Kroeker v Zoric, 2018 ABQB 967

Court of Queen’s Bench of Alberta Citation: Kroeker v Zoric, 2018 ABQB 967 Date: 20181126 Docket: 1703 21750 Registry: Edmonton Between: Gordon Kroeker Appellant - and - Ratko Zoric Respondent _______________________________________________________ Reasons for Decision of the Honourable Mr. Justice M. J. Lema _______________________________________________________ A. Introduction [ 1 ] This is a dispute over a used car. It comes to this Court on appeal from the Provincial Court (Civil Division).

In oral reasons released on September 19, 2017, Fraser PCJ dismissed the plaintiff Kroeker’s action against the defendant Zoric for damages arising from an alleged breach of contract or from Zoric’s negligence, or both, arising from Zoric’s sale to Kroeker of a 2006 BMW M5 automobile. [1]

[ 2 ] I heard the appeal on September 13, 2018, featuring submissions by counsel for each party and a written brief from counsel for Kroeker. I reserved judgment. B. Findings [ 3 ] I find that Fraser PCJ made no errors in finding the facts, determining the applicable law, and applying the law to the facts. Accordingly, I dismiss Kroeker’s appeal of Fraser PCJ’s judgment dismissing his claim against Zoric. C.

Overview of Provincial Court trial [ 4 ] At trial Kroeker’s position was that, while he was aware that the car in question had been involved in an accident, he relied on Zoric’s account of the accident and aftermath, which was that only body and other surface damage had been sustained and that the car had been written off for insurance purposes because of the undue expense of the replacement body parts.

His position was also that Zoric had described the car “as good as new”, with repairs performed by Zoric (who is a heavy-duty mechanic), and that the car could be driven “to Vancouver and back.” He also said that Zoric had said that he had inspection and certification paperwork, albeit it had been packed away for an upcoming move and could not be accessed. [ 5 ] Kroeker’s position was that, in buying the car, he relied on Zoric’s “as good as new” and “could be driven to Vancouver and back” descriptions, the stated reason for the write-off, and the existence of the described paperwork. [ 6 ] As it turned out, after some months of driving the car, Kroeker discovered, via an initial wheel-alignment report (indicating a closer examination of certain problems was required) and a resulting in-depth inspection, that the car had sustained major structural (frame) damage, which pre-existed a (relatively minor) accident involving the car while owned by Kroeker. [ 7 ] Zoric’s position at trial was that Kroeker was aware that the car had been involved in an accident and had been written off, that Kroeker did not pursue an independent car inspection, that Kroeker was content to buy the car despite the inspection and certification paperwork not being available, that Kroeker drove the car for many months and 11,406 kilometres without any trouble, and that Kroeker could not prove that the “pre-existing” damage pre-existed both the minor accident mentioned above and Kroeker’s purchase of the car. [ 8 ] The trial judge decided that Kroeker did not rely on Zoric’s representations as to a “good as new” car, that (having been driven over 11,000 kilometres before the in-depth inspection) the car was necessarily in adequate shape when purchased, and that, as a result, Kroeker’s claim was dismissed.

The trial judge summarized his analysis by stating that anyone buying a used car should know that, sooner or later, problems will emerge. He invoked the maxim “caveat emptor” (“buyer beware”) as capturing the essence of the legal problem here: Zoric had no duty to make any particular disclosures about the state of the car, and Kroeker bought it effectively at his own risk. D. Kroeker’s arguments on appeal [ 9 ] Fraser PCJ erred in fact and in law in dismissing Kroeker’s action.

Specifically, he: 1. erred in fact in concluding that Kroeker did not rely on Zoric’s statements that the car was “as good as new”, “could be driven to Vancouver and back”, and was written off because of high expense of the necessary body repairs, as well as that Zoric had inspection and certification paperwork for it; 2. erred in law in not considering that the Sale of Goods Act ( SGA ) applied in the circumstances here and, accordingly, that the “fitness for purpose” and “merchantability” terms implied by the SGA were part of the car contract; 3. further erred in law in not applying the principles of negligent misrepresentation outlined in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 to the facts here; and 4. further erred in law in ruling that the caveat emptor maxim applied here and, specifically, in concluding that “if one buys a used car, one can expect problems.” [ 10 ] In support of these positions, Kroeker argued that: 1. because Zoric was a licensed mechanic, he had an enhanced duty of care to Kroeker; 2. the SGA implied terms of “fitness for purpose” and “merchantability” applied even in the absence of a higher duty arising from Zoric’s licensed status; 3. he acknowledged that the SGA was not the focus of the trial, but the trial judge should nonetheless been alive to its application; 4. even if caveat emptor initially applied to the circumstances here, the PCJ ignored evidence that Zoric’s representations (detailed above) displaced the maxim’s operation here; and 5.

