COURT FILE AND PARTIES
COURT FILE NO.: CV-12-317
DATE: 2013-08-06
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Linda Lee Johnson, Plaintiff (Respondent)
AND:
Lee Munro Automotive Ltd., Defendant (Appellant)
BEFORE: The Honourable Mr. Justice Robert J. Nightingale
COUNSEL:
Daniel J. Senior, Counsel for the Plaintiff (Respondent)
Christopher J. Bittle, Counsel for the Defendant (Appellant)
ENDORSEMENT
- The defendant Lee Munro Automotive Ltd. brings this appeal from the judgment of Deputy Judge Ditchfield of the Brantford Small Claims Court of July 4, 2012. There are only two issues on this appeal:
a. Did the Deputy Judge err in failing to consider the plaintiff’s failure to mitigate her loss?
b. Did the Deputy Judge err in her calculation of the plaintiff’s damages?
Standard of Review
A trial judge’s findings of fact are given considerable deference and an appellate court will not interfere with the trial judge’s findings of fact, inferences from such findings or of mixed fact and law unless it is satisfied that the finding was the result of a palpable and overriding error.
A palpable and overriding error is a decision that is clearly wrong as being contrary to the evidence, where there was no evidence whatsoever to support the trial judge’s conclusions or where the trial judge patently misunderstood or misapprehended the evidence. A palpable and overriding error must be plainly identifiable and an error is shown to have affected the result. [^1]
Evidence at Trial
The Plaintiff approached the Defendant’s salesperson in January 2010 to locate a used Cadillac SRX. She clearly indicated that she needed and wanted it equipped with all-wheel drive and a sunroof. The salesperson, Ms. Dickieson, located such a vehicle and requested her manager to purchase that vehicle on the dealership network.
A vehicle was obtained but unfortunately when it was sold to the Plaintiff, it was represented to her that it included all-wheel drive which it did not in fact have. The purchase price was $19,988 plus the cost of the warranty/protection plan of $2416 for a total of $22,404. There was an additional $4476.50 for the financing costs of the Plaintiff borrowing funds to purchase the vehicle. The grand total purchase price was approximately $26,964.
The evidence established and the Deputy Judge accepted that the Plaintiff immediately experienced mechanical problems with the vehicle which required significant repairs. She did not realize until the end of March 2010 that her vehicle did not come equipped with all-wheel drive. The Defendant’s salesperson’s evidence was accepted by the Deputy Judge that she determined that the vehicle that was sold to the Plaintiff was not all-wheel drive and believed that her employer did not buy the vehicle she had located for the Plaintiff but instead sold her another vehicle.
The evidence at trial was that the Plaintiff then requested that the defendant give her a different vehicle or financial compensation. The defendant’s witness Andrew Munroe admitted he did not rescind the contract and did nothing to attempt to resolve the Plaintiff’s concerns about the blatant misrepresentation. The Deputy Judge based on this evidence rightfully found that the Defendant had little or no interest in attempting to satisfy the Plaintiff’s concerns but simply walked away from her.
The evidence at trial accepted by the Deputy Judge was that after the defendant refused her repeated attempts to resolve the matter, the plaintiff then made a complaint to the Ontario Motor Vehicle Industry Council (“OMVIC”) to resolve her problem with the defendant.
In or about May 2010, the Plaintiff learned that the defendant was soon going to close its dealership. She then made further attempts to settle with the defendant which were continually rebuked by the defendant.
On this evidence, the Deputy Judge found that the obvious misrepresentation was a serious breach of a fundamental nature that entitled the plaintiff to rescind the contract and would have been entitled to return that vehicle to the defendant. She also found that it was feasible for the defendant to restore the plaintiff substantially to her pre-contractual position, i.e. to return the purchase price to the plaintiff, and that the plaintiff was entitled to treat the contract at an end.
That liability finding against the defendant has not been appealed .In my view, and especially given the blatant misrepresentation of the defendant, that disposes of the Appellant’s argument that the only damages the plaintiff suffered was the difference between the value of the Cadillac without all-wheel drive and one equipped with it; i.e., approximately $1000 to $3000 based on the evidence at trial.
