COURT FILE NO.: CV-19-2330
DATE: 2022-11-17
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
PETER BUTLER Plaintiff
– and –
KIA CANADA INC. and JAMES CAMPBELL SERVICES LTD. Defendants
Counsel: Michael R. Switzer, for the Plaintiff Mark Repath and Megan Keenberg, for the Defendant, Kia Canada Inc.
HEARD: June 2 and 3rd, 2022 via zoom
LEIBOVICH J.
OVERVIEW
[1] The plaintiff, Peter Butler, has brought an action against Kia Canada Inc. for breach of contract. He bought a Kia Sorento in 2016 in the amount of $57,085.30. The plaintiff sold the car in 2022 after driving it for 170,000 km for $10,000. The plaintiff submits that some of the car’s critical features, such as the front passenger seat warmer and the adaptive cruise control, did not work properly. The plaintiff submits that there was breach of contract as the car was supposed to be delivered defect free and there was a breach of the Sale of Goods Act as the car was not of merchantable quality and was not reasonably fit for the purpose for which it was bought. The plaintiff seeks that the contract be enforced or rescinded. He seeks consequential damages, aggravating damages and punitive damages. The defendant submits that there was no breach of contract, any defects were covered by the car’s warranty. The defendant fixed the problems and would have fixed them earlier if the plaintiff had accepted their offer to have Kia Canada inspect the car earlier. In addition, there was no breach of the Sale of Goods Act as the car was clearly of merchantable quality as evidenced by the fact that the plaintiff drove it for 170,000 km.
[2] Mr. Butler filed two affidavits and was cross-examined at trial. He also filed an affidavit from his wife who was also cross-examined at trial. The defendant filed affidavits from Mr. Alexander, who serviced the Sorento at Bessada Kia, Mr. Papandrea, who was Bessada’s General Manager, Mr. Sukraj, a technician from Kia Canada who repaired the Sorento in January 2021 and Mr. Dunbar, a paralegal at Kia Canada. None of the defendant’s witnesses were cross-examined. The plaintiff took issue with portions of the witnesses’ affidavits, but were content that they be admitted and that I receive them and rule on their relevance afterwards.
ISSUES
[3] This case raises three issues:
a) Was there a breach of the sales contract between the parties?
b) Was there a breach of the Sale of Goods Act?; and
c) If there was a breach, what are the damages?
DETERMINATION OF ISSUES
[4] My answer, in brief, to each of the above questions is as follows:
a) There was no breach of the sales contract. The plaintiff’s sole remedy was the sales warranty, which applied to the defects at issue.
b) There was no breach of the Sale of Goods Act. The plaintiff’s car was reasonably fit for the purpose for which it was purchased, and it was of merchantable quality.
c) While not strictly necessary to address given my answer to questions 1 and 2, I note the following: 1) the test for rescission, if there was a breach, has not been met; 2) no evidence was led that the plaintiff suffered a loss when he sold the car; 3) I do not accept the evidence of the alleged loss suffered from lost working hours; 4) with respect to aggravating damages, the evidence of mental distress is weak; and 5) in the event that there was a breach, there is no evidence to support the plaintiff’s assertion that punitive damages is warranted.
FACTS
The purchase of the Sorento and the defects
[5] The plaintiff, Mr. Butler, is a sophisticated car owner. He always wanted to be a mechanic and he has worked on cars for over 50 years. On January 15, 2016, he bought a new 2016 Kia Sorento SX plus [“Sorento”] for $57,085.34, including HST. It had over 118 km on it. It was the 24th car that he had bought. He swore in his affidavit that he bought the car in part because of its comprehensive warranties.
[6] The warranty provided “Comprehensive Warranty Coverage” for 60 months or 100,000 km, whichever comes first, but there are certain exceptions, terms and conditions set out in the Warranty. The warranty period was as follows:
The New Vehicle Limited Warranty - Comprising of Comprehensive Warranty Coverage, Power Train Coverage and Adjustment Coverage - is divided into three coverage periods. Each coverage period begins on the date of retail delivery to the first purchaser or the date the Kia vehicle is first placed into service. Any remaining portion of the warranty is fully transferable to subsequent owners
[7] Under the ‘Limited Liability’ subsection of the Terms and Conditions, the warranty states:
Except as expressly provided for in this manual, the performance of required repairs or corrections as determined by Kia Canada in its absolute discretion is the sole and exclusive remedy available to you. Kia Canada shall not be liable for any indirect, special, reliance, consequential, economic or punitive losses or damages of any kind whatsoever including but not limited to losses, costs or expenses which may arise as a result of loss of use of the Kia vehicle, car rental expenses, additional travel costs, loss of wages, loss of profits or opportunities, loss of time and convenience.
[8] In the “What is Covered” section, the warranty states:
Subject to the terms and conditions set out below, Kia warrants that under the New Vehicle Limited Warranty your new Kia Vehicle will be free from defects in material and/or workmanship under normal use, operation and maintenance during the applicable warranty coverage period(s) described below. Where required, Kia will repair or correct at no charge to you any covered defect in your new Kia Vehicle using new or approved remanufactured parts.
[9] Under the ‘What Is Not Covered’ section of the New Vehicle Limited Warranty, is a subsection called ‘Extra Expenses and Damages’ which states:
Incidental costs or consequential damages such as loss of vehicle use, inconvenience, expenses for gasoline, telephone, lodging, economic loss or other incidental, special, consequential or exemplary damages or damage to personal and other properties are not covered by this warranty.
[10] Mr. Butler stated that he expected the warranty to be used for cost-free repairs for defects that arose after taking delivery of the car. He “did not expect that the warranty was to repair defects that already existed at the time of delivery as I expected that the automobile would be free of defects and operating properly when it was delivered to me.”
[11] Mr. Butler stated that after taking delivery of the car he found four major defects:
a) The front passenger seat warmer was defective in that it would activate but then deactivate after a period of time. If he turned the car off and then on the seat warmer would work until it would deactivate;
b) The adaptive cruise control system was defective in that it required him to put his foot on the brake to disengage the system instead of automatically adjusting to the speed of the car in front of him and it would not deactivate by pressing cancel. It was necessary to park the car and then turn it off and on again until the system reset at which point the system would only activate for a short period of time until the defect would repeat;
c) The computer interface screen was defective; and
d) The blind spot monitoring system was defective.
[12] The computer interface screen and the blind spot monitoring system were fixed by Kia. However, Mr. Butler claimed that when these defects were fixed, a new defect was created as the “automatic unlocking of the doors could not be controlled and did not function.” I will discuss the automatic door locks later in this section. Mr. Alexander provided an affidavit on behalf of the defendant. He worked at Bessada Kia and was able to speak to the work done on the car. He was not cross-examined at trial. With respect to the computer interface screen and the blind spot, Mr. Alexander stated:
I do not recall Mr. Butler ever advising me that there were issues with the Computer Interface Screen of the Vehicle or any unlocking feature of the Vehicle. Such reports are not recorded in any of the Work Orders/Invoices or Time Tickets attached to my affidavit either. As these would have been separate issues to the passenger heated seat and cruise control, I would have recorded and inspected such reports had they been mentioned to me.
I do not recall Mr. Butler ever advising me that there were issues with the Blind Spot Monitoring System (“BSMS”). I have reviewed Exhibits “A” and “I” of my affidavit and see that at the June 2016 service visit, Bessada Kia (I did not do this service personally) discovered there had been an impact to the Vehicle that required the BSMS to be recalibrated. Beyond June 2016, I started personally dealing with Mr. Butler. Again, he never advised me that he was experiencing a defect with the BSMS.
