CITATION: Louison Automotive Inc. v. Richards, 2023 ONSC 1331
COURT FILE NO.: 198/22
DATE: 20230224
ONTARIO
SUPERIOR COURT OF JUSTICE
Divisional Court
BETWEEN:
CURTIS RICHARDS
Plaintiff (Respondent)
– and –
LOUISON AUTOMOTIVE INC.
Defendant (Appellant)
Michael Odumodu, for the Respondent
Kevin Mooibroek, for the Appellant
HEARD: February 9, 2023
Schabas J.
reasons FOR JUDGMENT
Overview
[1] This is an appeal by Louison Automotive Inc. (“Louison” or the “appellant”), from a judgment in favour of Curtis Richards (“Richards” or the “respondent”) granted in the Small Claims Court in Toronto on March 3, 2022. Richards had sued Louison over his purchase of a used car. The trial judge found that Louison had misrepresented the condition of the vehicle and awarded Richards damages of $20,179.00, representing repair costs, amounts paid for financing, and mental stress.
[2] Louison argues that the trial judge erred in finding both that Louison had misrepresented the condition of the car and that its “lemon” status rendered it unfit, and in awarding damages that were excessive in light of Richards’ substantial use of the car. Louison also argues that there should not have been any damages awarded for mental stress.
[3] For the reasons that follow, the appeal on liability is dismissed. Each of the grounds of appeal raises issues of fact or of mixed fact and law. Absent a palpable and overriding error, the trial judge’s decision is entitled to deference. In my view the only palpable and overriding error was the awarding of damages for mental stress. The appeal is allowed insofar as the damages are to be reduced by $1,000.
Background
[4] In June 2017, Richards purchased a used car, a 2011 BMW X5, from Louison. The car was represented to Richards by Louison’s principal, McNeil Louison, as being in “perfect condition, it works well, it drives smooth, it’s a strong vehicle.” The Bill of Sale and “CarProof” report provided to Richards when he bought the car indicated that the car had been designated as a “Manufacturer Buyback Lemon” in February 2013 in the United States. The trial judge found that Louison did not draw Richards’ attention to, or explain, the “lemon” status.
[5] When the car was declared a “lemon” in 2013, it had been driven less than 20,000 kms. The car was then imported into Canada. Records show that it was used and serviced in Ontario over the next four years and had over 153,000 kms on the odometer when Richards purchased it.
[6] Richards provided Louison with $3,300 as a deposit on the car, but he needed financing to fund the full purchase price. Louison helped arrange financing through Priority Car Financing (“Priority”). Louison received $26,260 for the vehicle, but the total price, including financing costs of $13,945, was $41,373.80.
[7] Mechanical problems with the car became apparent as soon as Richards drove the car off the lot. Richards sought rescission of the purchase shortly thereafter, but Louison refused, saying rescission was not possible because the sale was made through Priority. Over the next 20 months, Richards had a number of repairs completed on the vehicle costing, as the trial judge found, $5,234. However, Richards also used the car, driving it approximately 40,000 kms (or about 2,000 kms per month) until February 2019, when the car was “totalled” in a snowstorm.
Issues and standard of review
[8] The appellant raises the following issues on appeal:
Whether the trial judge erred in finding that Louison misrepresented the state of the vehicle;
Whether the trial judge erred in placing weight on the “lemon” status of the vehicle;
Whether the trial judge erred in awarding damages, including damages for mental stress, when Richards had substantial use of the vehicle over the 20-month period that he possessed it.
[9] The parties agree that the standard of review on these issues, which raise questions of fact and of mixed fact and law, requires the appellant to show that the trial judge made palpable and overriding errors. A palpable error is an error “that is obvious and plain to see.” It can include findings based on no evidence or a misapprehension of evidence. An overriding error “goes to the root of the challenged finding of fact such that the fact cannot safely stand in the face of that error”: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 SCR 235 at paras. 296-297.
[10] This is a high standard. As the Supreme Court of Canada has observed in H.L. v. Canada (Attorney General), 2005 SCC 25, [2005] 1 S.C.R. 401, at para. 70:
The “palpable and overriding error” standard, apart from its resonance, nevertheless helps to emphasize that one must be able to “put one’s finger on” the crucial flaw, fallacy or mistake. In the words of Vancise J.A., “[t]he appellate court must be certain that the trial judge erred and must be able to identify with certainty the critical error.”
Misrepresentation and the “lemon” status
[11] The first two issues raised by the appellant are related and can be addressed together.
[12] Louison represented to Richards that the car was in good condition and in a good state of repair. However, the evidence of Richards, accepted by the trial judge, was that the car manifested a number of problems immediately after Richards drove it off the lot. These included defective sensors, concerns about emissions, leaking airbags, and broken lights and wipers. The car required a number of repairs to solve these defects.
