Judy’s Family Restaurant v. Brothers Food Equipment Date:, 2016 BCPC 352

Citation: Judy’s Family Restaurant v. Brothers Food Equipment Date: 20161101 2016 BCPC 352 File No: 1637 Registry: Mackenzie IN THE PROVINCIAL COURT OF BRITISH COLUMBIA (SMALL CLAIMS) BETWEEN: JUDY KUNKA doing business as JUDY'S FAMILY RESTAURANT CLAIMANT AND: BROTHERS FOOD EQUIPMENT DEPOT INC. DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE S. K. KEYES Appearing on their own behalf: Judy Kunka Appearing for the Defendant: Larry Nugent Place of Hearing: Mackenzie , B.C. Date of Hearing: March 24, 2016 Date of Judgment: November 1, 2016

INTRODUCTION [ 1 ] The Claimant, Judy Kunka, owns and operates a family restaurant known as Judy’s Family Kitchen, in Mackenzie, BC (the “Restaurant”). The Claimant purchased a commercial gas range (the “Range”) from Brothers Food Equipment Depot Inc. (“Brothers”), which is a family owned business that sells commercial food equipment. The Claimant paid Brothers $8,171.25 for the Range, casters and delivery in advance, allocated as follows: (

a) for the Range: $7,500; (

b) for the Coasters: $150; (

c) for shipping, $521.25. It came with a one year limited warranty. [ 2 ] After the Range was delivered, the Claimant says she opened the box and discovered extensive damage to it, which made food burn, made the cook top dangerous to use, and made one oven mostly inoperable. However, she had already removed their previous range and had no choice but to use it anyway. She used it for five months until the replacement range she ordered was ready and then moved it outside, where it has remained. The Claimant seeks to recover the full cost of the Range from Brothers.

Brothers disputes that the Range was damaged when it arrived and points to purchase terms obliging the Claimant to inspect the Range upon arrival and to the delivery receipt indicating that the Range was received in undamaged and in good order. They deny liability. ISSUES 1. Was the Range damaged already when it arrived at the Restaurant? 2. Was the damage such as to render the Range unfit for its purpose as a commercial range? 3. Application of the Sale of Goods Act . 4. What is the effect of Ms. Kunka having signed the delivery waybill? 5.

What is the effect of the Claimant’s use of the Range for five months? 1. Was the Range already damaged when it arrived? [ 3 ] Ms. Kunka says that when it was delivered to the Restaurant, the Range was still in a packing box with plastic strapping. It was resting on a pallet. The box in which the Range was packaged had some scuff marks and one small tear on the side. The pallet on which it rested was undamaged. There was nothing about the tear or packaging to suggest there might be significant damage to the Range. [ 4 ] Ms.

Kunka said that the deliveryman required her sign the Bill of Lading (Exhibit 9) before the Range was unpacked and before she had an opportunity to inspect it. The delivery service would not deliver the Range into her possession until she signed the Bill of Lading. [ 5 ] Ms. Kunka waited for her husband and helpers to come and unpack the Range and move it into the Restaurant. For about an hour and a half, between the time it was delivered and the time it was moved into the Restaurant, the Range sat in the parking lot beside the door to the Restaurant. Ms.

Kunka says during this time it was visible through the Restaurant windows. [ 6 ] Mr. Mayo, Ms. Kunka’s husband, removed the Range from the box without disturbing it from the pallet that it sat on and he noticed extensive damage to it as soon as it was unpackaged. With help from three others, he moved the Range into the Restaurant, using the attached coasters.

He noted the following damage to the Range: a. the grill was bowed, lifted up on both sides; b. the front was dented on the bottom where the guard beneath the oven and where the pilot light goes (you have to open that part to light stove); c. the right side of the oven had a dent about eight inches long and three to four inches deep; and. d. the four burners sat in a V shape rather than flat. The centre was lower than the two edges. [ 7 ] Photographs of the Range were taken by Monica, a waitress who works in the Restaurant on the date of delivery which corroborates that description.

In the photos, the Range was encased in plastic wrap except it had been ripped away in some areas where the Range was damaged. Although there was considerable damage to the portion of the Range visible immediately adjacent to the wooden pallet it sits on, there is no damage to the pallet. Mr. Mayo believes, therefore, that the Range was damaged before it was placed in the shipping box. [ 8 ] Exhibits 5 and 7 are photographs taken by Maria Allan, the Office Manager of Diamond Delivery, who shipped the Range, taken while it was packaged and in their possession.