Zoric’s representations induced Kroeker to buy the car, which ultimately required expensive repairs ($27,000, approximately), which Kroeker sought as damages from Zoric at trial.

E. Zoric’s argument on appeal [ 11 ] Zoric described what he saw as “four fatal flaws” in Kroeker’s argument: 1.

Kroeker had ample opportunity to inspect the car on his own i.e. he was not limited to Zoric’s descriptions of the car and its history or to what he hoped to discover by the inspection (i.e. a Government-of-Alberta-regulated inspection of “salvage” cars) and certification (i.e. by a BMW dealership, that a given car meets BMW’s own standards for used cars) paperwork; 2. the evidence showed that Kroeker did not actually rely on Zoric’s “enticements”; 3. the car was “working as intended” between the date of purchase and Kroeker’s “fender-bender” (11 months later – in August 2014); and 4. the evidence did not show that the “pre-existing damage” (i.e. pre-existing the fender-bender) also pre-existed Kroeker’s purchase of the car. [ 12 ] Zoric also tried to distinguish Kroeker’s authorities, all of which (he said) dealt with automobile dealers and the absence of inspection information (whether not existing at all or not introduced into evidence).

He contrasted that to the circumstances here, where the Alberta inspection report did exist, albeit was not located by Zoric until after Kroeker had bought the car. [ 13 ] Zoric says that Kroeker decided to drop the “no inspection report” matter i.e. proceed with the purchase in the report’s absence. [ 14 ] He said that, as well, the eventual production of the inspection/certification information was not made a “condition subsequent” of, or any kind of representation or warranty in, the parties’ contract. [ 15 ] Zoric referred to the availability of a “CarProof” report, requiring only the vehicle identification number (VIN), year, make and model of the car.

According to Zoric, such reports show a car’s history, including reported accidents and whether the car has been rebuilt at any point. [ 16 ] Zoric stressed that Kroeker knew that this was a “written off” car and that Zoric had rebuilt it i.e. it was obviously not “as good as new.” (Zoric stated that his statement was “just like new”, though he acknowledged that nothing turned on the difference between that and “as good as new.”) [ 17 ] As for the element of misrepresentation, Zoric argued that Fraser PCJ found no reliance by Kroeker on his representations.

Further, Kroeker asked the trial judge to draw an inference – that an inspection by a mechanic would have revealed serious underlying damage to the car – which the PCJ refused to draw. Would the damage have been uncovered here? According to Zoric, no evidence reflected that. [ 18 ] Zoric emphasized that the car had been running fine and that Kroeker drove it for 11,406 kilometres before the frame problems were uncovered. [ 19 ] Zoric points to the car being serviced, including a wheel alignment, in May 2014, i.e. two to three months after the purchase and 3,000 kilometres of driving later.

The servicing was done by Trail Tire and disclosed no mechanical deficiencies. [ 20 ] Zoric directed me to photos entered as exhibits in the trial, in particular three showing serious structural damage, taken during a mechanical inspection by Modern Auto Body.

According to Zoric, the “all clear” inspection report from Trail Tire indicates that the major structural damage uncovered by Modern Auto Body was not present when the Trail Tire inspection happened and, necessarily, when the car was purchased by Kroeker. [ 21 ] Zoric characterized Kroeker’s position on timing as “problematic” i.e. it is not obvious, or necessarily inferable, that the structural damage revealed by Modern Auto Body predated Kroeker’s purchase of the car.

Coupled with the 11,000+ kilometres of driving, this signals that the car was in adequate shape at the time of purchase. [ 22 ] As for Kroeker’s reliance on the Sale of Good Act and the Traffic Safety Act (previously the Highway Traffic Act ), Zoric says that the latter defines “dealer” (“any person who buys [and/or] sells as a business”) and that it is “debateable” whether Zoric is a “dealer” so defined.

