Mason v. King Date:, 2011 BCPC 169

Citation: Mason v. King Date: 20110630 2011 BCPC 0169 File No: 07-18469 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: THOMAS MASON CLAIMANT AND: NORMAN KING DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE H. K. DHILLON Counsel for the Claimant: Erin Dance Appearing on their own behalf: Norman King Place of Hearing: Vancouver , B.C.

Date of Hearing: May 16, 2011 Date of Judgment: June 30, 2011 Introduction [ 1 ] This case concerns the purchase of a 1991 Mercedes SL 500 by the Claimant from the Defendant in 2007. [ 2 ] The Claimant alleges a fundamental breach of contract due to misrepresentation by the Defendant vendor. The alleged misrepresentation is a statement describing the vehicle as an “AMG Edition” in the ad by the Defendant offering the vehicle for sale in the Vancouver Sun newspaper. [ 3 ] The Defendant vendor denies any misrepresentation. He suggests that the Claimant is the author of this own misfortune.

He alleges that the matter falls within the rule of “caveat emptor” or let the buyer beware because the Claimant waived his right to have the vehicle verified as an AMG Edition vehicle before finalizing the purchase. [ 4 ] The Claimant seeks rescission of the contract of purchase and sale on the basis of misrepresentation or mistake, or in the alternative damages for breach of warranty or breach of a material condition. Facts [ 5 ] The Defendant placed an advertisement in the Vancouver Sun which read as follows: MERCEDES 500 SL AMG EDITION, 59,000 KMS MIDNIGHT BLUE, CONVERT, ONLY $22,000. (604) [TELEPHONE #]

[ 6 ] The Claimant responded to the advertisement. He testified that he was retiring from the Vancouver Police Department and was interested in treating himself to a sports car. He was particularly interested in purchasing a Mercedes with the AMG package. He understood that the AMG Edition Mercedes was an after-factory upgraded vehicle with enhanced engine, suspension, and brakes. [ 7 ] The Claimant testified that he responded to the ad specifically because it contained the descriptor “AMG Edition”. [ 8 ] The Claimant went to the Defendant’s address to view the vehicle.

The vehicle was sporty looking and had various markings on it stating the letters “AMG”. [ 9 ] During the viewing on April 28, 2007 the Claimant asked questions about the vehicle’s history and price. The Defendant said it was a solid price because the vehicle was an AMG and the price reflected its worth. The Defendant said the vehicle came from a collector in Japan. [ 10 ] The Claimant had no substantial discussion about the condition or provenance of the vehicle. He thought by reason of the Defendant’s advertisement and by the markings on the vehicle that it was a Mercedes 500 SL AMG Edition.

The Defendant said nothing to indicate otherwise. [ 11 ] On April 30, the Claimant returned to finalize the transaction. [ 12 ] During this second meeting the Claimant asked what kind of gas the vehicle used and the Defendant answered that it was an AMG, with more horsepower, and such a premium vehicle would use premium gas. [ 13 ] The Defendant further disclosed that he was in the process of selling a container load of Mercedes and Porsches but apart from this the Claimant knew little of the extent of the Defendant’s knowledge about cars. [ 14 ] After concluding the sale and taking possession, the Claimant drove the vehicle some 2,000 kilometres and made changes to its suspension and alignment at a further cost of about $2,650. [ 15 ] In September 2007, about five months after completing the purchase, the Claimant learned by chance in speaking with a Mercedes mechanic that the vehicle he thought was an AMG Edition was in fact not so. [ 16 ] He sought a second opinion from a Mercedes dealer who also said that the vehicle he purchased was not an AMG Edition vehicle.

The Claimant was unhappy to learn this and telephoned the Defendant to complain. The Defendant told the Claimant that the Claimant should have known it was not an AMG Edition but instead a vehicle transformed with an AMG kit. [ 17 ] The Claimant believes that the Defendant misled him by representing that the vehicle was an AMG Edition when it was not. He sought a full refund from the Defendant. The Defendant refused. [ 18 ] Very shortly after his discussion with the Defendant, on October 5, 2007 the Claimant stopped driving the vehicle and took out a storage insurance policy.

On October 18, 2007 he commenced his action in Provincial court. [ 19 ] Since October 2007, the Claimant has kept the vehicle in storage. It remains in a similar condition to when he first purchased it, save for the mileage and repairs he put into it. [ 20 ] The Claimant understands that the value of the 1991 500 SL Mercedes would be half the price he paid if it is not an AMG Edition.

The Claimant presented no opinion evidence of estimates of the difference in cost between a regular Mercedes and an AMG Edition, all other elements being equal. [ 21 ] In cross examination, the Claimant agreed that prior to finalizing the purchase he did not have the vehicle inspected by a mechanic, nor checked to verify if it was an AMG Edition. He said he trusted the Defendant’s word, and the vehicle otherwise looked in good condition.