They show a very small tear to the box on one side, which shows the plastic wrap

underneath to be undamaged, but when the box was removed, there was no damage to the Range itself in that spot. [ 9 ] Scott Nugent, the representative of Brothers who dealt with the Claimant, suggested in his testimony that the Range was not in fact damaged when it was delivered but that the Claimant or her husband and helpers damaged it when they moved the Range inside. He also suggested that perhaps it was damaged by a truck backing into it while it was outside. On the other hand, Mr.

Nugent acknowledged that because the Range went directly from the U.S. to Thermatek’s distribution centre in Maple Ridge and then to the Claimant “at any stage along that way something could have happened to it and we wouldn’t know”. [ 10 ] He admitted that he had initially believed that the Range had been damaged prior to delivery, which was why he sued the delivery service on behalf of the Claimant and recovered damages. It was only after the Claimant refused to accept those damages in settlement of her claim (for an amount substantially less than the value of the Range) that Mr.

Nugent apparently changed his mind about when the Range was damaged. In my view when Brothers decided to sue Diamond Delivery, they admitted in a court of law the Range was damaged. For Mr. Nugent to come to this Court in these proceedings and now say Brothers takes the opposite position does nothing to enhance his credibility. [ 11 ] I find there is no factual foundation in the evidence for the suggestion that the Range was damaged after delivery to the Claimant. Such a suggestion is purely speculative. The evidence is that the Range was observed to be in damaged condition when the box was removed.

I am satisfied that the photographs were taken contemporaneously, since several of them show damage to the Range with the plastic wrap, plastic coatings and wooden pallet still in place. The pallet is sitting on a rough concrete surface which appears to me to be consistent with worn concrete one would expect to see outdoors, but not the finished surface one would expect to find indoors. I find that the photos corroborate the evidence of Ms. Kunka and Mr. Mayo that the Range was already damaged when they took off the box outside.

I also note that the damage was evident on several areas of the Range, not just one side, as would most likely be the case had it been struck by a vehicle as it sat outside. Accordingly, I find the damage occurred prior to the delivery of the Range to the Claimant. 2. Was the damage such as to render the Range unfit for its purpose as a commercial range? [ 12 ] Initially, Ms. Kunka said she did not believe the Range was useable. She said she called Scott Nugent immediately and told him of the damage. She told him she was in a bind because she had already removed her existing stove. According to Ms. Kunka, Mr.

Nugent said he would look after them and agreed the Claimant should use the Range until it could be replaced. Mr. Nugent does not recall any such call, but he testified that he initially believed that the Range had been damaged prior to delivery and took steps to obtain a remedy for the Claimant. I find his behaviour was consistent with having received information that the Range was damaged and that he would be assisting them to deal with the problem and was aware she would be using it. It seems to me to be plain common sense that Ms. Kunka would call Mr.

Nugent when she discovered the damage and I accept her evidence as to the content of that call. [ 13 ] The Range could be moved on its coasters so it was moved into place and a licenced gas fitter hooked up the Range the same day it was delivered without any trouble, but the Range was problematic from the outset. Ms. Kunka testified that the burners were caved in so pots did not sit properly and would slide off. The front of the stove became too hot to lean against it, which was a problem because she risked getting burnt anytime she had to reach towards the back of the cook top.

The right oven only worked sporadically. Because of the unevenness of the burners, food burnt. [ 14 ] The Claimant provided the Court with the opinion of Clayton Fernstorm, a licenced gasfitter, from Norlite Furnaces Ltd. in Mackenzie. He wrote on October 15, 2014: This is in regards to the new gas range at Judy’s Restaurant in Mackenzie, B.C. I was asked to take a look at the range and see what could be done about the damage to it. During my inspection I found that both ends of the range are bent up which would tell me the frame is bent on it, this cannot be repaired it needs to be replaced.

This also could cause issues such as, with the burners sitting like this angled towards the main grill. If something were to slide of[f] and hit the grill it would cause an injury or fire. [ 15 ] The Claimant delayed replacing the stove because she expected a settlement from Brothers, but that did not happen. Eventually, the Claimant ordered a new range and continued to use the Range for about five months while a new one was being built by another supplier. The Claimant paid $9,145, including delivery, for a new commercial range which was a different brand but had the same features as the Range.

