National Leasing Group Inc v Weir-Jones Engineering Consultants Ltd, 2017 ABQB 145

Court of Queen’s Bench of Alberta Citation: National Leasing Group Inc v Weir-Jones Engineering Consultants Ltd, 2017 ABQB 145 Date: 20170302 Docket: 0903 12624 Registry: Edmonton Between: National Leasing Group Inc.

Plaintiff - and - Weir-Jones Engineering Consultants Ltd. and Andrew Weir-Jones Defendants - and - 395908 Alberta Ltd. carrying on business under the firm name and style of The Trailer Shop, Dynasty Investment Inc. carrying on business under the firm name and style of The Trailer Shop, and 1383113 Alberta Ltd. carrying on business under the firm name and style of Rider's Connection Third Parties _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice K.G. Nielsen _______________________________________________________

I. Introduction [ 1 ] The Plaintiff commenced this action against the Defendants to recover amounts owing to it under an equipment lease. It obtained a Consent Judgment. The Defendants seek indemnity or contribution from the Third Parties for the judgment against them. II.

The Parties [ 2 ] At all material times: - the Plaintiff, National Leasing Group Inc. (National Leasing), was an equipment leasing company registered to do business in Alberta; - the Defendant, Weir Jones Engineering Consultants Ltd. (WJ Engineering), was a British Columbia company registered to do business in Alberta; - Iain Weir-Jones (Iain) was an officer and director of WJ Engineering, working out of WJ Engineering’s Vancouver office; - the Defendant, Andrew Weir-Jones (Andrew), Iain’s son, was doing work for WJ Engineering in Alberta through another entity, Weir-Jones Technical Services Inc. (WJ Technical); - the Third Party, Dynasty Investment Inc., carrying on business under the firm name and style of the Trailer Shop (the Trailer Shop), was a supplier of trailers with premises in Bonnyville, Alberta; and - the Third Party, 1383113 Alberta Ltd., carrying on business under the firm name and style of Rider’s Connection (Rider's Connection), was a supplier of recreational vehicles with premises in Cold Lake, Alberta. [ 3 ] The Third Party, 395908 Alberta Ltd., carried on business under the firm name and style of the Trailer Shop at one time, but had no involvement in the matters in this action.

No relief is sought against that party. III. Background A. Events Leading Up to the Lease [ 4 ] In the spring of 2008, Andrew approached Jack Way (Way), a principal of the Trailer Shop, and expressed interest in leasing a PJ 26-foot Gooseneck trailer the Trailer Shop had in its inventory (the Gooseneck). Way referred Andrew to Deborah Greene (Greene), a National Leasing account manager/commissioned salesperson. [ 5 ] Andrew’s father, Iain, completed a standard form National Leasing corporate credit application, in WJ Engineering’s name, seeking lease financing for the Gooseneck.

The application was provided to Greene. [ 6 ] Shortly thereafter, Andrew told Way he also wanted to lease two Forest River Cherokee Park 39L trailers that could be obtained through Rider’s Connection (the Cherokees).

Way contacted Larry Windiuk (Windiuk), the Rider’s Connection salesman Andrew had dealt with, and ordered the Cherokees. [ 7 ] WJ Engineering’s credit application was revised to include the Cherokees and approved by National Leasing. [ 8 ] The Trailer Shop purchased the Cherokees from Rider’s Connection and sold them, and the Gooseneck, to National Leasing. [ 9 ] National Leasing provided Way with a standard form National Leasing lease contract for Andrew to sign on behalf of WJ Engineering (the Lease).

Andrew signed the Lease at the Trailer Shop’s premises. [ 10 ] The Trailer Shop did not profit from its sale of the Cherokees; it sold them to National Leasing for the same amount it paid Rider’s Connection for them. However, National Leasing did pay the Trailer Shop an administration, or referral, fee of $4,007.71 plus tax, being 5% of the amounts National Leasing paid the Trailer Shop for the Gooseneck ($8,556.14 plus tax) and the Cherokees ($71,598.00 plus tax). B.

The Lease [ 11 ] By the terms of the Lease, WJ Engineering agreed to lease the Gooseneck and the Cherokees from National Leasing for a term of sixty-six months, and to pay rent in the amount of $1,653.04 plus tax before the first day of each month. The Lease commenced on July 1, 2008. [ 12 ] The following provisions of the Lease are particularly relevant to this action: ... 4. Non-Cancelable: This Lease cannot be cancelled by you during the Term for any reason, including equipment failure, loss or

damage. You may not revoke acceptance of the Equipment. You acknowledge that you selected the Equipment and the Equipment supplier. We purchased the Equipment at your request and on your instructions. We are not responsible for equipment failure or the Equipment supplier’s acts. 5. No Warranties: You are leasing the Equipment “as is”. We do not make any warranty or representation whatsoever with respect to the Equipment, including, without limitation as to the durability, quality, condition or suitability of the Equipment for your purposes.

We shall not be liable to you for any loss, damage or expense of any kind caused directly or indirectly by the Equipment or its use, operation, or possession, or by any interruption of service or loss of use, or for any loss of business or damage whatsoever and however caused. Where permitted, we assign all manufacturer’s and supplier’s warranties to you during the Term. 6. Use: You certify to us that the Equipment will be used solely for business purposes and not for personal or household purposes. ... ... 11.

Default: If: (1) you fail to pay any Rent or other sum payable under this Lease when due; (2) you fail to comply with any other term of this Lease; ... [or] (4) any representation made by you to us in connection with obtaining this Lease is or becomes untrue; ... all Rent and any other payments to the end of the Term shall immediately become due and payable on demand. You will immediately deliver the Equipment to us, at your own expense. We may, without notice and without resort to legal process, take immediate possession of the Equipment. ...