[13] Mr. Butler provided a second affidavit where he commented on different parts of Mr. Alexander’s affidavit. But he had no comment with respect to the above paragraph. However, based on the concerns I have with Mr. Butler’s testimony, which I will set out later in these reasons, I am not satisfied that Mr. Butler has established that the computer interface or the blind spot monitor were ever defective. Regardless, there appears to be no dispute that the main focus of Mr. Butler’s complaints was the defective seat warmer, the cruise control and the door locks.
[14] Mr. Butler stated in his affidavit that in the winter of 2020/2021 Kia Canada was able to repair the adaptive cruise control. He stated in his affidavit that when Kia Canada effected these repairs, they overtightened the lug nuts on each wheel causing some damage. In addition, the guide bolts to the brake system components were overtightened. The defendant disputes these claims. At the end of the trial, given that the car has now been sold, Mr. Butler is no longer claiming damages from this overtightening. Therefore, I will not summarize all the evidence relating to this issue. This does not mean that I am accepting Mr. Butler’s complaints about the overtightening.
The car seat warmer and the cruise control
[15] Mr. Butler stated in his affidavit that the adaptive cruise control system was defective. The principal complaint appears to be that the cancel button would not turn off the cruise control and Mr. Butler was required to press the brake to deactivate it. He also stated in his affidavit that the cruise control system would not automatically adjust its speed to the car in front of it. Mr. Butler attached a number of videos of him in the car with the cruise control, in essence showing that the cancel button did not work. He referred to the car at various times as “garbage” and “a piece of crap”. He said in the video that he wanted a car that was safe. There has been no evidence led that the car was not safe.
[16] Mr. Butler stated in his affidavit that the front passenger seat warmer was defective. It would activate for a short period of time and then deactivate. It was then necessary to park the automobile and turn the automobile off and on again until the system reset and then the seat warmer activated again for a short period of time.
[17] Jim Callaghan admitted in his examination, which was read in, that the seat warmer and the cruise control were defective.
[18] Mr. Butler attended at Bessada Kia approximately 16 times from when he took delivery of the car until June 2017. Eight of those visits are documented, but it was admitted that Mr. Butler could have attended an additional 8 times. The last work order was dated June 16, 2017. Mr. Butler agreed in cross-examination that he did not attend after June 2017.
[19] Mr. Alexander stated in his affidavit that the two primary issues for Mr. Butler was the cruise control and the front passenger heated seat. Mr. Alexander stated that:
Neither of these issues posed safety concerns that would prevent Mr. Butler from safely operating the Vehicle. The Vehicle would pass a safety certification test regardless of these concerns as they are not part of the test to determine whether a vehicle is roadworthy.
[20] Mr. Alexander said that neither one of these issues were common issues with the Sorentos or other Kia models. The difficulty was that these issues were intermittent, and they did not always manifest themselves upon inspection. When they did, Mr. Alexander was able to resolve the issue. A review of the work orders and invoices from Bessada Kia shows the following:
a) June 2016 – This was Mr. Butler’s first visit. Mr. Butler complained about the front passenger seat warmer. The problem did not replicate at Bessada. There was no complaint about the cruise control system;
b) October 2016 - Mr. Butler complained about the front passenger seat warmer. The problem did not replicate at Bessada. Mr. Butler complained about the cruise control. A part was ordered, and it was installed a week later;
c) November 2016 - Bessada Kia was able to replicate the reported faults with the passenger heated seat and cruise control systems. Parts were replaced and both issues appeared to be fixed;
d) December 2016 - Mr. Butler reported an issue with only the passenger heated seat. Bessada Kia swapped the passenger heated seat control module. The passenger heated seat was working when it was returned to Mr. Butler;
e) January 2017 - Mr. Butler reported issues with the passenger heated seat and cruise control again. In January 2017, Bessada Kia first swapped parts but the problems persisted. They then replaced a gateway and heater control switch, but again the problems persisted. They also switched the entire passenger heated seat with a seat from Mr. Alexander’s boos’ Sorento, which they believed fixed the problem until they were subsequently told by Mr. Butler that the problem re-emerged;
f) February 2017 – Bessada Kia was not able to replicate the concerns Mr. Butler was reporting about the passenger heated seat; and
g) June 2017 – Bessada Kia found the intermittent defects with the passenger heated seat and cruise control to be replicating. They removed the car’s instrument cluster and applied dielectric solution to the connection. Bessada Kia did not hear from Mr. Butler about any recurring issues with the passenger heated seat or cruise control systems for over three (3) months after this inspection/repair. In the year Mr. Alexander had been working on the car, this was the longest he had gone without hearing from Mr. Butler about any issues with these systems.
[21] Mr. Papandrea was the General Sales manager at Bessada Kia. He discussed with Mr. Butler possible trade in scenarios. None of those offers were agreeable to Mr. Butler. He stated that by early 2017 the Sorento had over 42,000 km. In Mr. Papandrea’s experience that meant that the car had been used significantly more than the average car.
[22] Mr. Butler, in the summer of 2018, called Mr. Alexander at Kia Bessada. The conversation took place in May or June 2018. Unbeknownst to Mr. Alexander Mr. Butler recorded this conversation. During the conversation, Mr. Alexander mentioned three times that he wanted to look at the car’s gauge cluster (also known as an instrument cluster) because he believed that it was the cluster that was causing the problems. Mr. Alexander said:
It’s called a gateway. That was going to be my next move, was to take it out of another vehicle, put it in yours and drive it with that one, even though the mileage would be different, to see if it was misbehaving with that.
[23] Mr. Butler never returned the car to Bessada Kia to allow them an opportunity to look at the gauge cluster.
[24] Mr. Butler explained in his affidavit that he started the action because he believed that the defects could never be fixed. He swore:
Eventually, Tony Alexander represented to me that all of the parts related to the defects had been changed with new parts except for a computer which could not be changed as it was not currently available and there was no date by which it was expected to be available. My impression at that time was that the automobile defects could never be fixed. Therefore, I commenced the within action when Kia refused to replace the automobile with one that did not have the unrepairable defects.
[25] Mr. Butler testified that it was his impression after speaking to Mr. Alexander in June 2017 that he had replaced everything he could replace. Mr. Butler agreed in cross-examination that this impression never changed. However, Mr. Butler agreed in cross-examination that during the taped summer 2018 conversation with Mr. Alexander, Mr. Alexander told him that he was hopeful that changing the cluster would fix the problem. Mr. Butler agreed that at that point he was made aware that all the parts had not been changed. He was contemplating having this done but at that point in time he lived 300 km away.
[26] Mr. Butler stated in para. 24 of his affidavit that he took the car to Carleton Kia but they said that the car was no longer under warranty. He was cross-examined on this at trial. He said that he took the car to Carleton Kia shortly after he spoke with Mr. Alexander in summer of 2018. He agreed that it would have been a few months after that conversation. On December 10, 2018 Mr. Butler was examined on this point. He gave the following questions and answers:
Q. Okay. After June 2017, you have not taken the vehicle back to Bessada Kia, is that right?
A. No. No, I haven't.
Q. And the last time the vehicle was at Durham Kia was the service visit we were looking at before, February 23, 2016?
A. Correct.
Q. And you've never personally taken the vehicle to Kia Canada Inc.'s Head Office?
A. No.
Q. Okay. Other than the service and maintenance we've been talking about you doing yourself, have you taken the vehicle to any other dealer or independent garage or anything?
A. No.
[27] Mr. Butler testified that he must have gone to Carleton Kia after litigation started but he does not remember it that way. He agreed that there was no documentation with respect to this visit and that they never actually worked on the car, they just said it was not covered by the warranty.