When the new range arrived, the Claimant removed the Range and put it outside where it sat for two or three weeks as she had nowhere else to store it. [ 16 ] Mr. Nugent submitted that since the Claimant managed to use the Range for five months, it was obviously fit to be used. It is clear that the Claimant did use the Range, despite the damage and the defects in it. Her evidence was that it burnt the food and was dangerous to use.

Certainly, the Claimant replaced it within five months, at considerable cost, with another commercial range having the same features, long before the one year warranty on the Range had expired. Had it been performing at the standard required of a commercial range, there would have been no reason to replace it with another with the same features, at considerable extra cost. I find that it was not fit for use as a commercial range when it was delivered. 3.

Application of the Sale of Goods Act [ 17 ] Like all other Provinces in Canada, British Columbia has enacted the Sale of Goods Act R.S.B.C. 1996, c. 410 ( SOGA ) to regulate consumer contracts of purchase and sale. It has a number of provisions intended to provide consumers with some certainty and protection when purchasing goods. The provisions of SOGA apply regardless of contractual terms that might say something different in retail transactions with consumers. However, the sale in question in this case was a sale of a commercial Range to a small business, Judy’s Family Restaurant.

3(

a) Does the SOGA apply to a sale made to a business? Contracting out of the SOGA [18]

Section 20 of the SOGA limits the seller’s ability to contract out (that is, make contractual terms different than the provisions inthe SOGA) of the statutory implied conditions and warranties. The version in force at the time the Claimant purchased the Range (Julyto September 2014) read as follows: No waiver of warranties or conditions 20

(1) For the purpose of this section, retail sale or lease includes every contract of sale or lease made by a seller or lessor in the ordinarycourse of the seller's or lessor's business but does not include a sale or lease of goods (

a) to a purchaser for resale or to a lessee for subletting, (

b) to a purchaser or lessee who intends to use the goods primarily for business purposes, (

c) to a corporation or an industrial or commercial enterprise, or (

d) by a trustee in bankruptcy, a liquidator or sheriff.

(2) Despite

section 18 (

e) or 69, in the case of a retail sale or lease of goods, other than goods that on reasonable inspection appear to beused goods or goods that are described or represented by the seller or lessor to be used, any term of a contract of sale or lease, or anycollateral or contemporaneous contract or agreement, that purports to negative or in any way diminish the conditions or warrantiesunder sections 17, 18 and 19 of this Act, is, (

a) if a term, severable from the contract and void, or (

b) if a collateral or contemporaneous contract or agreement, void.

(3) Despite

section 18 (

e) or 69, in the case of a retail sale or lease of new or used goods, (

a) any term of a contract of sale or lease, or (

b) any collateral or contemporaneous contract or agreement, that purports to negative or in any way diminish the condition or warranty under

section 16 is, (

c) if a term, severable from the contract and void, or (

d) if a collateral or contemporaneous contract or agreement, void. [19]

Section 20 has been interpreted to mean a seller can contract out of the implied terms and conditions set out in the SOGA wherethe buyer is a corporation, or an industrial or commercial enterprise, or the buyer intends to use the goods primarily for businesspurposes. However, the SOGA has been considered in many cases where the purchaser is either a corporation, commercial buyer, orintends to use the product for business purposes: Foley et al v. Piva Contracting Ltd. et al (“Foley”), 2005 BCSC 651 , T-BarContracting Ltd. v. Woodland Equipment Inc., 2010 BCSC 1036 . [20] In Foley, Mr.

Justice Powers was dealing with a claim by purchasers of a new farm tractor which had a number of mechanicalproblems. The purchasers operated a small ranch near Kamloops as a business. After considering the evidence of the parties and theexpert evidence of a mechanic, Mr.