You shall pay our costs of collection, re-possession of the Equipment and of the enforcement of our rights, including legal costs on a solicitor-client basis. ... 12. Miscellaneous: ... This Lease constitutes the entire agreement between you and us as lessee and lessor. You acknowledge that the Equipment supplier or its sales representatives or any lease broker, are not our agents and are not authorized to waive or change the terms of the Lease or act on our behalf. ... [ 13 ] National Leasing provided WJ Engineering with a copy of the Lease on or about July 4, 2008, and Iain was aware of the Lease. C.

Events Subsequent to the Lease [ 14 ] In early July 2008, Andrew picked the Cherokees up from Rider’s Connection in Cold Lake and transported them to a trailer park in La Corey, Alberta. He had taken delivery of the Gooseneck sometime before that. [ 15 ] Once the Cherokees were set up, Andrew and his girlfriend, Samantha Gordey (Gordey), moved into one of them and Rob Staff (Staff), one of their co-workers, moved into the other. [ 16 ] Richard Jurick (Jurick), a Rider’s Connection technician, did some warranty work on the Cherokees in the fall of 2008.

He unplugged the kitchen faucet and resealed a skylight in one; and adjusted the sliding door and replaced several items - the microwave, the television, and the bed frame - in the other. [ 17 ] Although efforts were made to prepare the Cherokees for winter, problems arose with them when the weather turned cold. The Cherokees were difficult to heat, and their water and sewer lines froze.

Despite these problems, Andrew, Gordey and Staff continued residing in the Cherokees. [ 18 ] WJ Engineering defaulted under the Lease in April 2009, when it failed to make its monthly rent payment. [ 19 ] National Leasing sent a demand letter to WJ Engineering in June 2009. Counsel for the Defendants responded with a letter purporting to terminate the Lease. Andrew, Gordey and Staff moved out of the Cherokees around this time. [ 20 ] National Leasing took possession of the Gooseneck and the Cherokees in the summer of 2009. Later, Ritchie Bros.

Auctioneers sold the three trailers for $56,750 ($4,750 + $26,000 x 2) and provided National Leasing with the net proceeds from the sales. IV. The Claims [ 21 ] In August 2009, National Leasing commenced this action against the Defendants seeking the balance owing under the Lease ($114,723.35 as at July 9, 2009), interest on that balance at the rate of 24% per annum, and costs on a solicitor and his own client basis. [ 22 ] The Defendants filed a Statement of Defence denying liability on a host of grounds. They also filed a Third Party Notice against the Trailer Shop and Rider’s Connection.

The Third Party Notice seeks indemnity or contribution on the basis that (

i) the Trailer Shop and Rider’s Connection made negligent misrepresentations regarding the nature of the leased goods and the nature and contents of the Lease; and (ii) Rider’s Connection was negligent in performing, or failing to perform, warranty services on the Cherokees. [ 23 ] The Third Parties filed Statements of Defence denying liability, and claiming that any losses the Defendants suffered resulted from their own actions or omissions. [ 24 ] National Leasing’s claim against the Defendants was resolved at the outset of the trial.

The Defendants admitted liability pursuant to a Statement of Agreed Facts which was entered as Exhibit 1, and I signed a Consent Judgment awarding National Leasing the full amount of its claim ($294,257.52) plus costs on a solicitor and his own client, full indemnity basis. [ 25 ] National Leasing and the Defendants had previously entered into a Settlement Agreement (effective April 9, 2014): Order dated February 27, 2017. The Settlement Agreement required the Defendants to pay $82,500 (the Settlement Funds) to National Leasing

immediately upon execution. It provides that the Defendants’ liability to National Leasing will be limited to the Settlement Funds, unlessthey recover a larger amount from the Third Parties. It further provides that the Defendants will pursue their claims against the ThirdParties and, if they are successful, they (i) “will be entitled to reimbursement from any proceeds recovered ... of an amount equivalent tothe Settlement Funds”, and (ii) will pay any excess proceeds to National Leasing. [26] The trial proceeded to address the Defendants’ claims against the Third Parties. V.

Issues [27] The Court must determine the following issues: 1. Did the Trailer Shop negligently misrepresent to Andrew that the Cherokees were winter worthy, or suitable for habitationthroughout an Alberta winter? 2. Did the Trailer Shop negligently misrepresent to National Leasing that the Cherokees were office trailers, when they were in factresidential trailers? 3. Did the Trailer Shop negligently misrepresent to Andrew that the document he signed at its premises was a delivery receipt forthe Cherokees, and not the Lease? 4.

Did Rider’s Connection negligently misrepresent to Andrew that the Cherokees were winter worthy, or suitable for habitationthroughout an Alberta winter? 5. Did Rider’s Connection negligently perform, or fail to perform, warranty work? VI. Law A.

Negligent Misrepresentation [28] The tort of negligent misrepresentation has five elements: (1) there must be a duty of care based on a "special relationship" between the representor and the representee; (2) the representation inquestion must be untrue, inaccurate, or misleading; (3) the representor must have acted negligently in making said misrepresentation; (4)the representee must have relied, in a reasonable manner, on said negligent misrepresentation, and (5) the reliance must have beendetrimental to the representee in the sense that damages resulted: Sharbern Holding Inc v Vancouver Airport Centre Ltd, 2011 SCC 23at para 121, [2011] 2 SCR 175, quoting Queen v Cognos Inc, (SCC), [1993] 1 SCR 87 at 110 [Cognos]. i.