[28] Mr. Butler testified that the front passenger seat warmer was critical for his wife as she had chronic back problems. He stated that he told this to Mr. Alexander. Mr. Alexander disagreed. Mrs. Butler provided an affidavit on this issue and was cross-examined at trial. She wrote in her affidavit that:
Travelling by automobile without functioning seat pan and seat back warming systems exacerbates the extreme pain I experience due to the movement of the automobile and the uneven surfaces that automobiles travel upon.
[29] During cross-examination Mrs. Butler testified that despite being in extreme pain because of the intermittent functioning of the seat warmer, she travelled over 100,000 km in the passenger seat. The driver seat’s car warmer worked fine but she only sat in the driver’s seat 15% of the time. She found it more relaxing when Mr. Butler drove.
[30] There is no evidence that Kia was ever told of the importance of the passenger car seat warmer or the adaptive cruise control when the car was purchased.
[31] It appeared that Mr. Butler had mistakenly believed that Kia Canada had, in addition to the efforts made by Bessada Kia, inspected and failed to fix the car. After litigation was commenced, the Sorento was sent to Kia Canada for inspection.
[32] Mr. Sikraj was the corporate automotive technician at Kia Canada. He personally inspected, diagnosed and serviced the Sorento in the winter of 2021. This was the first time the car had been inspected by Kia Canada. He determined that the gauge cluster was the most likely cause of the cruise control and passenger seat warmer. He did not test the unlocking car door system as he did not know that was an issue. He stated after he conducted the repairs:
I then test-drove the Vehicle for over 450 kilometers in the next week with no recurrence of any of the issues alleged in the Statement of Claim. Once I was satisfied that the problems were not recurring, I reported these results to KCI’s in-house legal team and KCI’s Senior Manager of Warranty, Steve Knopf, on February 4, 2021.
[33] Afterwards, Mr. Sikraj requested and arranged for others to test drive the car. None of them reported any concerns that the defects had returned. The car had 157,461 km on it upon inspection. They test drove it for a period of 1,134 km.
[34] In his affidavit Mr. Butler maintained that the car seat warmer was never fixed. He stated:
During that time, Kia was able to repair the adaptive cruise control system – a repair that Tony Alexander previously said would not be possible – but was unable to repair any other defects.
[35] However, Mr. Butler’s amended statement of claim states that it was fixed and only the unlocking system was not:
In 2021, an arrangement was made between the parties whereby the automobile would be transported to the head office of Kia where repairs would be attempted once again. After being in the possession of Kia for several months, repairs were successfully made to the defects in the automobile described hereinbefore, with the exception for the automatic unlocking system on the doors of the automobile which Kia claimed to have repaired but which never worked from the time that the automobile was delivered to the plaintiff after the repairs were completed. [emphasis added]
[36] Mr. Alexander stated in his affidavit that he never told Mr. Butler that it would be impossible to fix the cruise control:
At no point did I ever express to Mr. Butler, or believe, that Bessada Kia was unable or unwilling to resolve the issues he was reporting with the Vehicle. I never told him that we were out of options, because that wasn’t true. We were making progress on our investigations and I thought we had identified a route to resolution.
The unlocking system
[37] Mr. Butler claimed that when fixing a defect Bessada Kia created a new defect, as the “automatic unlocking of the doors could not be controlled and did not function.” Mr. Butler testified that when he initially purchased the car, when he put the car into park, all the doors would automatically unlock. He testified that this feature ceased to operate. He was now required to press the unlock button in order to automatically unlock all the doors or use the key fob.
[38] Mr. Dunbar stated in his affidavit that if you opened the driver’s door, all the other doors would unlock automatically. In his second affidavit Mr. Butler said that this was incorrect. Mr. Butler agreed during his examination for discovery that opening the driver door did unlock all the doors, as can be seen from the following exchange:
Q. Audibly. You do not hear the locks disengaging when you put it into park. Is that correct?
A. Correct.
Q. But if you were to put your hand on the door handle and open, they would automatically all 4 unlock in the vehicle, correct?
A. Correct.
Q. You don’t have to even press the automatic unlock button to open your driver’s side door?
A. Correct.
[39] However, at trial, he testified that this was incorrect and opening the driver door would not unlock all the doors. However, the passenger could unlock all the doors by opening the door.
[40] Mr. Butler found another similar Kia Sorento that had the missing unlocking feature proving that his car was defective. Mr. Sikraj in his affidavit, disagreed:
I understand that Mr. Butler found a 2016 Kia Sorento bearing VIN# 5XYPKDA58GG024271 (the “Other Sorento”) that he states was similar to the Vehicle and found an automatic door unlocking mechanism option that could be selected within the gauge cluster in the Other Sorento.
Using KCI’s internal database, I searched the Other Sorento’s VIN# to get information on when it was manufactured. KCI’s records show that the Other Sorento was manufactured on February 12, 2015.
I used the same database and searched for the Vehicle's VIN#. KCI's records show that the Vehicle was manufactured over nine (9) months after the Other Sorento, on November 25, 2015. A copy of my search is attached to my affidavit as Exhibit "M".
I therefore disagree with Mr. Butler's statement at paragraph 23 of his affidavit that the Other Sorento was manufactured: "near the same time that the [Vehicle] was manufactured". I also disagree with his conclusion that having the door unlock feature present on the Other Sorento is proof that the same unlock feature was present on the Vehicle as in my experience, a nine (9) month gap between the manufactured date of two Kia vehicles of the same model-year and trim level can lead to variability in minor features, such as an automatic door unlocking system.
Purported loss
[41] Mr. Butler stated that the passenger seat warmer and the automatic unlocking system were never fixed. In his affidavit he stated that he was never able to use the car for the purpose for which he intended. He wrote:
I have never been able to use the automobile for the purpose for which I intended to use it:
(a) I have not been able to loan the automobile to my family members to provide them with a safe automobile to operate because safety features of the automobile are defective.
(b) I have never been able to use the convenience features that are defective.
(c) I have never been able to use the comfort features that are defective.
(d) I have never been able to rely on the safety features that are defective.
In addition, I had to purchase, insure, maintain, and repair another automobile to fulfill the role that the automobile was to fulfill within our family.
I have never been able to have the piece of mind and satisfaction that would have come from receiving the automobile that I contracted to purchase.
[42] Mr. Butler was cross-examined on the above paragraph. He said, contrary to paragraph (a) that he would regularly loan the car to his family. He would regularly loan it to his wife and his daughters would also drive it. In the recording with Mr. Alexander, Mr. Butler referenced the fact that his wife and daughter used the car.
[43] Mr. Butler described in his affidavit the income he estimated he lost from missing work because he was taking his car in to be fixed:
While I was self-employed from January 15th, 2016 (being the date I took delivery of the automobile) until I retired from self-employment on December 31st, 2017, I estimate that I missed 50 hours of work because of having to drive the automobile to and from repair visits, waiting at the Kia repair facility, attending to rental automobiles, transferring personal belongings, making additional visits to fuelling stations, and reprogramming the automobile after it had been in for service for which I would have been paid $100.00 per hour. There are no fixed or variable expenses that I would have incurred had I worked the missed hours. Therefore, I estimate that I have lost $5,000.00 in self-employment income for said hours of work lost.
[44] Mr. Butler was cross-examined on the above passage. He testified that his time was worth $100 an hour and spent approximately 50 hours, primarily in 2016, taking the car back and forth from Bessada Kia. He agreed that in 2016 he only had $627 in income and that he did not bill any clients in 2016. He still maintained that his time was worth $100 an hour.
