Cognos Inc. (1987), 63 OR (2d) 389 (Sup. Crt.) at pp. 414-415.
[^15]: This amount is approximate because of the nature of loan repayment plans. The amount of principal decreases over time and reduces the amount of interest actually paid. The difference for 36 months at 14% interest on the sale price vs. the rough condition price + extra charges, assuming all payments were made in a timely manner, would be $1,879.29, which is $410.48 less than this calculation.
[^16]: Trial Decision at paras. 26-27, l. 3.
[^17]: Chisholm v Lindsay, 2015 ABCA 179 at para. 13.
[^18]: Maple Ridge Community Management Ltd. v. Peel Condominium Corporation No. 231, 2015 ONCA 520 at paras. 33-35.
[^19]: Maple Ridge Community Management Ltd. v. Peel Condominium Corporation No. 231 at para. 22.
[^20]: Law Society of Upper Canada v. Neinstein, 2010 ONCA 193 at para. 61.
[^21]: R. v. R.E.M., 2008 SCC 51, [2008] 3 S.C.R. 3 at para. 17.
[^22]: D.M. Drugs (Harris Guardian Drugs) v. Barry Edward Bywater (Parkview Hotel), 2013 ONCA 356 at para. 35; F.H. v. MacDougall, 2008 SCC 53, [2008] 3 S.C.R. 41 at paras. 97-101.
[^23]: Lubin v. Lubin, 2012 NSSC 31 at paras. 59-60.
[^24]: Avco Financial Services Canada Ltd. v. Thompson, [1996] 175 NBR (2d) 308 (Q.B.) at p. 5.
[^25]: Golden Auto Sell Corp. v. 2011320 Ontario Inc. (Ont. Sup. Crt.) at para. 5.
[^26]: Philippe v. Bertrand, 2015 ONSC 235 at para. 135.
[^27]: Papasodaro v. Papasodaro, 2014 ONSC 30 at para. 82.
[^28]: Siddiqui v. Anwar, 2018 ONSC 219 at para. 179.
[^29]: Bentley v Bentley, 2017 ABQB 53 at para. 87.
[^30]: Brook v. Billabong Road & Bridge Maintenance Inc., 2010 BCPC 416 at para. 9.
[^31]: 1170987 Alberta Ltd. v. 1544361 Alberta Ltd., 2015 ABCA 351 at para 6; VAS v. Grace, 2016 ABCA 45 at para. 13.
[^32]: TMS Lighting v. KJS Transport, 2012 ONSC 5907 at para. 206.
[^33]: TMS Lighting v. KJS Transport, 2014 ONCA 1 at para. 61, citing Martin v. Goldfarb, [1998] O.J. No. 3403, 112 O.A.C. 138 (C.A.) at para. 75, and reversing, in part, TMS Lighting v. KJS Transport, 2012 ONSC 5907.
[^34]: TMS Lighting v. KJS Transport, 2014 ONCA 1 at para. 65.