Is there a duty of care based on a “special relationship”? [29] Regarding the first element, the Supreme Court has held that a defendant-representor and plaintiff-representee will be in a“special relationship”, giving rise to a prima facie duty of care, “when it can be said (

a) that the defendant ought reasonably to haveforeseen that the plaintiff would rely on his representation and (

b) that reliance by the plaintiff, in the circumstances, would bereasonable”: Hercules Managements Ltd v Ernst & Young, (SCC), [1997] 2 SCR 165 at paras 24 and 41 [Hercules]. [30] These indicia of reasonable reliance have been found to “help to distinguish those situations where reliance on a[representation] is reasonable from those where it is not” (Hercules at para 43):

(1) The defendant had a direct or indirect financial interest in the transaction in respect of which the representation was made.

(2) The defendant was a professional or someone who possessed special skill, judgment, or knowledge.

(3) The advice or information was provided in the course of the defendant's business.

(4) The information or advice was given deliberately, and not on a social occasion.

(5) The information or advice was given in response to a specific enquiry or request: Bruce Feldthusen, Economic Negligence, 3rd ed(Scarborough: Carswell, 1994) at 62-63, quoted in Hercules at para 43. [31] Where a prima facie duty of care is found to exist using the reasonable foreseeability/reasonable reliance test, the Court mustconsider whether policy considerations ought to negate or limit the duty. For example, the Court must consider whether indeterminateliability is a concern.

Indeterminate liability is unlikely to be a concern where the defendant knew the identity of the plaintiff and hisrepresentations were used by the plaintiff for the specific purpose or transaction for which they were made: Hercules at paras 31, 41 and44-45. ii.

Was there a misrepresentation? [32] Regarding the second element of the tort of negligent misrepresentation, the meanings of “untrue” and “inaccurate” seemrelatively straightforward, and the Federal Court of Appeal has suggested that “[a] person may be ‘misled’ by a failure to divulge [or] by advice that is inaccurate or untrue”: Spinks v Canada (1996), (FCA), 134 DLR (4th) 223, [1996] FCJ No 352 (QL) atpara 29 (CA). Thus, a misrepresentation can be made by an inaccurate or untrue statement (oral or written), or by an omission.

iii. Was the misrepresentation made negligently? [33] The third element of the tort of negligent misrepresentation requires an examination of whether the representor breached theapplicable standard of care. In Cognos, at 121, the Supreme Court explained that: The applicable standard of care should be the one used in every negligence case, namely the universally accepted, albeit hypothetical,“reasonable person”. The standard of care required by a person making representations is an objective one.

It is a duty to exercise suchreasonable care as the circumstances require to ensure that representations made are accurate and not misleading. [34] In determining whether the applicable standard of care was breached by a defendant-representor, one should consider all ofthe circumstances of the case, including “the nature of the occasion, the purpose for which the statement was made, the foreseeable useof the statement, the probable damages which will result from an inaccurate statement, the status of the advisor and the level ofcompetence generally observed by others similarly placed”: Cognos at 121-122, quoting Lewis N.

Klar, Tort Law (Toronto: Carswell,1991) at 160. iv. Was there reasonable reliance on the negligent misrepresentation? [35] Regarding the fourth element of the tort of negligent misrepresentation, whether the plaintiff relied on the defendant’snegligent misrepresentation is a question of fact about the plaintiff’s state of mind.

Evidence demonstrating that the negligent“misrepresentation was at least one factor which induced the plaintiff to act to his or her detriment” may be sufficient to establishreliance: Kripps v Touche Ross & Co, (BC CA), [1997] BCJ No 968 (QL) at paras 101 and 103, 33 BCLR (3d) 254(CA) [Kripps]. [36] Although a plaintiff may “give direct evidence as to what, in fact, induced him to act as he did”, such evidence “might well besuspect as self-serving”: Kripps at para 101.

Perhaps consequentially, our Court of Appeal has confirmed that reliance can be inferred“from the nature of the misrepresentation or from the evidence about surrounding circumstances”: Emerging Equities Inc v Strand,2008 ABCA 23, 425 AR 314 at para 6, citing Kripps. [37] The reasonableness of the plaintiff’s reliance can be assessed using the indicia of reasonable reliance referenced above. v.

What damages, if any, resulted from the reasonable reliance? [38] The fifth and last element of the tort of negligent misrepresentation requires that the plaintiff suffered damage as a result ofhis reliance on the defendant’s misrepresentation. There must be a causal connection between the plaintiff’s reliance and the damage hesuffered: Lewis N Klar et al, Remedies in Tort, looseleaf (Carswell) vol 2 at 16.IV-44.3.

The test for showing causation is the “but for”test: would the plaintiff have suffered the damage he did “but for” his reliance on the defendant’s negligent misrepresentation?:Matheson v CIBC World Markets Inc/Marches Mondiaux CIBC Inc (cob CIBC Wood Gundy), 2015 NSCA 22, [2015] NSJ No 90(QL) and Hogarth v Rocky Mountain Slate Inc, 2013 ABCA 57, 542 AR 289. B.

Negligent Performance of a Service [39] In Economic Negligence, 4th ed (Scarborough: Carswell, 2000) at 120, Bruce Feldthusen states that: There is general agreement among the courts in all common law jurisdictions that the defendant will be held liable for the plaintiff’seconomic loss if: (1) the defendant voluntarily undertakes to perform a specific service for the plaintiff’s benefit; (2) the plaintiff relieson the defendant to perform the undertaking; and (3) the negligent performance of the service injures the plaintiff. VII. Credibility [40] In the Analysis

section of these Reasons for Judgment, I deal with the evidence specific to each of the issues identified.Generally, where Andrew’s evidence was inconsistent with the evidence of Greene, Way, Windiuk or Jurick, I have preferred theevidence of those witnesses to the evidence of Andrew.

