Court of Appeal for Ontario

Citation: Dean v. Mister Transmission (International) Limited, 2010 ONCA 443

Date: 2010-06-16

Docket: C51034

Judges: Weiler, Sharpe and Rouleau JJ.A.

Between:

Douglas Dean

Plaintiff (Appellant)

and

Mister Transmission (International) Limited, Mister Transmissions Systems Limited, Mister Transmission (Richmond Hill) Limited and Mister Transmission Leasing Inc.

Defendants (Respondents)

Counsel:

Brian Osler and Glyn Hotz, for the appellant

William D. Black and Kenneth J Morris, for the respondents

Heard: June 1, 2010

On appeal from the judgment of Justice Douglas K. Gray of the Superior Court of Justice, dated August 20, 2009.

ENDORSEMENT

[1] This is an appeal from summary judgment dismissing an action that had been certified as a class proceeding. Under the Motor Vehicle Repair Act (since repealed) and the Consumer Protection Act it is unlawful for a vehicle “repairer” to charge a fee for an estimate if the consumer authorizes the repair and the repair is carried out. The plaintiff class alleges that Mister Transmission International (MTI) breached that statutory prohibition by charging fees for estimates when members of the plaintiff class authorized and paid for repairs.

[2] In certifying the class action, the motions judge observed that there was no evidence that the other companies named as defendants had anything to do with the issues in this action. Prior to the motion for summary judgment, affidavit evidence was filed indicating these companies were not involved and, accordingly, the motions judge dismissed the action against them at para. 56 of his reasons. We would uphold his dismissal of the action against them.

[3] MTI is a franchisor that has no direct contact with customers. It does, however, through franchise agreements and manuals, set general standards to be followed by its franchisees. In addition, the franchisees pay MTI seven per cent of their revenues. The franchisees are not being sued in this action. The essence of the claim by the representative plaintiff, Dean, is that MTI’s franchisees are actual or apparent agents of MTI and that they improperly breached the legislation by charging customers estimate fees for a vehicle transmission “Inspection Service” even though the customer authorized the repair. Dean also alleges that MTI conspired with its franchisees to breach the statutes. By receiving a portion of the franchisees’ revenues for the transmission Inspection Service, Dean further alleges that MTI has been unjustly enriched.

[4] The transmission is the component of a vehicle that shifts the power from the engine to the wheels. The transmission is an enclosed sealed unit. When a customer brings a vehicle to a Mister Transmission franchise repair centre, it undergoes a road test and a multi-check. If the road test and multi-check indicate that the problem is internal to the transmission, requiring further diagnosis, the customer is offered an “Inspection Service”.

[5] If a customer asks, “How much will it cost to fix my transmission?” The answer is, “We don’t know until we do the Inspection Service.”

[6] Before the Inspection Service is performed, the customer is asked whether he/she wishes to have it done, and is given a price for it. The price will vary according to the make and model of the vehicle. The customer is also told that, upon completion of the service, the customer will be given an exact price for the repair of the transmission.

[7] The charge for the Inspection Service includes the cost of the removal of the transmission from the vehicle, the complete dismantling of the transmission and the reinstallation of the transmission into the vehicle. This takes a considerable amount of time. Depending on the vehicle, anywhere from three to ten hours of labour are required, and in some cases, up to twelve hours. In the course of this exercise, the nature of the problem requiring repair is discovered.

[8] If the customer goes ahead with the repair, then after the transmission is fixed, the customer is given an invoice, on which the customer is billed separately for the Inspection Service and the price of the repair. The Inspection Service does not include any repair to the vehicle.

[9] MTI’s position is that the franchisees are charging the total cost of taking apart the transmission and fixing it. They are not double billing and not in breach of the Motor Vehicle Repair Act and the Consumer Protection Act. The President of MTI, Randall Moore, denies in his affidavit that the Inspection Service is an estimate. Rather, he asserts that the fees are really fees for the removal, disassembly, reassembly and reinstallation of the transmission, and the diagnosis of the transmission problem is actually done for free.

[10] The motions judge accepted Moore’s evidence. On the basis of Moore’s evidence, he interpreted s. 3(2) of the MVRA such that a “fee for an estimate” is deemed to include the cost of diagnostic time and the cost of reassembly only if the repairs are not authorized by the consumer and completed. The motions judge held at para. 71 of his reasons that the clear inference from the legislation was that if the repair is authorized by the customer a fee for an estimate shall not include the cost of diagnostic time and the cost of reassembling the vehicle. At para. 72 he noted the evidence of Mr. Moore that there was no charge for diagnosis of the problem in the inspection fee. He then held that the Inspection Service was not an estimate as contemplated by the statutes.