Justice Powers found that although the tractor did function, it was not reliable and “was not what abuyer would expect from a new tractor.” In Foley, Powers J. upon reviewing the leading authorities with respect to fundamental breachand s. 18 of the SOGA espoused the following principles: a. a fundamental breach occurs when a particular breach goes to the very root of the contract; b. a breach of contract becomes a fundamental breach when the consequences of it cause the performance of the contract to besomething totally different from that which the parties had contemplated at the time of the agreement; c. for a fundamental breach to occur with respect to a piece of equipment, it is not necessary the equipment be utterly useless - if onall of the evidence it does not perform the way it was expected to, it may amount to a fundamental breach of the contract; d. multiple defects with a piece of equipment may demonstrate that it was not reasonably fit for the purpose for which it waspurchased, if it could not be relied upon on a day to day basis to fulfill the expected functions; and e. even though goods may comply with their description, the magnitude of failures may result in a finding that the goods were not ofmerchantable quality. [21] Mr.

Justice Powers found that the failure of the tractor to perform as it was expected to was a fundamental breach of thecontract of purchase and sale. The sellers argued that the contractual terms limited the claimant’s remedies, regardless of thefundamental contractual breach, and that the provisions of the SOGA which would have assisted the Claimant, did not apply.

[22] Mr. Justice Powers considered the application of s. 20 of the SOGA. At paragraph 46 of that decision, Mr. Justice Powers notedthat to exclude liability of the implied warranties under the Act, the exclusion or waiver must be clear and unambiguous. He found thatthe contractual terms did not exclude the application of the SOGA. He referred to a number of authorities in support of his decision asfollows: [47] In the decision Hunter Engineering Co. v.

Syncrude Canada Ltd. (1989), (SCC), 57 D.L.R. (4th) 321(S.C.C.), Wilson J. dealt with an argument that two exclusionary clauses were sufficient to preclude the application of the statutorywarranty. In dealing with those two exclusion clauses, she said at pp. 367-368: This argument runs counter to two long-established and related principles in the law of contract, (1) that an exclusion clause should bestrictly construed against the party seeking to invoke it and (2) that clear and unambiguous language is required to oust an impliedstatutory warranty: see Wallis, Son & Wells v.

Pratt & Haynes, [1911] A.C. 394 (H.L.); R.W. Heron Paving Ltd. v. Dilworth EquipmentLtd. (1962), (ON SC), 36 D.L.R. (2d) 462, 1 O.R. 201 (H.C.); Cork v. Creavette Boats Ltd (ON CA), [1940] 4 D.L.R. 202, [1940] O.R. 352 (C.A.); Fridman, Sale of Goods in Canada, 3rd ed. (1986), p. 282. I would adopt thefollowing statement of the law by Eberle J. of the Ontario Supreme Court in Chabot v.

Ford Motor Co. of Canada Ltd. (1982), (ON SC), 138 D.L.R. (3d) 417 at p. 430, 39 O.R. (2d) 162, 19 B.L.R. 147: … although a vendor may exclude conditions implied by the Sale of Goods Act, he must use explicit language, in the absence ofwhich the court will not be prepared to find that the conditions have been excluded. [23] I have reviewed Exhibit 6, which are the Purchase Terms relied on by Brothers.

The terms contained in Exhibit 6 include thatall new food equipment comes with a limited one year parts and labour warranty and an additional term states that the Brothers’ warrantyis for defective equipment and parts and not customer abuse. The terms pertaining to warranties expressly alert the buyer to thepossibility that other warranties may exist. There is no provision that excludes the doctrine of fundamental breach. There is no mentionof the SOGA at all; there is certainly no clear and unambiguous exclusion of its provisions in any of the terms.

Therefore, I find that theprovisions of the law with respect to fundamental breach and the SOGA apply to the Claimant’s purchase of the Range from Brothers,which means that conditions and warranties applicable under the SOGA also apply to this case. 3(

b) Conditions and Warranties under the Sale of Goods Act [24] Sections 17 to 19 of the SOGA impose four statutorily implied conditions in some contracts for the purchase and sale of newitems. The goods must: 1. match the description or the sample; 2. be reasonably fit for the buyer’s purpose for them; 3. be of merchantable quality; and 4. last for a reasonable time. [25] If any of these conditions have not been met, then the buyer can treat the breach of the condition as grounds for repudiating thecontract.

In that case, the buyer may refuse to accept the goods and will then be entitled not to pay, or to get his money back, if he hasalready paid. However, under s. 15 of the SOGA, if the buyer accepts the goods or property and the goods have passed to the buyer, theneven if a condition has been breached, that breach will be treated as if it is a breach of warranty.