I have done so for several reasons. [41] First, to the extent that Greene, Way, Windiuk and Jurick testified to the same matters, their evidence was generallyconsistent. [42] Second, the evidence of Greene, Way, Windiuk and Jurick was generally consistent with the documentary evidence. [43] Third, I found each of Greene, Way, Windiuk and Jurick to testify in a forthright and candid manner. [44] Fourth, Greene and Windiuk were essentially disinterested parties in this litigation.

While Greene was still employed byNational Leasing when she gave her evidence, National Leasing had resolved its claim with the Defendants in accordance with theSettlement Agreement. As for Windiuk, he was retired when he gave his evidence.

Accordingly, there was no reason for Greene orWindiuk to give their evidence in anything other than a truthful manner. [45] Finally, I found each of Greene, Way, Windiuk and Jurick to have a good recollection of matters, notwithstanding the passageof time. [46] I contrast this with Andrew’s evidence. [47] First, on virtually every matter of significance to this action, his evidence was contrary to the evidence of Greene, Way,

Windiuk or Jurick. [ 48 ] Second, in some instances, Andrew’s evidence was contrary to the documentary evidence. [ 49 ] Third, the Defendants obviously have a vested interest in this litigation and all the evidence Andrew gave supported that vested interest (that is, the Defendants’ position). [ 50 ] Fourth, Andrew did not have a particularly good recollection of some matters and, to a certain extent, his evidence at trial was inconsistent with his evidence at questioning.

While it is perhaps understandable that, with the passage of time, Andrew may not have a good memory of events, it seems to me that, given his personal involvement in this matter, and given the potential exposure of both WJ Engineering and Andrew personally, he would have had a much clearer recollection of events. [ 51 ] Finally, I am satisfied that Andrew did not pay close attention to the details involved in entering into the Lease. I am so satisfied for two reasons. First, Andrew was focused on the project being undertaken in Alberta by WJ Engineering and WJ Technical.

Second, it is clear that some matters with respect to the Lease were being attended to by Andrew in Alberta and some were being attended to by Iain or others in Vancouver. As a result, I find that Andrew assumed certain things in relation to the Lease when such assumptions were not well placed. [ 52 ] For all the foregoing reasons, I have preferred the evidence of Greene, Way, Windiuk and Jurick where it is contrary to Andrew’s evidence. VIII. Analysis A. Allegations against the Trailer Shop i. Negligent Misrepresentations Regarding the Nature of the Leased Goods a.

Misrepresentation that the Cherokees Were Winter Worthy [ 53 ] The Defendants argued that the Trailer Shop negligently misrepresented to Andrew that the Cherokees were winter worthy, or suitable for habitation throughout an Alberta winter.

This allegation can be disposed of on the basis that the Defendants have failed to establish the second element of the tort of negligent misrepresentation; that is, they have not proven that Way (acting on behalf of the Trailer Shop) made any representations, let alone any misrepresentations, about the Cherokees to Andrew. [ 54 ] Andrew testified that Way assured him that the Cherokees were “a suitable product for the winter in Alberta.” He said Way represented the Cherokees as winterized trailers that could be lived in, and told him that the Cherokees would survive the winter.

Andrew’s evidence conflicts with that of Way, who denied that he made any representations about the Cherokees to Andrew. [ 55 ] Way testified that the Trailer Shop did not sell any office, residential or Cherokee trailers at the relevant time. It was in the business of dealing with other types of trailers: utility trailers, “quads, sleds, goosenecks, dumps, highboys” and enclosed trailers.

Way said that, after he referred Andrew to Greene (so that Andrew could arrange lease financing for the Gooseneck), Andrew attended at the Trailer Shop’s premises with a Cherokee brochure and told Way he was interested in getting two Cherokees. Way was not familiar with the Cherokees; he had never heard of them and did not know what they were. Andrew described the Cherokees as office trailers and told Way he had found them at Rider’s Connection. He said he wanted to add the Cherokees to the lease National Leasing was preparing for the Gooseneck. [ 56 ] Way was prepared to assist Andrew.

To that end, he contacted Windiuk, the Rider’s Connection salesman Andrew had dealt with, and ordered the Cherokees. Way testified that it was Andrew who selected the model and that he (Way) was not involved in selecting any of the Cherokees’ options. Way denied that he had any discussions with Andrew about the Cherokees’ winter capabilities. He also denied that Andrew asked him anything about winterizing the Cherokees. Way said, “I never told [Andrew] anything about winterizing a trailer. It’s not my expertise.

I don’t know anything about it.” [ 57 ] I accept Way’s evidence and reject the contradictory evidence that Andrew gave. Therefore, I find that Way did not make any representations, let alone any misrepresentations, about the Cherokees to Andrew. Accordingly, the Defendants’ claim that the Trailer Shop negligently misrepresented to Andrew that the Cherokees were winter worthy, or suitable for habitation throughout an Alberta winter, fails. b.

Misrepresentation that the Cherokees were Office Trailers [ 58 ] The Defendants also argued that the Trailer Shop negligently misrepresented to National Leasing that the Cherokees were office trailers, when they were in fact residential trailers. This argument requires a more fulsome analysis. [ 59 ] I am satisfied that the Trailer Shop and National Leasing were in a “special relationship” giving rise to a prima facie duty of care.

The Trailer Shop and National Leasing had a business relationship pursuant to which: - the Trailer Shop referred customers interested in leasing the equipment it sold to National Leasing; and, - if a lease was negotiated between a Trailer Shop customer and National Leasing, the Trailer Shop would sell the equipment to National Leasing (so that National Leasing could lease it to the customer) and National Leasing would pay the Trailer Shop an administration, or referral, fee.