[45] Shortly before the start of this trial, Mr. Butler sold the Sorento. He was able to obtain $10,000 for the car. He stated in his supplementary affidavit that his practice was to keep a car for ten years. He expected that after ten years he would be able to sell the car for $15,000 because he keeps his cars in excellent condition. He stated that:
Therefore, the cost of ownership with respect to the capital cost of the automobile in question would have been $42,085.34 (i.e. the purchase price new less then sale price used) or $4,208.53 per year.
Now, in light of the condition of the automobile in question related to its history of defects, current defects, and concerns with respect to the over torquing of bolts related to the wheels and braking system, I have had to sell the automobile in question three years and eight months earlier that I otherwise would have and have had to sell if for $5,000.00 less than I would have.
[46] Mr. Butler was cross-examined on this paragraph, specifically his practice to keep his car for ten years. He testified that it was his practice, when possible. He was cross-examined on the fact that he told the Kia salesmen in an email that his practice was to keep his car for 6-8 years. He testified that it was just an email to a salesman, and it was irrelevant what he told him.
The trade-in program
[47] A portion of Mr. Callaghan’s examination for discovery was read in with respect to the trade-in program. He stated:
Q. Do you know why Kia Canada Inc. hasn't simply exchanged this defective unit for a unit that's not defective? Has that been considered?
A. We did have a discussion with one of the dealerships with regards to what we call a trade assist, where we look at the value of the vehicle and see if there's an ability to swap the customer into a different vehicle, yes.
Q. All right. Tell me about that discussion.
A. So, the dealership will determine the value of the vehicle towards the purchase of a replacement vehicle and let us know what that gap is, so to speak.
Q. In other words, the gap between what the vehicle would be worth as a trade in, if it wasn't defective.
A. Right.
Q. Versus what it's worth as a trade in with it being defective?
A. It's reliant on the dealerships to value the vehicle based on mileage, based on current situations.
Q. Okay. So, there was a discussion?
A. Yes.
Q. And what do you know about that discussion?
A. The number that was provided to us by the dealership was in excess of $20,000 and it didn't meet the requirements of a trade assist as per our process, internal processes.
Q. Why didn't it meet the criteria? This is policy? This is a written policy that's called the trade assist policy, is that what you're referring to?
A. Yes.
Q. Okay. Do you remember why it didn't meet that policy?
A. Probably because the value was in excess of what the program allows.
LAW AND ANALYSIS
Preliminary issue
[48] The plaintiff has objected to certain portions of the affidavits filed by the defendant’s witnesses. The plaintiff was content that the affidavits be admitted into evidence, but he submits that certain paragraphs should be ignored or given no weight. The parties were content to argue their position with respect to the impugned paragraphs and for me to address the issue in these reasons. The plaintiff, in his written outline, referenced the paragraphs that he objected to.
[49] The plaintiff has the following complaints:
Some paragraphs contain irrelevant information or speculation. The plaintiff in his written outline did not provide any submissions or details with respect to this complaint;
Some paragraphs are argument. The plaintiff in his written outline did not provide any submissions or details with respect to this complaint;
Some paragraphs contain opinion evidence. The plaintiff in his written outline did not provide any submissions or details with respect to this complaint;
Some paragraphs breach the settlement privilege rule;
Some paragraphs breach Rule 31.09(3)(b); and
Some paragraphs are related to documents that were not provided from the affidavit of documents and supplemental affidavit of documents of the defendant and ought not to be considered.
[50] A number of paragraphs reference the over-torquing and lug nut issue. Since that issue is no longer being pursued, the referencing paragraphs will not be considered.
Mr. Alexander’s affidavit
[51] The plaintiff complains that paragraphs 2, 18 and 45 are irrelevant. Paragraph 2 describes who Mr. Alexander works for, paragraph 18 describes the other Kia dealerships that are closer to Mr. Butler’s cottage than Bessada Kia and paragraph 45 states that the defects at issue pose no safety concerns. I see nothing wrong with the information provided. The fact that Mr. Butler continued to attend Bessada Kia despite their being closer ones to his cottage could potentially support the inference that he was happy with their service. The fact that the defects at issue pose no safety concerns is certainly relevant to all the issues at trial.
Mr. Papandrea’s affidavit
[52] The plaintiff complains that paragraphs 4-7, 17 and 18 are irrelevant. They are not. Paragraphs 4-7 describe Bessada’s trade-in program which provides background to Bessada Kia’s offers to arrange a trade in with Mr. Butler. Paragraphs 17 and 18 describe the amount of kilometres on Mr. Butler’s Sorento at the time. In my view, the evidence of Mr. Butler’s usage of the car is highly relevant to the issues at trial.
Mr. Sukraj’s affidavit
[53] The plaintiff complains that paragraphs 8 and 27 are irrelevant. Paragraph 8 describes the KTAC message system. I find nothing offensive about the paragraph.
[54] The plaintiff complains that paragraphs 6 and 63 contain speculation. Paragraph 6 explains why Mr. Sukraj believed that no prior inspection had been done. It is not speculation. Paragraph 63 explains how the new odometer worked. It is not speculation.
[55] The plaintiff complains that paragraph 68 is argument. I would not describe it as such. Rather, the witness is simply explaining why, in his view, Mr. Butler’s car never had the unlock mechanism at issue.
[56] The plaintiff submits that paragraphs 66, 67, and 68 should not be considered due to the consequences of Rule 31.09(3)(b). The rule states:
31.09 (1) Where a party has been examined for discovery or a person has been examined for discovery on behalf or in place of, or in addition to the party, and the party subsequently discovers that the answer to a question on the examination,
(a) was incorrect or incomplete when made; or
(b) is no longer correct and complete, the party shall forthwith provide the information in writing to every other party. R.R.O. 1990, Reg. 194, r. 31.09 (1).
(3) Where a party has failed to comply with subrule (1) or a requirement under clause (2) (b), and the information subsequently discovered is,
(a) favourable to the party’s case, the party may not introduce the information at the trial, except with leave of the trial judge; or
(b) not favourable to the party’s case, the court may make such order as is just. R.R.O. 1990, Reg. 194, r. 31.09 (3).
[57] I have read the relevant portions of the witness’ examination for discovery. I do not see the referenced paragraphs as violating the rule. If they do, I grant leave for the evidence to be admitted. The plaintiff states that he was ambushed by the affidavit. I disagree. The plaintiff has not even sought to cross-examine the witness. I see no unfairness.
[58] The plaintiff complains that exhibits K, L, and M are documents not found in the defendant’s affidavit of documents. They were not. However, they were in response to the plaintiff’s exhibits M-U which were not in his affidavit of documents. I see no unfairness in considering the exhibits. Again, the plaintiff has chosen not to cross-examine the witness on the issues.
[59] The plaintiff complains that paragraphs 6, 7, 8, 9, 10, 11, 12, 13, 14, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 62, 65, 66, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, and 84 of the affidavit contain irrelevant evidence.
[60] Paragraphs 6-11 set out the procedural history of the case. It is not irrelevant, although the information could have otherwise been gleaned from the case record. Paragraphs 12-14 set out who KCI is. It is not irrelevant. Paragraphs 20-44 describe the warranty program and the warranty that applies to Mr. Butler’s car. I appreciate it is Mr. Butler’s evidence that the warranty does not apply to this case but clearly the defendant is allowed to lead evidence about the warranty that they say applies.
[61] The plaintiff complains that the section in Mr. Dunbar’s affidavit entitled “Mr. Butler’s ulterior motivation” is irrelevant (paragraphs 71-84). I agree. I have read the paragraphs and I find that they are of no assistance to me in deciding the issues.