The plaintiff continued to work through OMVIC to try and resolve the issue of her vehicle but by July 13, 2010 was unable to do so. This action was then commenced. The plaintiff continued to operate the vehicle until October 2010 when she traded it in for another all-wheel-drive vehicle.
Failure to Mitigate
The evidence at trial was that the plaintiff purchased a newer Acadia motor vehicle at a reputable Brantford dealership at the end of October 2010 and traded in her Cadillac at that time receiving a $12,000 allowance. The plaintiff between July and October 2010 attended at numerous car dealerships and used her best efforts to get a good price and the best trade in value for her Cadillac. One had offered her only a $10,000 trade-in value but she went to another dealer and obtained a $12,000 allowance.
The defendant’s position is that the plaintiff failed to mitigate her damages because she didn’t sell her vehicle privately shortly after the defendant refused to rescind the contract and return her full purchase price.
There was some evidence at trial from the plaintiff’s witness Dickieson that at that time the vehicle may have been still worth approximately what it was when the plaintiff acquired it. The plaintiff admitted that she did not attempt to sell the vehicle privately on her own at that time even though, generally, she could get a better price selling the vehicle on her own.
However, the evidence leaves no doubt that at that time she was attempting to have the contract rescinded and return the vehicle to the defendant because of the blatant misrepresentation of the defendant which the defendant simply continually ignored. Her evidence was that she didn’t have time then to sell the vehicle, she needed it for transportation as she worked full time and OMVIC didn’t conclude its mediation until the end of July 2010. She had bought that vehicle from the defendant dealership and said it was easier for her to trade that vehicle at a dealership and get a vehicle when winter was approaching and she did so.
There was no evidence at trial to suggest the defendant had ever offered to either buy the vehicle back at the full price or assist the plaintiff in having it sold privately at the same or close to the same price. There was no evidence as well that the defendant ever told her that she would likely be successful if she tried to sell it privately at a price of $20,000 in the spring of 2010. Lastly, there was no evidence that any private buyer likely would have purchased that vehicle at the $20,000 price at any time in 2010 before the plaintiff traded it in October.
The Deputy Judge, after submissions were made during the trial including the defendant’s argument regarding the plaintiff’s failure to mitigate, simply found that the trade-in value allowed to the plaintiff was $12,000 which amount she then deducted from the original purchase price to come up with her calculation of the plaintiff’s damages. Unfortunately, no reasons or analysis regarding the mitigation issue were provided.
This court under section 134 of the Courts of Justice Act can make any order or decision that ought to or could have been made by the Deputy Judge or order a new trial. Section 134 (6) states that a new trial shall not be directed unless some substantial wrong or miscarriage of justice has occurred.
This court is entitled to draw inferences of fact from the evidence and the parties have agreed that if the Deputy Judge fell into reviewable error by not addressing that issue, they were content and agreed that this court could and should make that determination on the evidence.
In my view, the Deputy Judge’s finding that the proper deduction to calculate the plaintiff’s damages was the plaintiff’s vehicle $12,000 trade-in value rather than a higher amount was the correct one even though no specific reasons were provided in her judgment.
The evidence described above clearly indicates that the plaintiff took reasonable steps to mitigate her loss. She retained the vehicle while she pursued her right to rescind the contract through OMVIC. Obviously, had she sold it, she could not have asked for rescission as she couldn’t return the vehicle to the defendant.
Furthermore, she had initially purchased that vehicle through a dealership and needed her vehicle until she traded it in at another dealership. The defendant led no evidence that the trade-in value allowed was unreasonably low for a reputable dealership nor any evidence that there were actual private buyers who would likely have purchased the vehicle for the suggested $20,000 amount at any time. It did nothing to notify the plaintiff that she was expected to and could likely sell that vehicle privately at the higher figure to mitigate her loss; rather it continued to ignore its clear obligations to rescind the contract and return the entire purchase price to the plaintiff to which she was entitled.