In any case, asserts Zoric, this point was not raised at the trial, and it is too late to raise it on appeal. [ 23 ] Even if Zoric’s buying and selling activities satisfied the “dealer” definition, the sale to Kroeker here occurred outside the scope of those activities. The contact here was initiated by Kroeker, who twice approached Zoric about buying the BMW i.e. Zoric conducted no “selling activities.” As Zoric put it, the car here was not “up for sale” at any point. [ 24 ] If we were exploring the “dealer” definition, a purposive definition would be required.

Such an exploration did not happen here, because Kroeker did not raise this issue at trial. [ 25 ] As for the characterization of the PCJ’s reasoning here, Zoric said that we are dealing, fundamentally, with application of the caveat emptor maxim to a set of facts i.e. we have an issue of mixed law and fact, to which the “palpable and overriding error” standard applies. [ 26 ] Zoric referred here to Feehan J’s decision in Super Save Disposal (Alberta) Ltd v Shenwei Enterprises Ltd , 2017 ABQB 805 , which (at para 31 ) recites Moen J’s decision in Kieller v Sentinel Self-Storage Corp , 2008 ABQB 783 at para 39 , to the effect that, with

an issue of mixed fact and law (e.g. whether caveat emptor shields Zoric here i.e. application of a legal standard to a set of facts), the “palpable and overriding error” standard applies. F. Kroeker’s reply arguments [ 27 ] Kroeker replied as follows: 1. considering “opportunity to inspect”, Kroeker says that no inspection was pursued because of Zoric’s representations about “as good as new”, “Vancouver” and “inspection and certification reports exist” i.e.

Kroeker was not remiss in not pursuing an independent inspection; 2. as for “not enticed”, Kroeker said this ignores considerable evidence, and the permissible inference from that evidence, that Kroeker was drawn into the purchase by Zoric’s representations.

Nothing in the law says that Kroeker must state explicitly “I relied on [any particular thing]”; 3. as for “worked as intended”, Kroeker says that the car was not working well, right off the bat, with Kroeker early on describing the car as “listing” or shifting” i.e. with a need for a wheel alignment being apparent early, and also traction problems after driving through water. Kroeker said a wheel alignment was one of the things Zoric agreed to do before the sale (and did not do).

When Kroeker eventually took the car in for an alignment, the misalignment was uncovered, which led to the in-depth inspection by Modern Auto Body, which revealed the serious frame damage predating the “fender-bender”; 4. as for the claimed impossibility of showing that the “pre-existing damage” predated the car purchase, Kroeker termed it “curious” that the certification report prepared for Zoric was performed after-hours and was “non-billed” and, most troubling, was not able to discern any of the major structural damages eventually detected by Modern Auto Body.

Kroeker submitted that the Modern Auto Body witness addressed and identified that the major structural damage pre-existed the fender-bender.

Kroeker said that the damage would have been apparent to anyone “in the trade”, including Zoric, a mechanic for 18 years; 5. as for the case law, he argued that the cases have uniformly rejected the argument of “you could have had the car inspected and you did not – accordingly, you bear the risk of damage emerging.” Given the representations about “as good as new” and “Vancouver”, that the inspection/certification information would be provided, and that the write-off was strictly because of “expensive body parts”, the circumstances here are markedly different from those featured in the “you should have inspected” cases; 6. as for CarProof searches, Kroeker says no searches were required because Zoric is a mechanic who was experienced at buying and selling cars; 7. as for Zoric’s “dealer” status, while he did not have a “dealer” sign above his doorway, his conduct showed that he had bought and sold cars frequently and satisfied the “dealer” definition; 8.

Kroeker asserted that, at minimum, a new trial is warranted, because the PCJ failed to state the legal test correctly, applying the (incorrect) test that “if one buys a used car, one should expect trouble sooner or later – caveat emptor .” In so concluding, the PCJ did not fully state the legal test, or stated it incorrectly, or, in applying the law to the facts, did not address all of the elements of the negligence test, instead simply outlining a “bald conclusion”; and 9. fundamentally, we need to ask: “Did the PCJ address all the elements of the test?” If you look at the outcome, and can’t understand how he arrived there, at minimum a new trial is needed.