[62] The plaintiff complains that the paragraphs that reference the June 25, 2018 letter from the defendant to the plaintiff and the letter itself should not be considered because it breaches settlement privilege. The plaintiff notes that the letter states that it is a without prejudice communication.
[63] Settlement privilege is an important pillar of the justice system which has long been protected by the courts. It operates to protect communications made during the course of settlement negotiations so that parties can reach a resolution of their dispute knowing what is communicated cannot be used against them and is inadmissible in any court proceedings. It is based on the overriding public interest in favouring settlements; Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37, [2013] 2 S.C.R. 623 and Union Carbide Canada Inc. v. Bombardier Inc., 2014 SCC 35, [2014] 1 S.C.R. 800, at para. 31. In determining whether the privilege applies such that the communications in issue should be protected from disclosure, the Court of Appeal in Re Hollinger Inc., 2011 ONCA 579, 107 O.R. (3d) 1, at para. 16 set out the following three-part test:
there is a litigious dispute;
the communications were made with the express or implied intention that they would not be disclosed; and
the purpose of the communications is to attempt to effect a settlement.
[64] In Bellatrix Exploration Ltd. v. Penn West Petroleum Ltd., 2013 ABCA 10, 542 A.R. 83, the Alberta Court of Appeal stated at paras. 27 and 28:
It is to be remembered that the rationale for the privilege is not limited to the notion that it would be unfair to subsequently prejudice one of the parties by admitting any admissions made during settlement negotiations. The rule is also intended to allow parties to freely and openly discuss the potential for a settlement, and while doing so, the parties should not have to carefully monitor the content of their discussions. As noted by Lord Walker in Unilever plc v. The Procter & Gamble Co. (1999), [2001] 1 All ER 783 at para 35, [2000] 1 WLR 2436 (CA):
The protection of admissions against interest is the most important practical effect of the rule. But to dissect out identifiable admissions and withhold protection from the rest of without prejudice communications (except for a special reason) would not only create huge practical difficulties but would be contrary to the underlying objective of giving protection to the parties.
In other words, the rule's protection is not meant to be limited to the prejudice that an admission may have at trial specifically, but on the potential impairment on settlement discussions as an important element of the litigation process generally. Accordingly, for the rule to operate properly, not only must the ambit of the settlement privilege be broad, but the exceptions to the exclusionary rule must be narrowly construed and only be given effect where another policy objective can be shown to outweigh any impact that may arise to the settlement objective. [Citations omitted.]
[65] I do not view the June 25, 2018 letter and related discussion as being covered by settlement privilege. The letter, as counsel for the defendant submitted, is an offer to inspect the car, not an offer to settle the litigation. The letter offers to put the litigation on hold pending the inspection. The plaintiff refused the offer. Mr. Butler also refused the offer when it was made anew during his December 10, 2018 examination for discovery. Ultimately the plaintiff agreed to have the car inspected at the end of December 2020 and at the beginning of 2021. The fact that the car was ultimately inspected is referenced in the amended statement of claim and in Mr. Butler’s affidavit.
[66] The plaintiff is seeking punitive damages for how the defendant dealt with the defects in Mr. Butler’s car. The defendant is entitled to lead evidence that they offered to have the car inspected in June 2018 to defend against the plaintiff’s argument that they acted in bad faith. I do not see how admitting the June 25, 2018 or the December 10, 2018 offers to inspect and the surrounding evidence prejudice’s the plaintiff. The letter, for example, contains no admissions against interest.
Positions of Counsel
[67] It’s the plaintiff’s position that the defendant was required to deliver a defect free car to Mr. Butler. They did not, therefore there has been a breach of contract. In addition, according to the Sale of Goods Act the car sold must have been of merchantable quality. Given its defects, it was not. The defendant submits that there was no breach of contract. They sold Mr. Butler a Kia Sorento and any defects were covered by the terms of the warranty. There has been no breach of the Sale of Goods Act as any problems with the car did not stop the plaintiff from driving the car for 170,000 km. In addition, if there was a breach of contract, there is no evidence in support of aggravating damages and no basis to award punitive damages as the defendant bent over backwards to try and solve the problems.
The testimony of Mr. Butler
[68] The onus is on the plaintiff to establish the requisite facts on a balance of probabilities; Marcil v. Eastview Chevrolet Pontiac Buick GMC Ltd., 2016 ONSC 3594 (Div Ct) at paras. 39 and 40. While there are some undisputed facts, such as the front passenger car seat warmer and the adaptive cruise control were defective, and had to be fixed, there are other facts that are disputed and that rely on the testimony of Mr. Butler.
[69] I have a significant concern about the testimony of Mr. Butler. His affidavit, as exposed during cross-examination, shows a carelessness with the truth and in one area a deliberate attempt to mislead the court. I say this for the following:
Mr. Butler in his affidavit said that he missed “50 hours of work” taking his car in for repairs and would have been paid “$100 per hour”. Therefore, he is seeking $5,000 in damages. Mr. Butler’s assertion in this regard was a work of fiction and an attempt to mislead the court. Mr. Butler was not billing clients in 2016. He only earned $627 in 2016. There was no missed income as he was not earning any income. Mr. Butler still maintained at trial that his time was worth $100 an hour. This could only be correct if someone was actually paying for his time, and they were not. In my view, Mr. Butler’s false assertions about his lost employment income does not merely color his claim for damages but colors his testimony overall;
In his affidavit he wrote that he has “not been able to loan the automobile to my family members” because of the defective safety features. At trial, he said the opposite, that he has regularly loaned the car to his wife, and his kids have driven it. I also note that there was only one safety feature at issue, the adaptive cruise control and the defect at issue did not make the car unsafe;
Mr. Butler stated in his affidavit that the front passenger seat warmer was never fixed, yet after the inspection, an amended statement of claim was filed which said the opposite, that it was fixed;
In his affidavit, Mr. Butler stated that around the time he launched the action, he was under the impression that the defects in his car could never be fixed. At trial he stated that this impression never changed. There is no mention in his affidavit about the conversation he had, which he surreptitiously recorded with Mr. Alexander, around the same time period, where Mr. Alexander told him that the gauge cluster had not been replaced and he believed that this could be the source of the mischief. When confronted with this conversation during cross-examination, he agreed that he was contemplating whether to bring the car in to have the gauge replaced;
In his affidavit, he said that it was his practice to keep his cars for ten years. During cross-examination, he varied his position slightly and added “when possible”. In an email to Kia, he said that it was his practice to keep a car for six to eight years. When confronted with the inconsistency, Mr. Butler explained that it does not matter what he said to a salesman. In my view, this demonstrated that Mr. Butler is prepared to say different things at different times, depending on his end goal. He wanted the salesmen to think that he turned his car over more frequently to emphasize that he would be a good customer. He wanted the court to believe that he changed cars less frequently to demonstrate a loss when he sold the Sorento after six years; and
In his affidavit, he said that one of the reasons he bought the car was that he “needed a reliable automobile to be able to get to work on time each day.” In his examination for discovery, he said that the car was for personal use. At trial, he agreed with his examination but said that he drove it to work on Fridays.
[70] Mr. Butler was also inconsistent with his examination for discovery in two important areas:
a) At trial he said that using the handle to open the driver door would not unlock the other doors. During his examination for discovery, he said the opposite; and
b) Mr. Butler said that he took his car to Carleton Kia once, but they did not work on it because they said it was not covered by warranty. During his December 10, 2018 examination for discovery, he said that after his June 2017 Bessada Kia visit, he did not take the car to any other dealer.