[13] The appellant does not dispute that Richards’ attention was not drawn to the fact that the vehicle had been designated a “Manufacturer Buyback Lemon”. However, he argues, that fact was contained in the Bill of Sale and on the CarProof document. The appellant points out that Richards initialed the reference to the “lemon” status on the Bill of Sale. On the other hand, Richards’ evidence was that he had a limited education, and was unfamiliar with the term “lemon” and what it might mean about a vehicle.
[14] Louison offered no evidence to support his representation that the car was in a good state of repair other than to note that the car, despite its designation as a “lemon” several years earlier, had subsequently been sold to others and driven over 150,000 kms. He gave no evidence about why the car had been declared a “lemon” in 2013 or what repairs had been made to the car to address issues that had led to the “lemon” designation, or about any other issues with the vehicle that might have arisen in the intervening four years before Richards purchased the vehicle.
[15] On the other hand, despite the defects in the vehicle, Richards was able to use the car extensively over the 20 months he possessed it. Richards also delayed making many of the repairs. The first repair invoice was dated December 2017, six months after Richards purchased the vehicle. Richards said that, nevertheless, he was not able to use the vehicle as he had intended, and explained that he delayed repairs because he could not afford to make them all at once.
[16] The trial judge observed that a vehicle found to be a “buyback lemon” was a “huge strike” against it. He noted that under American law “it had been turned back” and “was not fit for the purpose, and yet here it was on a lot in Ontario being sold to an unassuming purchaser.” The failure to draw Richards’ attention to this fact was “significant”, as the trial judge pointed out, because the car was not sold “as is” but rather with a representation that the vehicle was in a good state of repair.
[17] The trial judge’s conclusions on the issue of liability are all grounded in the evidence and reveal no palpable and overriding error. These conclusions did not turn on a finding that the car had been designated a “lemon” years ago. Rather, the “lemon” status was just one factor in the trial judge’s determination that Louison misrepresented the condition of the vehicle as being in a good state of repair when it was sold to Richards.
Damages
[18] The trial judge awarded Richards his financing costs of $13,945 and the repair costs of $5,234. The effect of this award, the appellant argues, is that Richards effectively had use of the vehicle for 20 months for free. Louison submits the trial judge ought to have reduced the damages to reflect that Richards used the vehicle extensively, driving it approximately 40,000 kms.
[19] In Wu v. Volvo, 2002 34301 (Ont. Sup. Ct.), a purchaser of a “lemon” had her damages reduced to reflect her use of the car over a two-year period. This was fixed at 20 cents per kilometre or, in that case, about $9,000. Adopting a similar approach here, the appellant argues that a similar amount of $8,000 or $9,000 should be deducted from the financing costs to reflect Richards’ use of this vehicle.
[20] In my view the trial judge made no palpable and overriding error in not deducting any amount from the financing costs. First, the financing costs themselves were damages that could be awarded after a finding that Richards did not receive the vehicle in a good state of repair, as was represented to him. While it was open to the trial judge to make a deduction based on Richards’ use of the car, he had limited evidence on which to do so. Richards testified that he was not able to use the car as he had hoped or intended, but on the other hand, he did make considerable use of the car. This was an issue that could have been explored in the appellant’s cross-examination of Richards. Additionally, the $3300 Richards paid Louison by way of a deposit was not part of the damages award.
[21] The trial judge also awarded $1,000 for mental stress, which the appellant submits was a palpable and overriding error. On this issue I agree with the appellant. Such awards are rare and must be supported by evidence. There was no evidence of the kind found in the case relied upon by the trial judge, Asselin v. Norm’s Northern Auto Body and Paint, 2014 60376 (Sm. Cl. Ct.), in which medical evidence was presented. To the extent the trial judge grounded his award for mental stress in “the frustration involved in dealing with a vehicle for a year-and-a-half that was a lemon”, this is contrary to the holding in Fidler v. Sun Life Assurance Co. of Canada, 2006 SCC 30, [2006] 2 S.C.R. 3, at para. 45. The damages should therefore be reduced accordingly.
Conclusion
[22] The appeal on liability is dismissed. The appeal on damages is allowed and shall be reduced by $1,000.
[23] As I was advised that offers to settle are relevant to costs, the parties shall provide written submissions on costs not exceeding two pages, double-spaced, to me by March 10, 2023.
Paul B. Schabas J.
Released: February 24, 2023
CITATION: Louison Automotive Inc. v. Richards, 2023 ONSC 1331
COURT FILE NO.: 198/22
DATE: 20230224
ONTARIO
SUPERIOR COURT OF JUSTICE
Divisional Court
CURTIS RICHARDS
Plaintiff (Respondent)
– and –
LOUISON AUTOMOTIVE INC.
Defendant (Appellant)
REASONS FOR JUDGMENT
Schabas J.
Released: February 24, 2023