G. Zoric’s reply arguments [ 28 ] Zoric then provided final submissions: 1. look at the actual evidence: “no way you wouldn’t know about a problem here” … “drastic pulling.” [2] Obviously, Kroeker did not notice “pulling” immediately; 2. this Court on appeal must be cautious about going too far into reweighing the evidence e.g. looking at details of “screws”, and “filler”, and “badges of suspicion” – this is not a rehearing; 3. concerning Kroeker’s knowledge of the “write-off” status of the car, at minimum Kroeker’s agent (Gulaga) was informed about the write-off status of the car.

If Kroeker did not know that, that is Gulaga’s fault, not Zoric’s; and 4. the necessary evidence for the PCJ’s conclusion exists here. He has already properly weighed the evidence and properly applied the applicable law. H. Issues [ 29 ] The issues are whether Fraser PCJ erred in: 1. finding that Kroeker did not rely on Zoric’s representations; 2. finding that caveat emptor (“buyer beware”) applied here; and

3. not exploring whether the Sale of Goods Act applied here (and, if so, whether the car was “fit for its purpose” and “merchantable”). I. Standard of Review [30] Zoric addressed the standard of review, which he described as correctness for errors of law, palpable and overriding error forerrors of fact and also for errors of mixed fact and law. He argued that “palpable” means “obvious”, versus errors that emerge only froma “microscopic” examination of a trial transcript or other narrowly-focused views into the trial.

In his view, the PCJ committed no sucherrors of fact, or any errors at all. [31] Kroeker did not assert a different standard of review. [32] The standard of review on appeals from the Provincial Court (Civil Division) was canvassed by Graesser J in McCallum vEdmonton Frame and Suspension

(2002) Ltd[3]: The standard of review with respect to appeals from Provincial Court Civil Division to the Court of Queen's Bench has been discussed inseveral cases. In Palmer v Van Keulen, 2005 ABQB 239, Marceau J stated at paragraphs 11-12 The standard of review applied by a civil appellate court was recently outlined by Wittmann J.A., as he then was, in Schoff v. RoyalInsurance Co. of Canada (2004), 348 A.R. 366, 2004 ABCA 180 . Writing for the Court, Wittmann J.A. stated at para. 18: The standard of review that applies to factual inferences is palpable and overriding error: Housen v.

Nikolaisen, [2002] 2 S.C.R. 235,2002 SCC 33 at para. 25. An appellate court may intervene where the inference made by the trial judge is not supported by theevidence: Housen v. Nikolaisen at para. 22.

At para. 36, Wittmann J.A. continued stating: The standard of review on a pure question of law is correctness; the standard on a question of mixed fact and law, where the issue isapplication of a legal standard to a set of facts, is subject to a standard of palpable and overriding error, unless it is clear that the trialjudge made some extricable error in principle with respect to the characterization of the standard or its application, in which case theerror may amount to an error of law, subject to the standard of correctness: Housen v. Nikolaisen, paras. 26-36. In 527353 Alberta Ltd. v.

Stedelbauer Chevrolet Oldsmobile

(1975) Ltd. (2001), 2001 ABQB 909 , 302 A.R. 316 (Q.B.) at 321,Slatter J. applied the palpable and overriding error standard to findings of fact, and the correctness standard to questions of law.Therefore, the relevant question for any civil appeal, regardless of from which court the decision originates, is whether the questionappealed from is a question of fact or law. J.

Analysis Representations [33] Did Kroeker rely on Zoric’s statements about: (1) car “as good as new”; (2) the car could be “driven to Vancouver and back”;(3) the reason for write-off was unduly expensive body parts; or (4) inspection and certificate reports both existed and would beprovided? [34] Fraser PCJ properly found “no.” In any case, even if Kroeker relied on some or all of them, his reliance was not reasonable or,if it was, the representations turned out to be true, i.e. no misrepresentations were made.

My reasoning is as follows: 1. concerning the car being “as good as new”, Kroeker knew he was buying an eight-year-old car with over 68,000 kilometres, thathad been in an accident, and that had been repaired by Zoric himself.[4] In this context, such a description by the seller, on its own,should be understood as “banter” or essentially “vaporous” talk.

The natural reaction to such a statement is “Maybe, maybe not … whydo you say so?” If the vendor moves from empty phrases like this to a statement (for example) that the engine has been replaced, with anew engine, and it turns out neither aspect is true, we would then be dealing with meaningful representations.