[71] Therefore because of my concerns with Mr. Butler’s testimony, I am not prepared to accept his evidence where it is not supported by other testimony or documents. Therefore, with respect to the complained defects, I find the following:
The front passenger seat warmer was defective when the car was bought. This feature was complained about at the first Bessada visit in June 2016;
The adaptive cruise control was defective. But I am not satisfied that it was defective upon delivery. It was malfunctioning as of October 2016. There is no complaint of this feature when Mr. Butler attended Bessada Kia in June 2016. It is evident that Mr. Butler was not a shy customer. If there was a problem at the time, he would have said something;
I accept that the adaptive cruise control was only fixed when it was brought to Kia Canada for inspection at the beginning of 2021;
I accept Mr. Alexander’s affidavit that he never told Mr. Butler that the complained of defects could never be fixed;
I accept Mr. Sikraj evidence that at the same time that the adaptive cruise control was fixed, the passenger seat warmer was fixed. I do not accept Mr. Butler’s evidence to the contrary which is also contrary to the amended statement of claim. I also note that Mrs. Butler testified that she picked up the Sorento from the dealership after the work was done and there were no issues on the 30-minute ride home;
I do not accept Mr. Butler’s testimony that his car doors would automatically unlock when he put the car into park. I do not accept that his car once had this feature. I accept the evidence of Mr. Dunbar that the feature Mr. Butler’s car had was that when you opened the driver’s door all the doors would open automatically; and
I do not accept Mr. Butler’s testimony that he took the car once to Carleton Kia and they said it was out of warranty so they could not fix it for free. This evidence depends on the testimony of Mr. Butler, which I do not accept, and there is no documentation from Carleton Kia indicating that the car was ever brought in.
1) Was there a breach of contract?
[72] There is no dispute from the testimony that was read in from Mr. Campbell and Mr. Callaghan that it was the intent of the defendant to sell Mr. Butler a car that worked in all aspects, one that was in perfect working condition. The car that Mr. Butler brought had two defects. The passenger seat warmer did not work properly and shortly afterwards, the adaptive cruise control did not work. However, it is also clear from the testimony of Mr. Callaghan and the warranty itself that if a defect existed, the remedy would be that Kia Canada fix the defect. Mr. Callaghan’s examination for discovery evidence was read in. He stated:
Q. And is it Kia Canada Inc.'s expectation that when a customer purchases one of its products new, of course, as opposed to used, through one of its dealers that the product is sold free of defects?
A. Yes.
Q. And is it Kia Canada Inc.'s expectation that if there happens to be defect in one of its units that are sold through one of its selling dealers to a customer, that the defects is to be corrected at the expense of -- well, not at the expense of the customer?
A. Yes.
[73] The contract itself, through the warranty, stipulates what would happen, if there were a defect, Kia Canada would fix it. The plaintiff submits that the warranty only covers defects that exist afterwards, not pre-existing defects. There is no basis for this interpretation. At the time the car was bought, it had 118 km on it. It is clear from the warranty that it starts “on the date of retail delivery to the first purchaser or the date the Kia vehicle is first placed into service” which meant that it was in effect in this case at the moment Mr. Butler purchased the car.
[74] The plaintiff submits that the defendant never fixed the defects. In his written outline, counsel for the plaintiff states:
At the time of disposal of the automobile, the defects included:
a) the front passenger heated seat;
b) the automatic unlocking system;
c) potentially compromised wheel and braking systems from over-torquing; and
d) an odometer that did not display the correct kilometrage for the automobile.
The evidence from Mr. Butler and Mrs. Butler was that the defects were fundamentally important for the intended use of the automobile. They were not trivial or inconsequential.
[75] I disagree, ultimately, as I found above, the adaptive cruise control and passenger seat warmer were fixed. All the defects were fixed. I found that the car never had the unlock door feature that Mr. Butler complained of.[^1] I note that even if the unlock feature was, in fact missing, this feature was insignificant as there is no dispute that Mr. Butler could simply press the unlock button and all the doors would unlock automatically. The odometer was not defective. It did display the correct mileage. The user simply had to add 157,489 kilometers to the amount listed set out on the odometer. Mr. Sukraj explained in his affidavit that he was required to place a notice in the vehicle on the driver’s door opening stating the date the odometer was repaired/replaced on February 16, 2021, at 157,489 kilometers.
[76] The plaintiff had the right for the car to be fixed for any issues as set out in the warranty. The warranty kicked in as soon as the car was picked up. The car was ultimately fixed. The warranty specifically excludes the incidental losses that are being claimed. It states:
Incidental costs or consequential damages such as loss of vehicle use, inconvenience, expenses for gasoline, telephone, lodging, economic loss or other incidental, special, consequential or exemplary damages or damage to personal and other properties are not covered by this warranty.
[77] There was no breach of contract.
2) Was there a breach of the Sale of Goods Act?
[78] The plaintiff relies on the Sale of Goods Act, RSO 1990, c S.1, specifically s.15.1 and 2 which states:
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:
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.
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.
[79] I agree that the Sale of Goods Act applies to the car purchased by Mr. Butler; Elbassiouni v. World Fine Cars Limited, 2016 75052 (ON SC) at 3-4, aff’d 2017 ONSC 3627 (Div Ct), Gregorio v. Intrans-Corp., 1994 224, Marcil v. Eastview Chevrolet Pontiac Buick GMC Ltd., 2016 ONSC 3594 (Div Ct) at paras 4-9.
[80] In Marcil v Eastview Chevrolet Pontiac Buick GMC Ltd., the court described at paras. 42 and 43, what is a defect:
The test to determine whether any defect exists was described in the following manner at page 13 of the Ontario law Reform Commission Report on Products Liability:
For there to be liability under Lord Atkin's statement, (from Donoghue v. Stevenson, 1932 S.C. (H.L.) 31) it is clear that a product must fall short in some way of what it ought to be; a product, in other words, must be defective. Some test of the concept of "defect", therefore, is required. This must be a general and flexible test; and, it would seem that the concept cannot be defined except in terms of what is reasonable to expect of the product in all the circumstances.
A buyer must establish that the defect existed at the time of the delivery of the product or revealed itself within a reasonable amount of time thereafter. McCann v. Sears Canada Ltd., 1998 14812 (ON SC).
[81] The plaintiff has proven that there were two defects, the front passenger seat warmer and the adaptive cruise control. The defendant does not contest these facts. As I have stated, I have found that there was no missing unlocking mechanism of the car. I note that even if there was one, it would not qualify as a defect as it arose over a year after the car was purchased and did not exist at the time of delivery or within a reasonable amount of time thereafter.
[82] The plaintiff submits that the Sorento was not of merchantable quality and was not fit for a purpose and the Sale of Goods Act was breached:
It is submitted that in the immediate action, similar to Marcil, the problems with Mr. Butler’s automobile deprived the plaintiff of what he reasonably expected of the automobile. As such, these problems constituted defects that existed at the time of the automobile’s delivery to Mr. Butler, or that revealed themselves within a reasonable time thereafter. Further, similar to Elbassiouni, Mr. Butler’s automobile required substantial repairs. As such, it is submitted that Kia breached the implied term of merchantable quality under the Sale of Goods Act.
Further, Mr. Butler made known to Kia the purpose for which the automobile was required and relied on the sellers’ skill and judgment. As such, it is submitted that Kia also breached the implied term of fitness for purpose under the Sale of Goods Act.