A breach of a warranty does not end thecontract of purchase and sale, but it does entitle the buyer to damages for the breach, either to reduce or extinguish the purchase price, orfor consequential damages, or both. [26] The relevant sections in force when the Claimant purchased the Range from Brothers are as follows: Sale by description 17

(1) In a contract for the sale or lease of goods by description, there is an implied condition that the goods must correspond with thedescription…. Implied conditions as to quality or fitness 18 Subject to this and any other Act, there is no implied warranty or condition as to the quality or fitness for any particular purpose ofgoods supplied under a contract of sale or lease, except as follows: (

a) if the buyer or lessee, expressly or by implication, makes known to the seller or lessor the particular purpose for which the goods arerequired, so as to show that the buyer or lessee relies on the seller's or lessor's skill or judgment, and the goods are of a description that itis in the course of the seller's or lessor's business to supply, whether the seller or lessor is the manufacturer or not, there is an impliedcondition that the goods are reasonably fit for that purpose; except that in the case of a contract for the sale or lease of a specified articleunder its patent or other trade name, there is no implied condition as to its fitness for any particular purpose; (

b) if goods are bought by description from a seller or lessor who deals in goods of that description, whether the seller or lessor is themanufacturer or not, there is an implied condition that the goods are of merchantable quality; but if the buyer or lessee has examined thegoods there is no implied condition as regards defects that the examination ought to have revealed;

(

c) there is an implied condition that the goods will be durable for a reasonable period of time having regard to the use to which theywould normally be put and to all the surrounding circumstances of the sale or lease; (

d) an implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade; (

e) an express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent with it. [27] In Berg v. Harbour City Diesel and Offroad Ltd., 2012 BCSC 710 , at para 74, Mr. Justice Voith held there was noreverse onus arising under the provisions of the SOGA. The plaintiff must establish both the existence of an implied warranty, and itsbreach. In other words, it is up to the Claimant to satisfy me that the conditions (or warranties) noted in s. 18 of the SOGA applied tothis case and were breached. “The goods must match the description or the sample” [28]

Section 17 of the SOGA provides that if the goods are sold by description (for example by a catalogue) there is an impliedcondition that the goods will match the description. The evidence before me suggests that the Claimant selected the Range fromBrothers’ website according to the description provided as seen in Exhibit 4. Exhibit 4 describes the Range accurately, except, of course,that when the Range arrived the cook top was so damaged that it burned the food, was dangerous to the cook, and one oven worked onlysome of the time.

As such, the Range did not match the description, that is, that it was a fully functional commercial range with a levelcooktop and two operating ovens. It was, therefore, in breach of the condition that it matched the description. “The goods must be reasonably fit for the buyer’s purpose” [29]

Section 18 limits the application of this condition to sellers who sell that sort of item in the ordinary course of their business. Thus, a private sale between two people is rarely covered. Also, this condition applies only if the buyer told the seller, expressly orimplicitly, how she planned to use the goods and explained that she was relying on their skill and judgment. So, if the buyer told theseller she wanted a commercial stove for a restaurant and they sold her a regular residential stove not up to the task, then it isn’treasonably fit for the purpose for which she bought it.

If she picked it out herself without any discussion, she wouldn’t have the right tocancel the contract because she didn’t explain to the seller why she needed the stove. Also, if the seller gave her notice of the intendeduse (for example, a label says “this is a stove for making toast only”) and she used it differently, for cooking roasts, then she couldn’trely on this condition to get her money back. [30] It is uncontroverted that Brothers was in the business of selling food equipment for restaurants including selling commercial gasranges for use in restaurants.

Therefore, the Range in question was the sort of thing Brothers usually sold. [31] The Claimant went to Brothers for a commercial gas range for her Restaurant, as she had done before. She had always had agood working relationship with Mr. Nugent and they were familiar with one another.

She ordered a Thermateck gas restaurant range asdepicted in Exhibit 4 from the Brothers’ website and paid Brothers in advance of delivery. [32] While there is no direct evidence that the Claimant specifically advised Brothers of the purpose for which she intended to usethe Range, I find that the only reasonable inference from the evidence before me is that the Claimant purchased the Range for theirRestaurant from Brothers because Brothers was in the business of selling commercial ranges for restaurants, and the Claimant relied onBrothers expertise and experience in the business of selling restaurant equipment.

