Court File No: SC-14-000003764-0000

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

ELBASSIOUNI ESSAM, ALSO KNOWN AS SAM

Plaintiff

and

WORLD FINE CARS LIMITED

Defendant

DATES HEARD: August 7, 2015, April 4, 2016, June 3, 2016

APPEARING:

M. Dahab (lawyer) for the Plaintiff

G. Campisi (lawyer) for the Defendant

REASONS FOR JUDGMENT

Deputy Judge Marr

THE CLAIM AND DEFENCE

The Plaintiff seeks $25,000.00 in damages. The Statement of Claim states that on September 14, 2013 the Plaintiff bought a 2006 BMW 750LI[^1] from the Defendant. The Statement of Claim alleges the BMW vehicle had deficiencies which the Statement of Claim states BMW Canada advised would cost $11,135.00 to repair.

The Statement of Defence “denies each and every allegation contained in the Statement of Claim.” The Statement of Defence states that when the BMW vehicle was delivered to the Plaintiff on September 11, 2013, the odometer reading was 132,448 and when the Plaintiff returned the BMW vehicle complaining of excessive oil consumption, the odometer reading was 134,312[^2]. The Statement of Defence further states the Defendant “out of goodwill” at its cost replaced the crank case and did an oil change on the BMW vehicle. The Statement of Defence states the Plaintiff brought the BMW vehicle back again with mileage of 137,790 and the Defendant told the Plaintiff to make a warranty claim through the extended warranty purchased by the Plaintiff from Nation Wide Warranty but, the Plaintiff refused.

The Statement of Defence states there were no warranties or representations given by the Defendant with respect to the BMW vehicle “other than those contained in the Vehicle Purchase Agreement”.

THE EVIDENCE

The Plaintiff testified that he is a licensed paralegal practicing in the area of personal injury and accident benefit claims.

The Plaintiff testified he attended the Defendant’s business on September 4, 2013, and met with Eric Santos who works at the Defendant. The Plaintiff testified that Eric Santos showed him the BMW vehicle and Mr. Santos told the Plaintiff that the BMW vehicle was not an “as is” vehicle and that the BMW vehicle was in “roadworthy condition”.

The Plaintiff testified that Eric Santos had a Mr. Paul Travati take the Plaintiff for a test drive of the BMW vehicle. The Plaintiff testified that Mr. Paul Travati was a sales agent of the Defendant. The Plaintiff further testified that Mr. Travati told the Plaintiff that the BMW vehicle was not being sold “as is” and that the BMW vehicle was in “roadworthy condition” and “will be sold certified and e-tested”.

The Plaintiff testified that after the road test Mr. Travati took him to see Mr. Santos who told the Plaintiff he was the manager of the Defendant’s business and that he would be taking over from Mr. Travati the sale process with the Plaintiff. The Plaintiff further testified that Mr. Santos told him as the BMW vehicle was a 2006 vehicle, the manufacturer’s warranty no longer applied to the vehicle and therefore the Defendant could sell to the Plaintiff a third party warranty for BMW vehicle.

The Plaintiff testified that before he purchase the BMW vehicle he brought to Mr. Santos’ attention that blue smoke was coming from the BMW vehicle and that there were problems with the left turn signal indicator in that it worked sometimes and sometimes not. The Plaintiff testified that Mr. Santos informed the Plaintiff that the BMW vehicle had been sitting for awhile, and the blue smoke could possibly be from residual oil, and the smoke would go away with driving. The Plaintiff testified that Mr. Santos brought out a mechanic who said that the BMW vehicle would have an emission test, and the Defendant’s mechanic assured him it was just residual oil. The Plaintiff testified that before he purchased the BMW vehicle, Mr. Santos told him that the vehicle would have safety and emission testing and if there was anything requiring repairs, the Defendant would do the repairs before delivering the BMW vehicle to the Plaintiff.

The Plaintiff testified that when he picked up the BMW vehicle he brought to Mr. Santos’ attention that there was still blue smoke coming from the BMW vehicle, although less than before. At that time the Plaintiff that testified that Mr. Santos told him all the repairs had been done, that new brake pads were installed and that everything “had been taken care of”. The Plaintiff also testified Mr. Santos said that if there were any further problems the Plaintiff should bring the BMW vehicle back to the Defendant. The Plaintiff also testified the BMW vehicle was missing its CD Magazine and Mr. Santos said the Plaintiff should drive the car for a couple of days and he would look for Magazine in the Defendant’s storage area or try to get it from the previous owner of the BMW vehicle.