Given this relationship, I am satisfied that the Trailer Shop ought reasonably to have foreseen that National Leasing would rely on its descriptions of the equipment it sold, and that reliance by National Leasing would be reasonable. [ 60 ] I am also satisfied that there are no policy considerations that ought to negate or limit the prima facie duty of care the Trailer Shop owed to National Leasing.

Indeterminate liability is not a concern in these circumstances. [ 61 ] Regarding the second element of the tort of negligent misrepresentation, I am satisfied that the Trailer Shop inaccurately described the Cherokees in some of the paperwork it sent to National Leasing. On May 16, 2008, Way (acting on behalf of the Trailer Shop) sent Greene a fax listing the additional equipment Andrew wanted to lease from National Leasing as: 2 – OFFICE TRAILERS 2009 CHEROKEE PARK MODEL 39L (MANUFACTURE – FOREST RIVER): Exhibit 19.

And, when the Trailer Shop invoiced National Leasing for the Cherokees on June 23, 2008, it described them as “2009 Cherokee Park 39 L Office Trailer[s]”: Exhibit 3. [ 62 ] Although the Trailer Shop accurately listed the Cherokees’ model year (2009), make (Cherokee), model name (Park) and model number (39L) in these documents, it inaccurately described the Cherokees as “office” trailers. It is clear from the evidence that the Cherokees were designed to be lived in, not to be used as offices.

The Cherokees’ included a furnished bedroom, a furnished living area, a dinette, a kitchen equipped with appliances, and a bathroom with a shower: Exhibit 16. They did not include a designated office space. Accordingly, it was inaccurate for the Trailer Shop to use “office” as an adjective to describe the Cherokees. [ 63 ] Regarding the third element of the tort of negligent misrepresentation, I am not satisfied that the Trailer Shop acted negligently in misrepresenting to National Leasing that the Cherokees were office trailers.

I have already accepted Way’s evidence that he was unfamiliar with the Cherokees and that, when he and Andrew spoke about the Cherokees, Andrew described them as office trailers. Way also testified that, although Andrew did not get into the specifics of what he was going to use the Cherokees for, he did say that he wanted to use them as offices. Way denied that Andrew mentioned that the Cherokees would be lived in.

I accept this evidence as well, and reject the contradictory evidence that Andrew gave. (Andrew testified that he told Way he was going to use the Cherokees as residences and set his office up in one of them.) [ 64 ] Way explained that he described the Cherokees as “office” trailers in the paperwork he provided to National Leasing based on the information he received from Andrew. He also indicated why he was comfortable relying on that information. He said: [Andrew] mentioned that he was in [Rider’s Connection] talking to Larry Windiuk about the trailers and he had the brochures.

So the point in time when he came in to see me was that it sounded like he had already researched on what he was after because he came in and he said he wanted to buy these two. So I take it as he knew what he was looking at. [ 65 ] In the circumstances, I am not satisfied that the Trailer Shop breached its duty to take reasonable care to ensure that it accurately described the Cherokees to National Leasing.

It was reasonable for Way to rely on the information he received from Andrew (about the Cherokees and how they would be used) and, consequentially, to describe the Cherokees as “office” trailers in the paperwork he provided to National Leasing. Therefore, the Defendants’ claim that the Trailer Shop negligently misrepresented to National Leasing that the Cherokees were office trailers fails. [ 66 ] The Defendants’ claim would have failed even if I had found that the Trailer Shop acted negligently in misrepresenting to National Leasing that the Cherokees were office trailers.

This is because the fourth element of the tort of negligent misrepresentation was not established either; that is, the Defendants failed to establish that National Leasing relied on the Trailer Shop’s misrepresentation when it entered into the Lease. [ 67 ] It is clear from Greene’s evidence, and the Lease’s “Use” provision, that National Leasing was primarily concerned about how the Cherokees would be used. National Leasing was in the business of leasing equipment that would “be used solely for business purposes and not for personal or household purposes": the Lease at para 6.

Greene testified that she was not authorized to lease a trailer “to somebody who might just be living in [it].” [ 68 ] It is also clear from the evidence that, in pursuing the Lease on behalf of National Leasing, Greene relied on Andrew’s representations about the Cherokees and how they would be used. She did not rely on the descriptions of the Cherokees provided in the Trailer Shop’s paperwork. (The fax Way sent Greene on May 16, 2008 was not even put to her during her testimony.) [ 69 ] Greene testified that she had “quite extensive” telephone conversations with Andrew regarding the Lease.

She said Andrew told her that the Cherokees were office trailers and that they would be used as offices. She said Andrew mentioned the possibility that the Cherokees might be slept in on occasion (when, for example, workers could not leave a jobsite due to bad weather) and she was comfortable authorizing that use. However, Greene indicated that she could have lost her job if she had told Andrew the Cherokees could be lived in on a regular basis. She said the Lease “would not have been done” had Andrew told her that he and his co-workers were going to live in the Cherokees.

Greene said she did not learn that the Cherokees were being used as residences until sometime after WJ Engineering stopped making payments under the Lease, probably in June or July 2009. [ 70 ] I accept Greene’s evidence and reject the contradictory evidence that Andrew gave. (Andrew testified that he told Greene he was going to use the Cherokees as residences and set his office up in one of them.) Greene’s evidence regarding what Andrew told her is consistent with a document recounting what Andrew told another National Leasing representative in April 2009, after WJ Engineering defaulted under the Lease: Exhibit 4.