Fitness of purpose
[83] There is no evidence that Mr. Butler ever communicated to Kia that the adaptive cruise control or passenger seat warmer were important features to him in purchasing the car. There is no evidence that Mr. Butler relied on anything that Kia Canada said with respect to these features. Counsel for the plaintiff submits, without reference to any authority, that given the evidence from Kia that the car was to be sold defect free, it is unnecessary for the plaintiff to produce such evidence. I disagree. Section 15.1 protects consumers who communicate a certain need to a seller with respect to a product and who then rely on the seller’s expertise in telling them that the product will meet the need. In some cases, the need will be communicated explicitly, in some cases, implicitly. I agree that the reasonably fit provision of the Sale of Goods Act with respect to cars may cover more than the fact that the car is reasonably fit to drive.
[84] In Wharton v. Tom Harris Chevrolet Oldsmobile Cadillac Ltd, 2002 BCCA 78, the Court of Appeal for British Columbia upheld the trial judge’s finding that the defective sound system breached the reasonably fit for the purpose term of the Sale of Goods Act. In Wharton, the plaintiff had purchased a luxury vehicle for pleasure use. Its "high end" sound system was defective from day one, making a buzzing noise that interfered with music and conversation and caused sensory discomfort for the two and a half years it took to fix the problem. The Court of Appeal agreed with the trial court that the defendant had not delivered the luxury vehicle experience to the plaintiff as promised. [The trial judge did find that the car was of merchantable quality].
[85] Turning to this case, if the complaint was that the car’s heater did not work, then there would be a breach of s. 15.1 of the Sale of Goods Act. However, the complaint is with respect to two luxury items: 1) the adaptative cruise control system, and 2) the front passenger seat car warmer. There is no evidence that, either expressly or implicitly, it was made known to the defendant that these particular features were of particular or any importance. Kia certainly had no information that Mrs. Butler had any type of back issue. Evidence was not led with respect to the exact features of the car that came with the particular model bought by Mr. Butler. However, it is evident that the complained of features were only part of a package of overall features.
Was the car of merchantable quality?
[86] The plaintiff submits that this is an objective standard and relies heavily on the cases of Elbassiouni v. World Fine Cars limited and Marcil v Eastview Chevrolet Pontiac Buick GMC Ltd. In my view, these cases do not assist the plaintiff, rather, they support the defendant’s assertion that the car was of merchantable quality. In Elbassiouni v. World Fine Cars limited, prior to purchasing the car, the buyer pointed out to the seller that there was blue smoke coming out of the car. The seller said it would be fixed. After the sale was concluded, the car still produced blue. Additionally, there were other problems such as the fog lights, the transmission malfunctioning when shifting gears, and problems with the vehicle’s suspension. The Court found that there was a breach of the Sale of Goods Act. It stated:
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 reasonably foreseeable damages arising from the breach of contract.
[87] In Marcil v Eastview Chevrolet Pontiac Buick GMC Ltd, the defects in the car were explained as follows at para. 4 and 5:
On November 10, 2010, Marcil was on a hunting trip in Northwestern Ontario and was attempting to re-enter his own lane after having passed another vehicle. His vehicle began to accelerate (“auto-accelerate”), although Marcil was attempting to decelerate and was applying the brakes. The vehicle attained a speed of 150 km per hour before it finally began to slow down. It was jumping on the road, and there was much noise, smoke, and the smell of something burning.
Marcil had attempted several manoeuvers to slow the speed of the vehicle, involving the use of much force. He and his passenger both believed that their life was in danger. The passenger jumped out of the vehicle while it was still in motion, sustaining significant injuries.
[88] There are no safety concerns at issue here. Mr. Butler sold the car after six years and after driving it for over 170,000 kilometres. The passenger seat warmer and the adaptive cruise control did not impede his ability to drive the car. Neither one of these features are safety features. It is important to recall that Mr. Butler was able to use the cruise control, he simply had to cancel it by pressing his foot on the pedal as opposed to pressing the cancel button. In addition, the cruise control would not automatically adapt to the speed of the car it was following and sometimes it would not reset without restarting the car. None of these issues with the cruise control made the car unsafe. Again, Mr. Butler did not offer any testimony that not having the adaptive cruise control resulted in any accident or near accident.
[89] With respect to the seat warmer, the front passenger seat warmer worked, but only intermittently. It would turn on and then sometimes turn off and it could only be turned back on again if the car was restarted. The driver’s seat had no issues. Mrs. Butler stated in her affidavit that the heated seat was required for her back and that without it, she was in extreme pain. I accept that a heated seat helped her back. I do not accept that without the seat warmer she was in extreme pain. She said that she spent over 100,000 kilometres in that seat despite the extreme pain, even though she could have simply driven the car and been soothed by the driver seat’s functioning car warmer. Her explanation is that she liked it better when her husband drove. In my view, she exaggerated her evidence with respect to the extreme pain. There is no issue that the car’s heating and air conditioning system worked properly.
[90] The plaintiff submits that clearly the defects were of concern for Mr. Butler as he returned to Bessada Kia 16 times to have them fixed. I agree that Mr. Butler wanted the problems fixed, but that does not mean the car was not of merchantable quality, nor does it mean that these features were particularly important to him. I suspect he would complain about any imperfection that he came across. Mr. Butler cares about cars and he professes to be somewhat of an expert in them. He was also not working and had time. I am not at all surprised that he took the car into Bessada Kia as many times as he did. Merchantable quality, however, does not mean that the car has to be in perfect condition.
[91] In addition, Mr. Butler drove this car a lot. He drove it for approximately 40,000 km in the first year. After five years he had driven it approximately 157,000 km. After 6 years and a few months he had driven it approximately 170,000 km. In my view this speaks to the merchantable quality of the car. Mr. Butler was not forced to abandon the car, as seen in some of the other cases.
[92] It is important to not lose sight of the fact that these two defects were fixed. I appreciate that they were only fixed permanently in February 2021. Bessada Kia was able to temporarily fix for periods of time. However, the plaintiff did not return to Bessada Kia after June 2017. When he called Bessada Kia in May or June 2018 and complained anew, he was told that changing the gauge cluster could solve the problems. He decided against bringing the car back in to be fixed. I am not faulting him for that decision, just as I am not faulting him for refusing the inspection offers in June and December 2018. However, at the same time, I do not see how Kia could be faulted for not fixing it earlier, when Mr. Butler had stopped bringing the car in.
[93] The car was reasonably fit for the purpose for which it was bought and was of merchantable quality. There was no breach of the Sale of Goods Act.
3) Comments with respect to damages
[94] While not strictly necessary given my answers to questions 1 and 2, I wish to make a few comments with respect to damages.
The request for punitive damages
[95] The biggest sum requested is for punitive damages. Punitive damages are not compensatory and are only awarded in exceptional cases for “malicious, oppressive and high-handed” misconduct that “offends the court’s sense of decency”, amounting to acts of bad faith and unfair dealing: Fidler v. Sun Life Assurance Co. of Canada, 2006 SCC 30, [2006] 2 S.C.R. 3 at para. 62. Punitive damages are designed to address the purposes of retribution, deterrence, and denunciation: Fidler, at para. 61; Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595, at paras. 36 and 94.
[96] In Fernandes v. Penncorp Life Insurance Co, 2014 ONCA 615, 122 O.R. (3d) 192, the Ontario Court of Appeal, with reference to the Supreme Court of Canada’s decisions in Fiddler and Whiten, in the context of insurance contracts, summarized the law relating to punitive damages at paras. 74 and 75:
The law relating to punitive damages was canvassed in detail by the Supreme Court in Whiten and addressed again more recently in Fidler. The key applicable principles may be summarized as follows.
Punitive damages are designed to address the objectives of retribution, deterrence and denunciation, not to compensate the plaintiff: Whiten, at paras. 43 and 94, and Fidler, at para 61.