The Plaintiff testified he got a call three days later from Mr. Travati to pick up the Magazine and at that time the Plaintiff testified he told Mr. Travati the blue smoke coming from the BMW vehicle was getting worse, and Mr. Travati said to speak to Mr. Santos. The Plaintiff testified that the Defendant’s mechanic said the mechanic had to order some parts, which it didn’t have in stock, and that the Plaintiff would be called when the BMW vehicle was ready for pick up.

The Plaintiff testified that the Defendant repaired the BMW vehicle at its expense and returned the vehicle to the Plaintiff on October 15^th (see also repair invoice issued to the Defendant by the Defendant’s mechanic dated October 15,2013; found at Exhibit 4, Tab 8). The Plaintiff testified that Mr. Santos said the Plaintiff needed to drive the BMW vehicle “for a longer period”. The Plaintiff testified he told the Mr. Santos he had a pre-planned trip to New York, driving 1,200-1,500 km each way. The Plaintiff testified that both the mechanic and Mr. Santos assured him it was no problem to do so as the BMW vehicle was safe and roadworthy and the repair was done, and it was just a matter of getting the BMW vehicle on the road and clearing its residual oil.

The Plaintiff testified he commenced driving to New York and after driving 300-400 km he got an error message that the BMW vehicle was low two quarts of oil. The Plaintiff testified he called Mr. Santos who told him that was impossible as they had flushed the engine of the BMW vehicle, changed the oil filter and filled the car with oil. The Plaintiff testified he added the two quarts of oil to the BMW vehicle when driving to New York.

The Plaintiff testified that 3 days later he drove back to Ontario from New York, and the BMW vehicle gave him error messages telling him not to drive faster than 80 km per hour. The Plaintiff also testified that during the trip back from New York he needed to add another two quarts of oil, and that there were problems with the turn signal indicator. The Plaintiff further testified that on the trip back from New York there were also other problems with BMW vehicle’s computer, such as its navigation screen coming on and off, and another message saying it needed another quart of oil.

Additionally, the Plaintiff testified he dropped off the BMW vehicle in November 2013 to the Defendant, and told Mr. Santos of other problems with the vehicle, including problems with the fog lights, the transmission malfunctioning when shifting gears, and problems with the vehicle’s suspension. The Plaintiff testified that when he dropped off the BMW vehicle, Mr. Santos said he would look into the problems. The Plaintiff testified that subsequently Mr. Santos called the Plaintiff and said these problems were not present when the BMW vehicle was first picked up by the Plaintiff at the time of purchase and that the Plaintiff should submit a claim under the third party warranty. The Plaintiff testified that he called the third party warranty company and was told that based on the information the Plaintiff provided, the warranty claim would be denied because the problems with the BMW vehicle were pre-existing problems.

In his testimony Eric Santos denied that at the time of purchase of the BMW vehicle by the Plaintiff the mechanic saw the BMW vehicle, and in his testimony he denied that there were problems initially with the BMW vehicle. Eric Santos further testified that the problems only arose after the Plaintiff had driven the BMW vehicle a significant distance, which was also the testimony of the mechanic utilized by the Defendant. (The mechanic was David Santos of Euro Speck Tuning Inc., whose business was at the same property as the Defendant).

At Exhibit 3, Tab 9 there was a document with respect to the history of the BMW vehicle which showed that the previous owner of the BMW vehicle had complained that the BMW vehicle needed too much oil.

The Plaintiff testified that when the problems with the BMW vehicle were not repaired by the Defendant he took the vehicle to the Mississauga BMW, which examined the vehicle on February 27, 2014 when the BMW vehicle had 137,800 km on it[^3] (see Exhibit 3 Tab 11). Mississauga BMW listed in its report (Exhibit 3 Tab 10) a number of issues with the BMW vehicle and which required repairs at a cost of $11,135.00.