Brothers knew the Claimant operated a restaurant inMackenzie because Brothers had sold her restaurant equipment in the past. I find, therefore, that Brothers was aware the Claimantintended to use the Range as a commercial range in Judy’s Family Restaurant in Mackenzie. “The goods must be of merchantable quality” [33] If the buyer buys a product by description from someone who sells that type of goods, the product cannot have any defects. So,it applies to catalogue sales and most mail order sales. But it wouldn’t apply if the buyer bought something privately through an onlinead, for example.

It also wouldn’t apply if the buyer examined the goods first and had a chance to discover any defects before buying. [34] In Kobelt Manufacturing Co. Ltd. v. Pacific Rim Engineered Products

(1987) Ltd., 2011 BCSC 224 , Mr. JusticeSigurdson discussed the meaning of “merchantable quality”: 57. . . . Merchantable quality means the goods must be “of such quality, in such state or condition as it is reasonable to expect, and [...]fit for the purpose for which it is normally purchased within the market in which it is sold”: Savoie v. Rene’s Service & Trailer SalesLtd., 2007 NBQB 229 , at paras. 15-16. [35] In the present case, the Claimant purchased the Range from Brothers’ online catalogue.

As the Range was shipped to theClaimant directly from the manufacturer, she did not have any chance to inspect the Range prior to its delivery to discover any defects. As it was new, she had a legitimate expectation it would be undamaged. It was substantially damaged when it arrived and I find,therefore, that it was not of merchantable quality. “The goods must last for a reasonable time” [36] This implied condition applies only if they buyer uses the product as intended. It doesn’t apply if the buyer uses the goods forsomething they weren’t made for.

For example, the buyer can’t say that an ordinary residential stove designed for household use hasn’tlasted for a reasonable time if it breaks down as she was using it for commercial cooking.

[37] In this case, the Claimant used the Range as intended, namely to cook food in the Restaurant. The Range was damaged whenthe Claimant received it. It burnt the food, endangered the cook, and the right oven worked only sporadically right from the start. Afterfive months she gave up trying to use it and bought a new one. Given the one year warranty offered by Brothers on the Range, I inferthat the Range was intended to last more than five months.

I find it did not last a reasonable time. [38] In view of all of the above there is ample evidence that the Range did not comply with the implied conditions of the SOGA. Therefore, the Claimant was entitled to refuse to accept the Range and was entitled to treat the contract as at an end and to receiverepayment of the cost of the Range, casters and delivery. 4. What is the effect of Ms. Kunka having signed the delivery waybill? [39] When an item is purchased and sold, property passes in that item according to the intention of the parties.

In this case, thePurchase Terms require the buyer to inspect the items upon delivery and provides that the buyer’s signature on the delivery receipt form[Bill of Lading] will be construed as acceptance the equipment delivered has been received undamaged and in good condition. Thisimplies the title to the Range passes upon delivery and acceptance.

Accordingly, the Range remained the property of Brothers until andunless it was accepted by the Claimant. [40] The Claimant argues she did not accept the Range because she had no opportunity to inspect it until after it was delivered andwhen she had the opportunity, she immediately called Brothers to reject it. Brothers behaved, thereafter, in a fashion that was consistentwith an acknowledgement of that lack of acceptance and that property of the Range remained with Brothers, in that Brothers suedDiamond Delivery for the damage to the Range.

Brothers would not have had standing to sue Diamond Delivery if their propertyinterest had passed to the Claimant upon delivery. On the other hand, Brothers argues that by not returning the Range, and by makinguse of it, the Claimant did in fact accept the Range. [41] As I found earlier, Ms. Kunka signed the waybill without opening the cardboard packaging or otherwise inspecting the Rangebecause the delivery man would not unload the Range unless she signed for it.

I have already found that there was nothing about thecondition of the box or the pallet that would have led anyone to suspect the serious nature of the damage to the Range which was hiddenby the packaging. Brothers seeks to rely on the Brothers contract terms that provide that: 1. Buyers are responsible for inspecting the items delivered, for both obvious and hidden damage and to ensure the goods havearrived in good order and are free of damage. 2.