In the current case, thefocus shifts to the other representations; 2. concerning the “Vancouver” aspect, this too might be categorized as “empty talk.” However, assuming it should be treated as arepresentation that the vehicle would operate for at least 2,400 kilometres (taking the driving distance between Edmonton andVancouver as approximately 1,200 kilometres), the evidence showed that, after parking the car for the winter, Kroeker drove it for aboutthree months, putting on about 11,000 kilometres, before the fender-bender accident that eventually led to discovery of the frame issues.In other words, it could have been driven to Vancouver and back four times; 3. as for the reason for the write-off, I note the following: a.

Fraser PCJ concluded, after reviewing the evidence as a whole, that Zoric was not aware of the frame issues when he bought the carfrom the salvage auction or when he sold the car to Kroeker. In other words, Zoric’s understanding that the “write-off” stemmed fromprohibitively expensive body repairs reflected his actual perception; b. that perception turns out to be accurate: Kroeker learned from the previous owner of the car i.e. (before Mr. Zoric) that the car hadbeen involved in a collision and that he (the previous owner) had taken the car to Doug’s Place Collision Repair for an estimate.

A copyof the Doug’s Place repair estimate was entered into evidence at the trial (Ex 4). Among other things, the estimate reflected:

• a “date of loss” of July 12, 2010; • estimates for total labour ($8,198.61), total replacement parts ($18,418.62), and total additional costs ($504.00), for a gross total of $27,121.23 (excluding GST); • the basis on which the estimates were made: “THIS IS AN ESTIMATE BASED ON THE DAMAGE THAT WAS VISIBLE WHEN IT WAS WRITTEN. IT IS NOT A FIRM QUOTATION AND MAY CHANGE DURING THE REPAIR DUE TO ADDITIONAL DAMAGE, PART PRICE CHANGES AND OTHER FACTORS”; • 53 entries categorized as “BDY” (which another

section of the estimate confirms refers to body work), including work such as removing and replacing the front bumper spoiler, removing and replacing the right front body panel, and removing and installing the right front outdoor belt moulding; • 14 entries categorized as “REF” (refinishing work), including refinishing the front bumper cover and the right fender outside; • 12 entries categorized as “MCH” (mechanical work), including removing and replacing the right front air-bag sensor and performing a four-wheel alignment; • 1 entry categorized as “FRM” (frame work), namely, an “ADD’L LABOR OP” (which I assume means “additional labour operation”) to “set-up on Cellete Bench” -- 12.0 hours of labour. (I note, based on an internet search, that “Celette” is a manufacturer of automotive repair equipment, including benches on which a car can be mounted for inspections and repair work); • of the 80 overall entries for estimated repair work, 8 are marked with an asterisk (*), which another

section of the estimate confirms means a “judgment item.” I infer that that means a repair or investigation that the estimator believes may be, but is not necessarily, required; • the single “frame work” entry (noted above) is one of those 8 entries i.e. the estimator believed that mounting the car on the described bench may be necessary; • based on the stated labour rate of $150 per hour, the estimated cost of the “frame work” was $1,800 (12 hours x $150/hour); and • the estimate includes a supplementary component (two additional pages), which either adds or changes 10 body-work, 3 mechanical-work, and 1 refinishing-work entries i.e. no additional frame-work entries or changes to the above-described frame-work entry; c. from this material, I conclude: • the structural (frame) damage discovered by the Modern Auto Body inspection after Kroeker’s fender-bender was not detected during the Doug’s Place inspection shortly after the 2010 accident.

The Doug’s Place estimate noted that inspection of the frame (via mounting the car on a Celette bench) might be required. The estimate included no amounts for any forecasted repairs to or replacements of the frame or related components. In other words, the structural damage would only have been uncovered if a bench investigation had been performed.

In yet other words, the structural damage was not patent (discoverable on a “surface level” or with minimal “uncovering work”, such as opening a hood or moving cables) but latent (not so discoverable); • the “striking similarity” between the 2010 Doug’s Place gross repair estimate ($27,121.23) and the total repair costs incurred by Mr. Kroeker with Modern Auto Body ($26,027.58), highlighted by Kroeker’s counsel during argument before Fraser PCJ, ends up being entirely coincidental.

As noted, the 2010 estimate reflected almost entirely body, refinishing, and mechanical work, with only $1,800 estimated for a possible “bench investigation” of the frame.