He has never had a vehicle inspected by an independent mechanic in his previous private vehicle purchases. [ 22 ] The Claimant also agreed that he signed a bill of sale prepared by the Defendant which did not specifically describe the vehicle as an “AMG Edition”. The Bill of Sale noted the vehicle was sold “as is” and all sales were final.

The Claimant said he signed this document because the Defendant asked for it for purposes of his business records. [ 23 ] The Claimant also admitted that at the time he entered into the transaction, he did not then have an exact understanding of how to identify a true AMG packaged vehicle or what constituted the elements of an AMG Edition vehicle. He only knew that an AMG Edition vehicle was much sought after and he relied on the Defendant’s written and spoken representations that he was selling an AMG Edition.

The letters “AMG” on the vehicle and related markings appeared to indicate that it was such a vehicle at the time he viewed it. [ 24 ] The Claimant relies on the written report of David Birchall, an ICBC registered Automotive Appraiser. Mr. Birchall opined on July 15, 2008 that he inspected the subject Mercedes on July 2, 2008. Mr. Birchall notes that the vehicle did not have the AMG modified engine and engine plate, or modified brakes and suspension by the AMG company in Germany. Mr.

Birchall stated that the AMG Edition vehicle would have a chassis plate confirming its provenance which is missing on the vehicle the Defendant sold the Claimant. Rather, the Claimant’s vehicle had a stock engine without an AMG name, and the brakes appeared to be stock Mercedes - Benz brakes. The dealer “Build Sheet” for the VIN in question indicates a Japanese dealer but does not reference AMG Edition. [ 25 ] It is the opinion of Mr. Birchall that the vehicle sold by the Defendant is superficially dressed up as an AMG Edition but is not a true product of the AMG company in Germany. [ 26 ] Mr.

Birchall also states that although the subject vehicle was fitted with the AMG or “AMG like” trim or components sometime “early in its life”, it is impossible to tell when or by whom.

Issue [27] Whether the Claimant has established on a balance of probabilities that he was induced to enter into an agreement for purchase ofthe vehicle by a material misrepresentation made by the Defendant. Findings [28] I accept the evidence of the Claimant that his heart was set on buying only an AMG Edition Mercedes for use on his retirement.

I am satisfied that he responded to the Defendant’s advertisement because it specifically offered an AMG Edition Mercedes 500 SL forsale. [29] The Defendant’s ad, having regard to its brevity, specifically contained the words “AMG Edition” in addition to the vehiclemake, model, colour, mileage and price. The AMG Edition was a material representation which had a specific meaning to motoringenthusiasts.

It meant the vehicle was enhanced post-production at the AMG facility for high performance, and this designation set itapart from like vehicles manufactured at the Mercedes Benz factory in Germany. [30] I accept the opinion of Mr. Birchall that the vehicle sold by the Defendant to the Claimant was not an AMG Edition.

It was astandard 500 SL dressed up to look like an AMG Edition vehicle. [31] Accordingly, I am satisfied that when the Defendant placed the ad describing the vehicle as an “AMG Edition”, he made amaterial representation of a fact which was not true. [32] I am also satisfied that the Defendant was aware that the Claimant was looking specifically for an AMG Edition due to questionsthe Claimant asked about its history and price.

The Claimant did not disabuse the Claimant of his misapprehension, or state as a fact thathe did not know it was a true AMG Edition vehicle. [33] The Defendant did not testify or call defence evidence to explain how he came to make the representations that I find were untrueand misleading. [34] I find that the Claimant relied on the misrepresentation of fact made by the Defendant. [35] On the totality of the evidence, I am not able to conclude that the Defendant made the misrepresentation fraudulently, knowingthat it was false at the time he made it.

The vehicle had not been previously owned by him, is said to have arrived from Japan, and hadbeen modified at some stage earlier in its life. [36] The Defendant was without question careless in placing the words AMG Edition in the advertisement and careless in hissubsequent oral statements that the vehicle was a premium AMG vehicle requiring premium gas.

I find that he was negligent in assertingthe AMG designation without ascertaining it to be true, all the while knowing that buyers were likely to rely on it. [37] I find those print and verbal misstatements by the Defendant directly induced the Claimant to enter into the contract to purchasethe vehicle because the Claimant believed those statements to be true. [38] The Defendant says the Claimant should have had the vehicle inspected to confirm that it was an AMG Edition as represented.

Ido not accept that, after the misrepresentation was made, the Claimant was duty bound to verify by independent means the veracity ofthe statement. The claim is not about the roadworthiness of the vehicle or whether it is reasonably fit for the purpose of being driven onthe roads. Statements of opinion about the condition of a vehicle’s working parts may, in an appropriate case, require verification or beat the risk of the buyer. [39] This case is about a misrepresentation of fact, not opinion, that the vehicle was an enhanced AMG model.

As such, the assertionof fact is not expected to be in issue and can be taken at face value. As noted by Jessel M.R. in the case of Redgrave v. Hurd (1881) 20Ch. D. 1(C.A.) at 13: If a man is induced to enter into a contract by a false representation it is not sufficient to answer him to say “If you had used duediligence you would have found out that the statement was untrue.