That document notes: “Andrew also explained that they work and sometimes have to sleep in these trailers.” Greene’s evidence is also consistent with paragraph 16 of the Statement of Agreed Facts, which reads: “National Leasing was not in the business of leasing residential trailers or equipment for personal habitation and was not aware that the Cherokees were

intended for residential habitation”: Exhibit 1. [ 71 ] In the result, the Defendants’ claim that the Trailer Shop negligently misrepresented to National Leasing that the Cherokees were office trailers fails because the third and fourth elements of the tort have not been established. ii. Negligent Misrepresentation Regarding the Nature and Contents of the Lease [ 72 ] The Defendants also argued that the Trailer Shop negligently misrepresented to Andrew that the document he signed at its premises was a delivery receipt for the Cherokees, and not the Lease.

This allegation can be disposed of on the basis that the Defendants have failed to establish the second element of the tort of negligent misrepresentation; that is, they have not proven that Way (acting on behalf of the Trailer Shop) misrepresented anything about the nature of the Lease, or its contents, when he presented it to Andrew to sign. [ 73 ] Andrew testified that: - after he took delivery of at least one of the Cherokees, Way called him and asked him to attend at the Trailer Shop’s premises to sign a receipt for the trailers “so that he [Way] could get paid”; - he attended at the Trailer Shop’s premises for a “couple of minutes” and signed the document Way presented to him without reading it or examining it in any detail; - when he signed the document (on two separate pages), Way told him “it was a receipt for the trailers”; and - the document he signed turned out to be the Lease.

Andrew also testified that, on a separate occasion (that is, on a date other than the date he signed the Lease), he provided Way with a void cheque to pass on to National Leasing so that the monthly rent payments under the Lease could be taken from WJ Technical’s bank account. [ 74 ] Andrew’s evidence conflicts with the evidence of Way and the documentary evidence. Way testified that Andrew attended at the Trailer Shop’s premises to sign the Lease on June 23, 2008 (that is, well before he picked the Cherokees up from Rider’s Connection).

Way was confident of the date because that is the date he faxed the signed Lease and related documents to National Leasing. The fax information at the top of the Lease, the Customer Invoice and the void WJ Technical cheque confirms this: Exhibits 2, 11 and 17. The invoices the Trailer Shop issued to National Leasing for the Cherokees and the related administration fee were also dated June 23, 2008, and Way said the invoices would have been issued the day Andrew signed the Lease: Exhibit 3.

Way was certain that the Cherokees would not have been released to Andrew before the Lease was signed. [ 75 ] Way also testified that he witnessed Andrew sign the Lease in his office and that, in keeping with his practice, he would have explained the top portion of the Lease to Andrew, and encouraged Andrew to read the Lease, before he signed it. (The top portion of the Lease includes the lessee’s information, a description of the leased equipment, the lease’s term, the monthly rent payments, and the purchase option date and price.

The bottom portion contains National Leasing’s standard terms and conditions.) [ 76 ] Way denied telling Andrew that he needed him to attend at the Trailer Shop’s premises to sign paperwork so that he (Way) could get paid. He said, “I would never mention to a customer anything that regards my affairs. I would never say to him that I have to get paid so you have to sign this.” It was Way’s evidence that, when he presented Andrew with the Lease to sign, he told him it was a lease contract.

Way also testified that Andrew gave him the void WJ Technical cheque the day he signed the Lease. [ 77 ] I accept Way’s evidence and reject the contradictory evidence that Andrew gave. I note that, in addition to conflicting with Way’s evidence, Andrew’s evidence conflicts with Greene’s evidence that Andrew told her he would attend at the Trailer Shop’s premises to sign the Lease.

I also note that the Defendants did not raise any issues regarding how the Lease was signed until after the commencement of this litigation. [ 78 ] I am not satisfied that Way made any untrue, inaccurate, or misleading representations about the nature of the Lease, or its contents, when he presented it to Andrew to sign. Therefore, the Defendants’ claim that the Trailer Shop negligently misrepresented to Andrew that the document he signed at its premises was a delivery receipt for the Cherokees, and not the Lease, fails. B. Allegations against Rider’s Connection i.

Negligent Misrepresentations Regarding the Nature of the Leased Goods [ 79 ] The Defendants argued that Rider’s Connection negligently misrepresented to Andrew that the Cherokees were winter worthy, or suitable for habitation throughout an Alberta winter.

This allegation can be disposed of on the basis that the Defendants have failed to establish the second element of the tort of negligent misrepresentation; that is, they have not proven that Windiuk (acting on behalf of Rider’s Connection) misrepresented anything about the Cherokees to Andrew. [ 80 ] Andrew testified that Windiuk assured him that the Cherokees were “a suitable product for the winter in Alberta.” He said Windiuk represented that the Cherokees were winterized trailers that could be lived in, and that they would survive the winter. [ 81 ] Andrew said Windiuk knew he wanted to use the Cherokees as residences on a year round basis and, because of that, he (Windiuk) recommended certain options for the Cherokees.

Andrew said he followed Windiuk’s advice by selecting options, like Thermopane (double-pane) windows and heated holding tanks, that would make the Cherokees “more resilient to the cold and winter.” [ 82 ] Andrew admitted that, when they were “optioning the trailers out”, Windiuk told him he would have to “add additional

winterizing to them.” He recalled Windiuk saying that the Cherokees would have to be skirted, and that plastic would have to be placed on their windows.

When presented with some evidence he gave during his questioning in November 2011, Andrew confirmed that Windiuk also advised him that he “would have to put additional heating below the floor of the trailers.” Finally, Andrew said he recalled Windiuk telling him that he would have to wrap the Cherokees’ flow lines with insulation and heat tape. [ 83 ] Andrew acknowledged that Windiuk informed him that he needed to take these additional steps if he was going to live in the Cherokees throughout the winter.