[11] The motions judge also held that even if the statutes were interpreted in the appellant’s favour and charging for the Inspection Service fees was the unlawful charging of an estimate fees, MTI was not unjustly enriched by its receipt of part of these fees because MTI’s agreement to receive seven per cent of the revenues from its franchisees was not illegal. In any event, the amounts charged by the franchisees for the labour to remove the transmission, was fair and thus, not a detriment to the plaintiff nor an enrichment of the franchisees.

[12] The motions judge also determined that MTI franchisees were not agents of MTI and MTI had not breached the statutes because it was not a “repairer”. He dismissed the claim for conspiracy on the basis that the damages resulting from the alleged conspiracy were not separate and distinct from those allegedly suffered as a result of the claim for breach of the statute but merged. See Normart Management Ltd. v. West Hill Redevelopment Co. (1998), 1998 CanLII 2447 (ON CA), 113 O.A.C. 375.

[13] Before us, Dean brought a motion seeking to have admitted as fresh evidence a portion of the training manual dealing with the Inspection Service that MTI provides to franchisees. It instructs franchisees to tell customers that the fee includes, among other things, a charge for diagnosis. This is inconsistent with Mr. Moore’s evidence. Furthermore, the manual also appears to instruct franchisees that if any customer specifically questions the obligation to pay for the Inspection Service on a completed repair, franchisees are to tell the customers that they do not have to pay for the Inspection Service if the repair is authorized and carried out. On its face, the training manual appears to be inconsistent with Moore’s evidence and with the position taken by MTI.

[14] During his cross-examination, Mr. Moore was asked to produce a copy of the training manual. Counsel for MTI, responding for Mr. Moore, advised that his firm had a copy of the training manual and that he had reviewed it, but there was nothing in the training manual that was relevant to the matters in issue. At another point in the cross-examination, counsel for MTI indicates that he would review the training manual and produce any parts of it relevant to the claim.

[15] After summary judgment was granted, counsel for Dean obtained a copy of the training manual from a former franchisee.

[16] Dean’s motion to have this evidence, attached as an exhibit to an affidavit, admitted as fresh evidence was initially opposed by counsel for MTI on the basis that it was not relevant and that Dean had not exercised due diligence by bringing a motion to have it produced. However, when the court pointed out to counsel for MTI that it was of the opinion he had misled his friend on the cross-examination, he apologized and explained he had not intended to do so. He also later indicated that if he was successful on the motion he would not be seeking any costs.

[17] We admit the fresh evidence. The due diligence test for the admission of fresh evidence is less significant when the evidence is in the hands of a party against whom it is tendered and there was an obligation on the party to disclose or to produce it. See: R. Clancy Heavy Equipment Sales Ltd. v. Joe Gourley Construction Ltd. (2001), A.B.C.A. 114 (Alta. C.A.).

[18] In our view, the fresh evidence calls for an explanation from MTI. Without that explanation, the motions judge, through no fault of his own, simply did not have a full and fair record sufficient to pronounce judgment on this case. The exercise of statutory interpretation is a contextual one that ought to be done with the benefit of a full and fair record. In the circumstances, without taking any position on the correctness of the motions judge’s interpretation of the legislation, we are of the opinion that the summary judgment must be set aside.

[19] Dean submits that the motions judge erred in that if MTI is not a repairer under the Act it could have committed the tort of conspiracy if it entered into an agreement with the franchisees to charge unlawful estimate fees. If the fees were unlawful, and if, as MTI submits, it was not a “repairer” under the Act, the claim for conspiracy would not merge with the claim for breach of statute. See e.g. Andersen Consulting Ltd. v. Canada (Attorney General) (2001), 150 O. A.C.177 (C.A). MTI concedes that on those assumptions, the claim for conspiracy would not merge. Thus, a genuine issue for trial exists as to whether a conspiracy between the franchisees and MTI took place. As there is a genuine issue for trial on the conspiracy claim against MTI, we need not address the issues of agency and unjust enrichment.

[20] Accordingly, the appeal is allowed and the decision of the motions judge is set aside. Costs of the motion before him are awarded to the appellant and are fixed in the amount of $40,000 all inclusive. Costs of the appeal are also to the appellant. We fix those costs in the amount of $30,000 all inclusive.

“Karen M. Weiler J.A.”

“Robert J. Sharpe J.A.”

“Paul Rouleau J.A.”