They are awarded only where compensatory damages are insufficient to accomplish these objectives: Whiten, at para. 94.
They are the exception rather than the rule: Whiten, at para. 94.
The impugned conduct must depart markedly from ordinary standards of decency; it is conduct that is malicious, oppressive or high-handed and that offends the court's sense of decency: Whiten, at paras. 36 and 94; and Fidler, at para. 62. [footnote omitted].
In addition to the breach of contract, there must be an independent actionable wrong: Whiten, at para. 78, and Fidler, at para. 63.
In a case of breach of an insurance contract for failure to pay insurance benefits, a breach by the insurer of its contractual duty to act in good faith will constitute an independent actionable wrong: Whiten, at para. 79, and Fidler, at para. 63.
In considering the issue of good faith, it must be emphasized that disputing or refusing a meritorious claim does not, in itself, constitute a breach of a duty to act in good faith: Fidler, at para. 63.
[97] Even if I found that there was a breach, there is no basis to award punitive damages. The plaintiff submits that punitive damages are necessary because the defendant should have simply replaced the defective Kia. The plaintiff submits that punitive damages were needed to deter the defendant and other similarly minded defendants. The plaintiff submitted:
Punitive damages in this case will send a message to irresponsible automobile manufacturers such as the defendant that it ought to appreciate the critical role that automobiles play in modern lives, the great expense that they represent for households, and the tremendous power that manufacturers hold over purchasers once they have purchased a defective automobile where they refuse to do what would be expected in our Province and that is to fix the defects or replace the automobile with one that is not defective.
[98] Assuming, for the sake of discussion, that the defendant was wrong for not compensating the plaintiff with a new Sorento, there is no evidence that the defendant acted in bad faith, in an egregious or high-handed manner. Mr. Butler described the defendants as fantastic people but who did not get the job done in fixing his car. This is a far cry from the behaviour one sees associated with an award of punitive damages. The defendant attempted to fix the defects; they even changed the physical car seat itself. After the litigation commenced, they offered twice to have the car inspected by Kia Canada with hopes of better results. Mr. Butler refused to accommodate the request for an early inspection just as he decided to not accept Mr. Alexander’s offer to change the gauge cluster. Everything indicates that Bessada Kia did everything they could to fix the problem and were able to solve the issues, albeit on a temporary basis. I do not accept Mr. Butler’s evidence that he asked Carleton Kia to assist, but was, in essence, turned away. There is no basis for punitive damages.
The request for aggravating damages
[99] Aggravating damages do not require the existence of an independent actionable wrong. Rather, they are meant to cover situations where the aggrieved suffers mental distress arising out of the breach. Damages arising from mental distress should in principle be recoverable where they are established by the evidence and shown to have been within the reasonable contemplation of the parties at the time the contract was made. As stated by the Supreme Court of Canada in Fidler v. Sun Life Assurance Co. of Canada, at para. 44:
The measure of these damages is, of course, subject to remoteness principles. There is no reason why this should not include damages for mental distress, where such damages were in the reasonable contemplation of the parties at the time the contract was made. This conclusion follows from the basic principle of compensatory contractual damages: that the parties are to be restored to the position they contracted for, whether tangible or intangible. The law’s task is simply to provide the benefits contracted for, whatever their nature, if they were in the reasonable contemplation of the parties.
[100] The evidence with respect to mental distress is weak. At is highest, it shows that Mr. Butler was frustrated and aggravated about the defects. That is understandable but, in my view, it does not merit compensation. I also wish to comment that, at some point, it is evident that Mr. Butler lost perspective with respect to this car purchase. His anger is dripping through the video clips he made of the defects. Yes, the car had two defects which took a long time to fix but they were just luxury features for a car that he was otherwise able to drive a considerable amount.
Alleged loss of income
[101] Mr. Butler has alleged loss of income in the amount of $5,000. As I explained earlier, I do not accept Mr. Butler’s evidence that he lost any wages or income as a result of his numerous trips to the dealership.
Recission is not an appropriate remedy
[102] Counsel for the plaintiff submits that recission is an appropriate remedy. It is not. The Ontario Court of Appeal in Urban Mechanical Contracting Ltd. v. Zurich Insurance Co., 2022 ONCA 589, [2022] O.J. No. 3701 at paras 35-38, explained anew the concept of recission. The court stated that:
Rescission is an equitable remedy that is meant to put the contracting parties back in the positions they were in before entering into the contract (restitutio in integrum):
Rescission is available to a party that has been improperly induced to enter into a contract, for instance, by a fraudulent misrepresentation and that the court will be more willing to order rescission when the plaintiff was induced to enter the contract by fraud;
Rescission requires proof that the misrepresentation was material and was relied on by the party seeking to rescind the contract. The Court of Appeal stated at para. 38 and 39 that:
A “material misrepresentation” is one that a reasonable person would consider to be relevant to the decision to enter the agreement, though it need not be the only reason to enter into the agreement: York University v. Markicevic and Brown, 2016 ONSC 3718, 33 C.C.E.L. (4th) 26, at para. 145, aff’d 2018 ONCA 893, 51 C.C.E.L. (4th) 30, leave to appeal refused, [2019] S.C.C.A. No. 134.
Whether a contracting party relied on the misrepresentation, at least in part, to enter into the agreement is a “question of fact to be inferred from all the circumstances of the case and evidence at trial”: Barclays Bank, at para. 159.
[103] Recission does not apply to this case. There is simply no evidence of any fraud or any material representation.
No evidence of damages
[104] The plaintiff submits that the most appropriate way to assess damages is to require the contract to be enforced:
In this case, that means that Mr. Butler received $65,351.20 for a new Kia Sorento less the $10,000.00 salvage he obtained for the automobile for damages of $55,351.20.
[105] I disagree. Mr. Butler chose to use the car for over six years and for in excess of 170,000 km. In essence, he is submitting that he should not have paid for the use of the car for the entire time he owned it. The point of damages is to compensate the aggrieved for losses sustained as a result of the breach, not to obtain a windfall. Counsel for the plaintiff has not provided me with any cases in support of his position.
[106] Mr. Butler sold the Sorento for $10,000. I have been provided with no evidence regarding the resale value of the same 2016 Sorento with the same kilometres, but without any of the alleged defects (I note that the only difference at this stage is that Mr. Butler’s car had a new gauge resulting in the restarting of the odometer). Counsel for the plaintiff submits that it is not required to lead such evidence. I disagree. The onus is on the plaintiff to show what pecuniary loss he has sustained from his over six-year ownership of the Kia. He has failed to do so.
CONCLUSION
[107] The action is dismissed. As the defendant is the successful party, they are entitled to costs. If the parties cannot agree on the quantum of costs, the defendant shall, within 15 days from the date herein, serve and file written costs submissions, limited to three pages, with a bill of costs and cost outline attached together with any offer to settle that affects costs. The plaintiff shall, within 30 days of the date herein, serve and file their response, also limited to three pages with a bill of costs and cost outline attached, together with any offer to settle that affects costs. If the defendant wishes to reply, any reply shall be served and filed within 40 days, limited to one page.
Justice H. Leibovich
Released: November 17, 2022
COURT FILE NO.: CV-19-2330
DATE: 2022-11-17
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
PETER BUTLER Plaintiff
– and –
KIA CANADA INC. and JAMES CAMPBELL SERVICES LTD. Defendants
REASONS FOR JUDGMENT
Justice H. Leibovich
Released: November 17, 2022
[^1]: During oral submissions, counsel for the plaintiff stated that he wasn’t pursuing the over-torquing issue since the car has now been sold.