He also acknowledged that Windiuk explained that the additional steps were necessary because the Cherokees had a reduced R-value. Andrew said he understood, from his discussions with Windiuk, that the Cherokees were not the equivalent of a house. [ 84 ] Andrew’s evidence regarding what Windiuk told him is largely consistent with the evidence that Windiuk gave. Windiuk testified that Andrew told him the Cherokees would be lived in on a full-time basis and asked him what they would be like to live in during the winter months.

Windiuk said he told Andrew the Cherokees would “take a lot of heat”, because they lacked the insulation of a house, but that it could be done; that is, the Cherokees could be lived in during the winter months. [ 85 ] Regarding their discussions about preparing the Cherokees for winter use, Windiuk was certain that he would have told Andrew that he would have to skirt the Cherokees, heat their underbellies, and insulate and heat tape their water and sewer lines. Windiuk explained that these steps would have to be taken because the Cherokees had less than half the R-value of an old house.

Later in his evidence, Windiuk suggested that the advice he gave Andrew was his standard advice; that is, it was no different than the advice he would have given to any other customer. [ 86 ] Based on the evidence, I am satisfied that Windiuk (on behalf of Rider’s Connection) represented to Andrew that, if he took a number of steps to winterize the Cherokees, they could be lived in throughout the winter. However, I am not satisfied that this was a misrepresentation. In other words, I am not satisfied that Windiuk’s representation was untrue, inaccurate, or misleading.

This is because the evidence shows that the problems that arose with the Cherokees during the winter months were likely attributable to Andrew’s failure to properly level, support and continuously heat them. The evidence does not show that the problems arose because the Cherokees were incapable of being winterized, or lived in throughout the winter. [ 87 ] I accept the evidence of Andrew and Gordey that, once it started to get cold in October, they: - added Mylar insulated skirting to the Cherokees, - placed plastic on the windows, and, - put heat tracing on the water and sewage lines and propane tanks.

I also accept their evidence that, when it got very, very cold, they placed a Herman Nelson heater underneath at least one of Cherokees (the one they were living in). In other words, I accept that, as the weather turned, Andrew and Gordey made efforts to prepare the Cherokees for winter use in accordance with Windiuk’s advice.

However, it is clear from the evidence that Andrew failed to follow other advice he received from Windiuk and Jurick (acting on behalf of Rider’s Connection) and that, consequentially, the Cherokees proved difficult to heat in the winter and their water and sewer lines froze. [ 88 ] Windiuk testified that he told Andrew that, if he was planning to park the Cherokees permanently, he would have to support them throughout, because they only had four jacks, one on each corner. He said he likely recommended supporting the Cherokees with wooden blocking on a good base every four or five feet along the main frame.

Windiuk explained that the Cherokees were long units (40-feet) that required support beyond their corner jacks. He said, without blocking, the units’ metal would sag and, consequently, their doors and windows would become misaligned. [ 89 ] Jurick testified that he gave Andrew similar advice when he attended at the trailer park in La Corey to perform warranty work on the Cherokees. Jurick observed that one of the Cherokees had had its two front stabilizer jacks torn off, and that a single generic jack stand was supporting the front of that unit (at the hitch).

He said this support was inadequate and, consequentially, there was a visible bow in the Cherokee’s frame; the centre was sagging. Using a level, Jurick determined that there was a two-inch deflection in the centre of the unit’s frame.

Jurick said this bowing would cause the unit’s window and door frames to shift and, consequentially, make the windows and doors difficult to close properly and create gaps for air to leak through (which would impact the heating of the unit). [ 90 ] Jurick testified that he discussed these issues with Andrew and told Andrew he had to block the unit up; that is, use blocks of wood to support and hold its frame. He said that, if the unit was being lived in, it should have been supported in five or six places along the frame.

Jurick was sure he went through this with Andrew. [ 91 ] I accept the evidence of Windiuk and Jurick and reject the contradictory evidence that Andrew gave. Andrew admitted that Windiuk told him it was important to make sure the Cherokees were level when he set them up. He also admitted that a Rider’s Connection service technician (Jurick) checked the levelness of his Cherokee. However, Andrew maintained that the technician found his unit to be “level within about an eighth of an inch” and told him that was acceptable.

Andrew also said he could not recall the technician telling him that his trailer was bowing or advising him to block it. [ 92 ] Andrew acknowledged that he did not use wooden blocking to support the Cherokees. Moreover, although he claimed he supported the Cherokees with more jack stands than Jurick observed, there is no evidence suggesting Andrew took any steps to re-level and add support to the Cherokees after Jurick attended at the trailer park and provided his advice.

In the result, I find that Andrew did not take adequate steps to level and support the Cherokees and, consequentially, the Cherokees had air leaks that made them difficult to heat. [ 93 ] The evidence also indicates that Andrew did not take adequate steps to keep heat flowing through the Cherokees throughout the winter, which may have contributed to their pipes freezing. Andrew admitted that he did not place a Herman Nelson heater underneath the Cherokee he and Gordey were living in until “it got very, very cold” and there is no evidence indicating that a heater was placed underneath the other Cherokee.

Moreover, Andrew admitted that, despite the fact that Windiuk suggested he purchase or rent

larger propane tanks for the winter, he, Gordey and Staff made do with the thirty-pound propane tanks that came with the Cherokees and some additional thirty-pound propane tanks he purchased. They would switch the tanks out and refill them as the propane got used, which was every twelve hours when it was cold. Given that Andrew, Gordey and Staff were all working long days away from the trailer park, I find it difficult to accept Andrew’s denial that the propane tanks ever ran empty before they were replaced.

Finally, Andrew admitted that he and Gordey spent a number of weekends in Fort McMurray and that, when they did that, they would turn the heat in their Cherokee down to just above zero. [ 94 ] In addition to the evidence showing that the problems that arose with the Cherokees during the winter months were likely attributable to Andrew’s failure to properly level, support and continuously heat them, my conclusion that Windiuk did not misrepresent anything about the Cherokees to Andrew finds support in the evidence of Cory Welsh (Welsh).