Buyer’s signature on the delivery receipt form will be constructed as acceptance that the equipment delivered had been receivedundamaged and in good condition. [42] While it is reasonable for a seller to expect a buyer to inspect goods when they receive them, it is also reasonable to expect thata buyer will be given a reasonable opportunity to do that inspection.

Section 38 of the SOGA provides that: 38

(1) If goods are delivered to the buyer that the buyer has not previously examined, the buyer is not deemed to have accepted themunless and until the buyer has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are inconformity with the contract.

(2) Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, the seller is bound, on request, to afford the buyer areasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract. [43]

Section 38 of the S0GA requires the buyer have a reasonable opportunity to examine the goods before title can pass. I find thata reasonable opportunity for examination requires the Range be off loaded from the delivery truck, unpackaged and inspected. TheClaimant is entitled to have an opportunity to discern whether the damage was in conformity with the contract: Dr. Andrew Hokhold Inc.v. Wells et al, 2005 BCSC 194 . I find that the Claimant did not have a reasonable opportunity to inspect the Range until after itwas off loaded from the truck, which was after the waybill was signed.

Thus, I find that the Brothers contractual term that the signatureon the waybill “will be construed as acceptance that the equipment has been received undamaged and in good condition” contravenes s.38 of the SOGA and is not enforceable. [44] I find, therefore, that the fact that the Claimant signed the delivery waybill did not constitute an acceptance of the Range in thecondition it was in, or at all. Her signature on the waybill in fact constituted nothing more than an acknowledgement that a large box hadbeen delivered. 5.

What is the effect of the Claimant’s use of the Range for five months? [45] I have found that the Claimant was justified in rejecting the Range upon delivery or immediately upon discovering the damage. Generally when a buyer finds the goods are defective, they return them to the seller and obtain a replacement or refund. It becomes alittle problematic where the buyer continues to use the defective product until she returns it or after she demands a refund or exchange. Subsequent use can impede her right to return it. [46] I accept that Ms.

Kunka immediately called Brothers and expressed her rejection of the Range. Brothers’ now argues that theClaimant should have sent it back when they discovered the obvious damage. [47] The Claimant and her business were located in Mackenzie, B.C., some 1000 km from Brothers. By the time the Range had beeninspected, the delivery truck was long gone. Returning the goods was not really an option. Under s.40 of the SOGA, a buyer who isentitled to reject goods that have been delivered has no obligation to return them after the seller has been made aware of the rejection:

Buyer not bound to return rejected goods 40 Unless otherwise agreed, if goods are delivered to the buyer and the buyer refuses to accept them, having the right so to do, the buyeris not bound to return them to the seller, but it is sufficient if the buyer intimates to the seller that the buyer refuses to accept them. [48] I find that the Claimant was not obliged to return the Range immediately upon rejection of it. In the circumstances, it madesense to retain it until Brothers completed their investigation of the matter, as requested by Brothers.

However, the other problem wasthat the Claimant had already removed her old range from the premises and she needed the new one for her restaurant, howeverunsuitable it was. Brothers suggested that she make use of the Range while they looked into the problem. [49] Under s. 39 of the SOGA, whenever a buyer acts in any way inconsistent with the ownership of it remaining with the seller,then the buyer is deemed to have accepted the goods. By making use of the Range, Brothers argues that the Claimant has accepted theRange and can no longer repudiate the contract.

Essentially they argue that having made use of the Range as directed by Brothers, theClaimant has accepted it and therefore despite its condition upon arrival, Brothers cannot now be obliged to return the purchase price andaccept return of the Range. [50] In Nikka Traders, Inc. v. Gizella Pastry Ltd., 2012 BCSC 1412 , Madam Justice Maisonville states: [85] I do not agree that s. 39 suggests resale of a product precludes the plaintiff’s claim for breach of s. 18(

a) of the Act. Thedefendant has provided no authority why acceptance of the goods should extinguish an implied warranty or condition under s. 18(a).In Foley v. Piva Contracting Ltd., 2005 BCSC 651 , the defendant salesman of a defective tractor was found to havebreached s. 18(

a) despite the fact that the plaintiff purchasers had already resold the defective tractor to another person. I dismiss thedefendant’s argument that, by operation of s. 39, the plaintiff is precluded from asserting a breach of an implied warranty of a product’sfitness for the buyer’s purpose. [51] International Clearspan Tnts LLC v. Ehlert, 2014 BCSC 635 , is a case where the buyer accepted defective productsbecause of the immediate need. The product in this case was for tents which the trial judge found to be substantially and materiallydefective. Mr.