On the other hand, the repairs performed by Modern Auto Body necessarily reflected major reconstructive or replacement parts and labour relating to the frame or other structural components; • if Doug’s Place did not detect the frame damage (only noting that a bench investigation may be necessary) or at least was not in a position to gauge whether frame damage had been sustained and, if so, what repair work and replacement parts were necessary, it is unreasonable to conclude that Zoric could have done so on his own; • even if the bench-investigation entry should be understood as required (versus “may be required”), the existence of frame damage and its extent would only have been detectable (based on the Doug’s Place estimate) via the indicated investigation i.e. as discussed above, this was a purely “latent” issue; • in the result, Zoric fairly, and accurately, surmised (and without having seen the 2010 Doug’s Place estimate until after the sale to Kroeker) that the car had been written off owing to expensive body and body-related repairs.

The frame problems were not uncovered or at least explored to any degree by the Doug’s Place examination in 2010 and accordingly were not a factor, or a material factor, in the decision to write the vehicle off and sell it at a salvage auction; and • to summarize on this aspect: Zoric was not aware of the frame issues at any time before or at the time of sale. Necessarily, he took no steps to conceal or camouflage the frame problems before or at the time of sale; 4. finally, as for the inspection and certification paperwork, I note the following: a.

Kroeker did not make plain to Zoric what he meant by “certification.” The evidence showed that, in Kroeker’s mind, it meant that a BMW dealer, authorized by BMW headquarters to perform the necessary inspections, had inspected the car and pronounced that it met BMW’s in-house standards for used BMWs. But it also showed that, in Zoric’s mind, “certification” meant that the car had undergone and passed a “post-salvage” inspection i.e. pronounced roadworthy according to minimum provincial-government standards. On this point, the parties’ minds “did not meet”;

b. if Kroeker believed that “BMW certification” was an indispensable condition of the deal for him, he should have (1) ensured that Zoric knew what he (Kroeker) meant by “certification”; (2) if Zoric had obtained such a pronouncement from an authorized BMW dealer, not proceeded with the deal without evidence of it or, at minimum, made confirmation of such pronouncement an express term of the sale contract; and (3) if Zoric had not obtained such certification, stepped away from the deal or decided to proceed without it.

As it was, with the misunderstanding over what “certification” meant, Kroeker cannot show that Zoric made any kind of misrepresentation on this aspect.

Without Kroeker having made plain the difference between “certification” and “inspection”, and with no evidence that Zoric knew or even should have known about the “BMW certification” process, Zoric was justified in believing that “inspection” and “certification” were the same thing; c. as it was, Zoric had obtained, on November 8, 2011, a “Salvage Vehicle Inspection Certificate”, issued under the Traffic Safety Act and featuring the required “mechanical equipment and alignment” and “structural integrity” certifications, completed by employees of Spec Mechanical, who listed their inspection facility and inspection technician numbers on the inspection report; d. the evidence overall did not point to Zoric having any reason to doubt the genuineness of that certificate or the quality of the inspection work underlying it; e. on the evidence overall, Fraser PCJ was justified in concluding that Kroeker did not actually rely on the existence of the “inspection and certification” paperwork (which I will now refer to as the “inspection”).

Notably, the bill of sale includes no reference to the fact of an inspection, the provision of an inspection report or anything inspection-wise; f. in fact, the bill of sale contains only the standard “fill in the blank” information e.g. the parties’ names, addresses and phone numbers, plus a basic description of the car (year, make, model, style, vehicle identification number, colour, and odometer reading). As for “conditions of sale” (page 2 of the bill), the only conditions listed were “no liens or encumbrances” and “payment by cheque.” In the blank titled “special conditions of sale”, nothing was inserted.

Kroeker could have asked that some or all of these representations -- practically speaking, probably only #4 (inspection), or perhaps #3 (reason for write-off) -- be made express conditions of the sale and, failing agreement on that, walked away from the car. Or he could have passed on closing the sale until the sought-after paperwork had been produced.

In deciding to close the sale despite the paperwork being unavailable and in omitting any reference to it (or any of the other representations) in the sale contract, Kroeker effectively said: “I am content to buy the car whether or not an inspection report exists”; and g. in any case, as outlined above, an inspection had been done, Zoric actually had the resulting report, and it showed that the vehicle had met the Alberta government’s standards for a salvage vehicle coming back “into service.” Conclusion on Representations [ 35 ] Fraser PCJ’s decision that Kroeker did not rely on Zoric’s “as good as new” and “Vancouver” representations was reasonable.