Welsh was an owner and the general manager of Rider’s Connection at the relevant time. He testified that the Cherokees were mid-priced trailers, with average to decent insulation values, and that, if proper steps were taken, they could be lived in throughout the winter.

Welsh said the proper steps would be to: - make sure the Cherokees were well-supported and stable; - skirt the Cherokees; - provide additional heat underneath the Cherokees, in the skirted areas; - run heat tracing for any exposed lines; - cover up the roof vents; - place a plastic film, over the windows (to increase their R-value); and - keep heat flowing through the Cherokees (to prevent the pipes from freezing).

In other words, he confirmed the accuracy of the advice Windiuk gave Andrew. [ 95 ] Moreover, the fact that Andrew, Gordey and Staff lived in the Cherokees throughout the winter (from July 2008 until June 2009), albeit not that comfortably, especially during extreme cold snaps, also confirms the accuracy of the advice Windiuk gave Andrew.

The Cherokees were capable of being lived in throughout the winter, and could have been lived in more comfortably, had all the proper winterization steps been taken (including those that Andrew failed to take). [ 96 ] In the result, the Defendants’ claim that Rider’s Connection negligently misrepresented to Andrew that the Cherokees were winter worthy, or suitable for habitation throughout an Alberta winter fails. ii.

Negligent Performance of, or Failure to Perform, Warranty Work [ 97 ] The Defendants also argued that Rider’s Connection negligently performed, or failed to perform, warranty work. [ 98 ] There is no evidence that the warranty work Rider’s Connection completed was anything less than satisfactory. The Defendants do not take issue with any of the items that Rider’s Connection replaced (the microwave, television, and bed frame) or repaired (the kitchen faucet and skylight) pursuant to the Forest River warranty applicable to the Cherokees: Exhibit 23.

What the Defendants take issue with is the fact that Rider’s Connection took the position that some of the things Andrew complained about were not covered by the warranty. [ 99 ] Andrew testified that Rider’s Connection denied the warranty claim he made for the two front stabilizer jacks that tore off one of the Cherokees.

He explained that, after he set the Cherokee up, and he and Gordey entered the unit and moved around in it, the unit shifted forward and the two jacks “peeled right off.” Andrew admitted that he thought there was a battery that locked the brakes on the unit when it was disconnected from a truck and that, consequentially, he did not chock the wheels when he set the unit up. He acknowledged that the Cherokees’ owner’s manual (which I find was available to him, despite his evidence to the contrary) warned: “BEFORE USING THE JACKS, BE SURE TO CHOCK THE WHEELS ON BOTH SIDES.

PLACE CHOCKS BOTH IN FRONT OF AND BEHIND THE WHEELS”: Exhibit 24.

Andrew said Rider’s Connection refused to replace the two jacks because he had not set the Cherokee up correctly. [ 100 ] Andrew also testified that Rider’s Connection failed to address the problems that arose with the Cherokees during the winter months; that is, they failed assist him when he complained that the Cherokees were difficult to heat, that their water and sewer lines froze, and that ice was forming on the inside of the units. [ 101 ] The applicable warranty provided that the body structure of the Cherokees would “be free of substantial defects in materials and workmanship attributable to [Forest River].” Welsh explained that Rider’s Connection would do an initial assessment of a customer’s concerns and provide that information to Forest River.

However, it was ultimately up to Forest River to decide whether something was a warranty item. Welsh also explained that, on Rider’s Connection’s end, Jurick was the one who would do the initial assessment. [ 102 ] Jurick testified that he did not consider the fact that the front stabilizer jacks tore off one of the Cherokees to be a defect in material or workmanship.

He said he had seen this many times before and explained that, if the jacks are down with weight on them and the unit moves, the jacks will just fold up underneath the unit and break off (because they are not designed to take any side load). [ 103 ] Welsh explained that Rider’s Connection provided Andrew with advice in response to his other complaints and ultimately concluded that those complaints arose from user issues, not from any defects in materials or workmanship.

For example, he confirmed Jurick’s evidence that Andrew was advised that the Cherokees were sagging, due to a lack of support under their frames, and that they needed to be blocked. He said this was a user issue that gave rise to some of Andrew’s complaints.

[ 104 ] Based on the evidence, I am not satisfied that the Defendants have demonstrated that the Cherokees had any substantial defects in materials or workmanship that Rider’s Connection failed to rectify. [ 105 ] In the result, the Defendants’ claim that Rider’s Connection negligently performed, or failed to perform, warranty work fails. IX.

Damages and the Effect of the Settlement Agreement [ 106 ] Given that I have found that the Third Parties have no liability to the Defendants, it is unnecessary for me to address damages and the effect of the Settlement Agreement on the Defendants’ claim to indemnity or contribution. X. Conclusion [ 107 ] The Defendants’ claims against the Third Parties are all dismissed. If the parties cannot reach an agreement on costs, they may speak to costs within sixty days. Heard on the 14 th - 16 th days of December 2015, the 7 th - 8 th days of November 2016, and the 1 st day of December 2016.

Dated at the City of Edmonton, Alberta this 2 nd day of March, 2017 . K.G. Nielsen J.C.Q.B.A. Appearances: Terrence M. Warner Miller Thomson LLP for the Plaintiff Timothy J. Byron Byron & Company for the Defendants Bryan A. Kwan McLennan Ross LLP for the Third Party Dynasty Investment Inc. Daniel L. Morrow Bennett Jones LLP for the Third Party 1383113 Alberta Ltd .