The Contract

The Plaintiff and Defendant both signed a vehicle purchase agreement for the purchase of the BMW vehicle. The agreement contains inter alia the following contractual terms:

Total purchase price: $22,399.65 (which included $1300 for third party warranty, taxes and other fees);

SALES FINAL

Please review the entire contract, including all attached statements before signing. This contract is final and binding once you have signed it unless the motor vehicle failed to comply with certain legal obligations.

A box for the purchaser to initial (which was not initialed by the Plaintiff) stating:

VEHICLE SOLD “AS IS”:

The motor vehicle sold under this contract is being sold “as is” and is not represented as being in road worthy condition, mechanically sound or maintained at any guaranteed level of quality. The vehicle may not be for use as means of transportation and may require substantial repairs at the purchaser’s expense. It may not be possible to register the vehicle to be driven in its current condition.

Warranties:

I understand that there are no warranties or representations given by the dealer regarding the vehicle or effecting my rights or those of the dealer, other than those continued in this agreement or set out in any applicable legislation or manufacturer’s warranty.

Legal Acknowledgment:

I acknowledge that other than what has been disclosed on the bill of sale and all the Attached Documents that make up this entire contract, no Verbal promises have been made to me.

(The Plaintiff initialed this clause on the line for the Customer Signature)

The Mileage on the vehicle at the date of purchase was 132,448 kilometers.

ANALYSIS

The Ontario Sales of Goods Act states:

Implied conditions as to quality or fitness

15. Subject to this Act and any statute in that behalf, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows:

16. Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required so as to show that the buyer relies on the seller’s skill or judgment, and the goods are of a description that it is in the course of the seller’s business to supply (whether the seller is the manufacturer or not), there is an implied condition that the goods will be reasonably fit for such purpose, but in the case of a contract for the sale of a specified article under its patent or other trade name there is no implied condition as to its fitness for any particular purpose.

17. Where goods are bought by description from a seller who deals in goods of that description (whether the seller is the manufacturer or not), there is an implied condition that the goods will be of merchantable quality, but if the buyer has examined the goods, there is no implied condition as regards defects that such examination ought to have revealed.

18. An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade.

19. An express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith. R.S.O. 1990, c. S.1, s. 15.

The Ontario Consumer Protection Act states:

Interpretation

1. In this Act,

“consumer” means an individual acting for personal, family or household purposes and does not include a person who is acting for business purposes;

“consumer agreement” means an agreement between a supplier and a consumer in which the supplier agrees to supply goods or services for payment; (

“consumer transaction” means any act or instance of conducting business or other dealings with a consumer, including a consumer agreement;

Quality of services

9. (1) The supplier is deemed to warrant that the services supplied under a consumer agreement are of a reasonably acceptable quality.

Quality of goods

(2) The implied conditions and warranties applying to the sale of goods by virtue of the Sale of Goods Act are deemed to apply with necessary modifications to goods that are leased or traded or otherwise supplied under a consumer agreement.

Same

(3) Any term or acknowledgement, whether part of the consumer agreement or not, that purports to negate or vary any implied condition or warranty under the Sale of Goods Act or any deemed condition or warranty under this Act is void

In Collett (appeal by Szilvasy) v. Reliance Home Comfort Limited Partnership[^4] the Ontario Court of Appeal heard an appeal concerning water heater rentals. The Court of Appeal in its judgment wrote:

38 Section 9(2) of the CPA provides that the implied conditions and warranties applying to the sale of goods by virtue of the SOGA are deemed to apply, with necessary modifications, to goods that are leased or otherwise supplied under a consumer agreement.

42 In the circumstances, there can be no doubt but that Reliance knew the purpose for which Ms. Szilvasy rented the hot water heater (namely, to produce hot water for her home) and that she was relying on its skill and judgment to provide a properly functioning water heater. Accordingly, pursuant to s. 15.1, there was an implied condition that the water heater would be "reasonably fit" for the purpose of heating water in her home. The water heater in question was not reasonably fit for that purpose because it leaked.

The BMW vehicle was not sold “as is” as that box in the Contract was not initialed by the Plaintiff. The Defendant was a dealer in used cars and there was, under the Sales of Goods Act and Ontario Consumer Protection Act, an implied condition that the BMW vehicle would be of merchantable quality, and would not require substantial repairs, and would be in roadworthy condition. If the Defendant did not want these implied terms to apply, in my view it should have had the Plaintiff check the box in the Contract indicating the Plaintiff was buying the BMW vehicle “as is” and acknowledging that substantial repairs may be required.