Justice Verhoeven states: [59] I find that the tents supplied were substantially and materially defective. Wild Coast would clearly have been justified in rejectingthe goods outright upon arrival. They were not fit for their intended purpose. Among other things, the ratchets and stakes were missing.The corner pieces, which are critical to the structure, were unreliable. The cables were too short. The walls were all significantly toosmall and had to be replaced or would have to be replaced in order to fulfill the original specifications. Accordingly, Wild Coast hasestablished a breach of s. 18(

b) SOGA. In addition, the degree of intercompatibility of the components was poor, in breach of thecontract. [52] Justice Verhoeven found the buyer would clearly have been justified in rejecting the goods outright upon arrival. They were notfit for their intended purpose. The seller was obliged to provide tents in accordance with the express and implied terms of the contractand had failed to do so. The buyer had been obliged to make use of the tents despite the defects, and so had received some value fromthe purchase.

In that case the court accepted that the Buyer had been able to make some use of the tents and attributed some set offsagainst the full purchase price. [53] In this case, I accept that the damage to the Range as delivered was such as to render it not of merchantable quality, and thus theClaimant has established a fundamental breach of the contract and a breach of the implied conditions of sale under the SOGA. However,although the Claimant rejected the Range, she ultimately made use of it as it was and thus she accepted it.

Brothers now argues that theRange has been well used and it is now useless to Brothers, so there is no point in returning it. However, just because the Range cannotnow been returned for a refund does not mean that is the end of the matter. Where a breach of condition has been established, as I havefound occurred in this case, but the Claimant has accepted the goods, the Claimant is entitled to damages, rather than to return the goodsfor a refund. DAMAGES [54] Since the Claimant made use of the Range, she cannot now return it for a refund.

However, the Claimant is entitled to sue fordamages for breach of contract on the bases that the quality, fitness, and performance of the Range did not meet the express or impliedterms of sale. For the reasons given above, I have found that the Range was defective and did not meet the implied conditions under theSOGA. [55] The measure of damages is to be assessed; the Claimant is to be placed in the same position as if the contract had beenperformed as agreed or contemplated. Nikka Traders, Inc. v. Gizella Pastry Ltd., 2012 BCSC 1412 , paragraph 92.

Theplaintiff is entitled to all direct costs flowing from the breach, any consequential indirect costs, and the loss of projected profits. Directcosts might include the cost of the replacement range and the cost of burnt food. Consequential losses might include loss of business dueto the food being burnt, or damages for injuries to the cook. Had Ms. Kunka chosen to reject the Range and closed her restaurant untilBrothers provided her with a new one, she may well have succeeded in a claim for damages for loss of profits until the new one arrived.

I note that it took five months for the replacement range to arrive. [56] In this case, the Claimant sought simply the repayment of the purchase price of the Range, casters and delivery, not loss of food

or loss of profits. The Claimant had a duty to mitigate her damages and she did so by continuing to use the Range until she could obtain a replacement. As a result, she has not advanced a claim for loss of profits, although I accept her evidence that the defects in the range caused food to burn, which will necessarily have a cost, both in spoiled food and in the quality of the food served at the restaurant. [ 57 ] I might arrive at an appropriate amount of damages in a variety of ways. One method of estimating the cost is to place Ms.

Kunka in the position she would have been in had the Range not been defective, to award what she was obliged to pay to purchase the replacement range with the same features, including delivery: $9,145. Another method of assessing the damages is to simply assess the entire cost of the Range, casters and delivery, since it was never of merchantable quality and had to be replaced. That is what the Claimant seeks in this case.

Although I might have been inclined to award damages in the amount of the cost of the replacement range, given the position taken by the Claimant in this case, I will award damages in the amount of the purchase price paid by the Claimant for the Range, casters and delivery. [ 58 ] I therefore order that the Defendant pay the sum of $8,171.25 plus court filing and service fees of $176.00 and pre-judgement interest from September 19, 2014. ____________________________ S. K. Keyes Provincial Court Judge Provincial Court of British Columbia