You had the means afforded you of discovering its falsity, and didnot choose to avail yourself of them.” [40] Lack of due diligence in verifying the statement by the person to whom the false statement is made does not benefit the maker ofthe misstatement. [41] The case of Leggett v. Taylor (1965) (BC SC), 50 D.L.R. (2d) 516 is not of assistance to the Defendant becausein the case at bar the Claimant relied on the written description given by the Defendant that was essential and fundamental to hisdecision to purchase the vehicle. [42] In

summary, I have found it proven on a balance of probabilities that the Defendant made a misstatement of a material fact whichdirectly induced the Claimant to enter into the contract of purchase and sale. I accept and find that the Claimant would not havepurchased the vehicle had he been told about the true state of affairs.

Remedies [43] A material and operative misrepresentation will allow the wronged party to set aside or rescind the contract and the put theparties in the position they were in before the contract was finalized. [44] Whether the words of the Defendant amounted to a negligent misrepresentation or innocent misrepresentation, or amounted to amaterial misstatement based on mistake under contract law, the Claimant is entitled to have the contract rescinded.

[45] A case remarkably similar on the facts out of Ontario is Lecos Auto Sales v. Vink Motors Ltd. [1988] O.J. No. 496, appealdismissed [1992] O.J. 3465 (C.A.) in which the Plaintiffs complained that the Defendants had represented a 1983 Mercedes Benz forsale as having a full AMG package when it was 1982 Mercedes Benz with only a partial AMG package with no engine conversion. TheCourt was satisfied on the balance of probabilities that: ...the seller had made a clear, unequivocal albeit innocent misrepresentation, intended to persuade Mr.

Rusonik to conclude an agreementof purchase and sale, that a full AMG conversion, including engine modification, had been done on the car. Such was not in fact the caseand there was expeditious notification to the defendants’ representatives of this fact and of the plaintiffs’ desire to rescind the agreementin very short order.

It was perfectly clear to all from the beginning that the AMG full conversion was at the heart of the deal...[.] [46] The Ontario Court held that the Plaintiffs were entitled to have the contract set aside and the purchase price refunded to them. [47] The remedy of rescission would require that the Claimant return the vehicle to the Defendant and the Defendant refund thepurchase price paid by the Claimant. [48] Is the fact that the Claimant drove the vehicle for several months or the fact that the he made improvements to the vehicle a barto undoing the contract? The Defendant relies on Diamond v. B.C.

Thoroughbred Breeders’ Society and Boyd (1965) (BC SC), 52 D.L.R. (2d) 146, 1965 Carswell 59 for the proposition that a delay in disavowing the contract after learning of a mistakemay result in the contract being affirmed, leaving damages and not rescission as the available remedy. [49] I am of the view that Diamond is distinguishable. In the Diamond case, the Plaintiff waited some six months after learning ofthe fundamental mistake concerning the purchased horse’s lineage. In the case at bar, the Claimant acted very quickly after learning ofthe true state of affairs.

He contacted the Defendant for a refund and, not meeting with success, he placed the vehicle in storage andcommenced the lawsuit. He is not guilty of any wilful delay. [50] Second, the law recognizes that, in an appropriate case, the court may make a monetary adjustment for use or profit from achattel which is the subject matter of a rescinded contract. In Wiebe v.

Butchart’s Motor Ltd. (BC CA), [1949] 4 DLR838 (BCCA) a purchaser who obtained rescission of a car purchase contract after one year’s use of the vehicle was required to give $600in recognition of deterioration of the vehicle’s value due to its use. [51] In the case at bar, after purchasing the vehicle for $22,000 the Claimant drove it a distance of about 2,000 kilometres and spentabout $1,505.73 in upgrades and repairs before learning of the misrepresentation.

In my judgment, by reason of the improvements madeto the vehicle by the Claimant, a deduction of $500 for vehicle use and deterioration is a sufficient adjustment in this case. [52] Accordingly, I find for the Claimant in this action. The contract between the parties is rescinded. The Claimant is grantedjudgment against the Defendant in the sum of $21,500 and the vehicle is to be returned to the Defendant in exchange for payment of thejudgment.

The parties have 45 days from the date of these reasons to comply with repayment by the Defendant of the contract price, less$500 adjustment, and for the Claimant to return the vehicle to the Defendant. [53] Should the Defendant not tender the sum of $21,500 within 45 days in satisfaction of this judgment, the Claimant is at liberty tosell the vehicle at fair market value, to retain in partial satisfaction of this judgment the net proceeds of sale after payment of reasonablecosts associated with its sale, and to seek payment of any shortfall remaining as if a payment order made against the Defendant. [54] The Claimant is entitled to its filing and service costs, and costs of its expert report from the Defendant. ______________________ H.K.

Dhillon Provincial Court Judge