At the time that the BMW vehicle was purchased in September 2013 its mileage was 132,448. When BMW Mississauga inspected the BMW vehicle in January 2014 the mileage was137,800 km, a difference of 5,352km. The problem with the oil crank was repaired by the Defendant on October 15, 2013, a relatively short time after the purchase of the BMW vehicle (see invoice at Exhibit 4, Tab 8).

While the vehicle had been driven a significant distance before BMW Mississauga inspected, I accept the Plaintiff’s testimony and make as a finding of fact, that from the moment the BMW vehicle was sold by the Defendant to the Plaintiff it was not operating properly and was not of merchantable quality and not reasonably fit for purpose that it was sold for: that purpose being as a roadworthy vehicle to be used as a means of transportation. It had all the defects the Plaintiff testified about and since it was not sold “as is”, the Defendant breached its contract with the Plaintiff and is liable for all the reasonable foreseeable damages arising from the breach of contract.

I do not agree with the Plaintiff’s submissions that his entire damages claim is a reasonably foreseeable consequence of the breach of contract. For example, renting a car for 33.5 months at $649.31 for a total of $21,751.89 is not a reasonably foreseeable consequence for the breach of the contract. The claim for repayment of the insurance on the BMW vehicle is not in my view a reasonable damage claim because this insurance would have had to have been paid even if there had not been a breach of contract.

The reasonable damage claim is for the cost of repairing the BMW vehicle. The Plaintiff had the BMW vehicle inspected by BMW of Mississauga which produced an estimate of repair costs (see Exhibit 3, Tab 10) of $11,135.00. This is a foreseeable damage arising from the Defendant’s breach of contract which I order the Defendant to pay to the Plaintiff.

Also, BMW of Mississauga charged the Plaintiff $471.21 for its review of the BMW vehicle, which I conclude is a foreseeable damage arising from the Defendant’s breach of contract which I order the Defendant to pay to the Plaintiff

CONCLUSION

I order the Defendant WORLD FINE CARS LIMITED to pay to the Plaintiff ELBASSIOUNI ESSAM, ALSO KNOWN AS SAM, the sum of $11,606.21 ($11,135.00 plus $471.21).

INTEREST AND COSTS

If the parties wish to make submissions on interest costs, they should serve written submissions upon each other, and file the submissions with the Court (along with proof of service) in accordance with the following:

(a) On or before November 10, 2016, the Plaintiff’s lawyer shall deliver to the Court, and to the Defendant’s lawyer, the Plaintiff’s written submissions with respect to any request for interest (both pre-judgment and post-judgment interest) and costs. Submissions shall be filed with the Court in the usual manner, but shall also be sent to me by email to smarr@lmklawyers.com;

(b) On or before November 21, 2016, the Defendant’s lawyer shall deliver to the Court, and to the Plaintiff’s lawyer, responding written submissions with respect to costs and prejudgment interest. Submissions shall be filed with the Court in the usual manner, but shall also be sent to me by email to smarr@lmklawyers.com;

(c) On or before November 29, 2016, the Plaintiff’s lawyer may deliver to the Court and to the Defendant’s lawyer a Reply, if any, to the Defendant’s submissions. Submissions shall be filed with the Court in the usual manner, but shall also be sent to me by email to smarr@lmklawyers.com;

(d) The submissions on costs may include any relevant settlement offers made, including copies of any written offers to settle; and

(e) The submissions on a claim for pre-judgment interest should include the date from when pre-judgment interest is calculated.

Released: October 18, 2016. Samuel S. Marr, Deputy Judge

[^1]: In this judgment the vehicle purchased by the Plaintiff from the Defendant will hereafter be referred to as the “BMW vehicle”.

[^2]: In the Statement of Defence it does not say if these figures are miles or kilometers, but in the Defendant’s trial evidence the figures were in kilometers.

[^3]: At the time of purchase the BMW vehicle had according the purchase agreement, mileage of 132,448 kilometers.

[^4]: [2012] O.J. No. 5555