The evidence at trial clearly established that the defendant had not met the heavy onus on it to establish that the plaintiff did not take all reasonable steps to mitigate her damages. There is simply no evidence that she likely could have sold the vehicle privately to a private buyer at a much higher price than what she traded the vehicle in for in October 2010 when she purchased her new vehicle.
Accordingly, I dismiss this ground of appeal.
Calculation of damages
The trial judge calculated damages based on the purchase price including the plaintiff’s cost of financing the purchase totaling $26,964.66. She then deducted the trade-in value of $12,000 and the further sum of $2594 which represented payments that the plaintiff had made during her period of ownership. She accordingly found damages in favour of the plaintiff of $12,070.60.
On examining the bill of sale, the sale price of the vehicle was $19,988 but in addition the plaintiff paid $2019 for the warranty and $397 for the protection package effective for a 2 year period. However, the plaintiff only received the benefit of that for a period of approximately the first month that she operated the vehicle when some initial repairs were done and for some time after that before trading it in. She did not receive the benefit of most of the cost for that even though she is still paying for that cost now as the financing costs were transferred to her replacement vehicle costs. In my view, by allowing a deduction of $500 for her benefits received, $1900 as the ”unused value” of the warranty/protection plans should be added to the purchase price cost of $19,988.
The plaintiff borrowed the purchase funds at approximately 7.5% annual interest and the bill of sale indicates the total cost of borrowing over the contact was an additional $4476.50. The Deputy Judge added this amount to the overall purchase price in her damage calculation.
With all due respect to the Deputy Judge, it appears that she may have misapprehended that part of the evidence and ought to have used as the original purchase price only the actual price paid for the Cadillac including the unused value of the warranty/protection plans costs and not have included the entire cost of borrowing the funds. The Cadillac was actually sold in October 2010 while the loan which was originally to be for 260 weekly payments commencing February 2010 was then transferred to her replacement vehicle.
The Deputy Judge then deducted from the damages the $2594 in payments made by the plaintiff until October, 2010 without providing reasons for that deduction. Although these payments should not normally be deducted from the plaintiff’s damages given her obligation to pay the purchase price of approximately $22,400 anyway, the plaintiff did have some use of that vehicle for approximately nine months until it was traded in in October 2010 for which the defendant would be entitled to some credit. Offsetting an amount of $200 per month for the value of her usage of that vehicle for nine months would be fair to the defendant. [^2]
Accordingly, the appropriate calculation of the plaintiff’s damages would be as follows: a) purchase price $19,988 b) plus: unused value of warrant/protection plan costs $1900 c) less: imputed value for 9 months use $1800 d) less: trade in value received $12,000 e)Plaintiff’s total net Damages $8088
Conclusion
The appeal is accordingly allowed and the judgment of Deputy Judge Ditchfield dated July 4, 2012 is set aside. Her Order as to costs of September 12, 2012 shall remain in effect together with post judgment interest thereon.
The Defendant (Appellant) shall pay to the Plaintiff (Respondent) the sum of $8088 together with prejudgment interest thereon from July 28, 2010.
The parties made submissions on costs of the appeal at the appeal hearing and I reviewed the Appellant’s sealed written offer to settle after rendering this decision. The offer dated December 6, 2011 predated the trial and suggests that the appellant would pay only $1600 all inclusive to the respondent to settle and accordingly is of no relevance on this appeal.
The Appellant has been successful in having the Respondent’s damages reduced on this appeal but certainly not close to its requested amount of only $1500 initially suggested. Given the original conduct of the Appellant that led to this action in the first place as described above, its costs of this appeal should be restricted to its disbursements incurred only for the appeal which I fix in the amount of $1400 inclusive of H.S.T. which the Respondent plaintiff can set off and deduct from her entitlement to damages and costs against the Appellant as determined in this decision.
The Honourable Mr. Justice R.J. Nightingale
DATE: August 6, 2013
[^1]: Housen v. Nikolaisen (2002) 2002 SCC 33, 2 SCR 235.
[^2]: Vieira v. Prestige Auto Sales Inc. [2004] O.J. No.4480.