In any case, any reliance on the former was unreasonable, and the “Vancouver” representation turned out to be true. [ 36 ] As for the representation that the car had been written off on account of prohibitively expense body repairs, whether Kroeker relied on that statement or not, and whether any such reliance was reasonable or not, the representation was shown to be accurate. [ 37 ] As for the representation that the car had been inspected post-salvage and that Zoric had the confirming paperwork, both were also shown to be true. [ 38 ] In other words, Zoric made no misrepresentations of any species – fraudulent, negligent, or innocent -- to Kroeker.

As a result, Kroeker was not entitled to any relief anchored on a finding of misrepresentation(s). Caveat Emptor [ 39 ] Fraser PCJ concluded that, in the absence of any misrepresentations and any contractual terms as to quality of the car, the principle of caveat emptor applied i.e. Kroeker, as buyer, bore the risks arising from any patent defects in the car or any latent defects of which Zoric was unaware. [ 40 ] That conclusion was correct, for these reasons: 1. the frame and other structural problems were latent i.e. neither obvious nor detectable on a “surface” level.

This is confirmed by the Doug’s Place inspection in 2010, after the previous owner’s collision. As discussed above, that inspection did not identify any particular frame or other structural problems. At most, it noted that an in-depth frame inspection might be advisable. As described by the Modern Auto Body witness, the frame problems only became apparent after a “layered” investigation i.e. progressively more intensive inspections of the car’s soundness; 2. Kroeker did not establish that Zoric was aware of the frame problems.

Zoric testified that: a. he purchased the car for self-repair on the basis that the collision problems were body-related; b. he had obtained a post-salvage inspection from Spec Mechanical, confirming mechanical and structural fitness; and c. he (or he and his son) drove the car for the next two years, putting on over 6,000 kilometres; 3. if any of the frame or other structural problems were patent (i.e. were obvious or readily detectable on a “non-invasive” inspection), they would have been equally apparent to Kroeker as to Zoric.

Where the contract of sale (as here) is silent on the condition of the car and where (as properly concluded by Fraser PCJ) no material misrepresentations were relied on (or even made), the principle of caveat emptor applies: the prospective purchaser should take due care (e.g. by doing an in-depth inspection on his own or with the assistance of

a qualified mechanic) to investigate “patently obvious” things. Where no such investigation is performed (as here), Kroeker has no recourse against Zoric if any “patent” defects later caused problems; and 4. Alberta courts have applied caveat emptor in similar situations. [5] Sale of Goods Act Argument [ 41 ] On appeal, Kroeker argued that the Sale of Goods Act applied to the sale, specifically subsections 16(2) (“fit for purpose”) and (4) (“merchantable quality”). [ 42 ] Kroeker did not make this argument at trial.

The question arises whether Kroeker can raise the argument for the first time on appeal. [ 43 ] I find that he cannot. [ 44 ] The general rule is that “an appeal court should decline to resolve an issue not presented to the original court ….” [6] That is especially so if the evidence at trial is insufficient to allow the issue to be determined on appeal. [ 45 ] In this case, that obstacle exists. Subsection 16(2) of the Sale of Goods Act refers to a sale “in the course of the seller’s business to supply.” Subsection 16(4) refers to “a seller who deals” in certain goods.

The record shows that the issue of whether Zoric carried on a car-selling business or “dealt” in selling cars within the meaning of these provisions was not explored at trial. [7] [ 46 ] Given the insufficient record on these points, it is not possible to address them on this appeal. K. Conclusion [ 47 ] For these reasons, I find that Fraser PCJ reached the appropriate conclusion in dismissing Kroeker’s claim against Zoric for reimbursement of the costs to repair the structural damage to the car and, accordingly, dismiss Kroeker’s appeal to this Court. Heard on the 13 th day of September, 2018.

Dated at the City of Edmonton, Alberta this 26 th day of November , 2018. M. J. Lema J.C.Q.B.A. Appearances: Peter Shipanoff Barrister & Solicitor for the Appellant, Gordon Kroeker Nigel Forster Weir Bowen LLP for the Respondent, Ratko Zoric