Evergreen Kitchen Cabinets Ltd. v. Kaeser Compressors Canada Inc., 2020 BCPC 217

Citation: Evergreen Kitchen Cabinets Ltd. v. Kaeser Compressors Canada Inc. 2020 BCPC 217 Date: 20201103 File No: 17794 Registry: New Westminster IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: EVERGREEN KITCHEN CABINETS LTD. CLAIMANT AND: KAESER COMPRESSORS CANADA INC. DEFENDANT AND: CLARKE TRANSPORT INC. DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE D. SUDEYKO Counsel for the Claimant: H. Turna Counsel for the Defendant, Kaeser et al C. Chiu and A. Jiwaji Counsel for the Defendant, Clarke et al: B. Meadow Place of Hearing: New Westminster , B.C. Dates of Hearing: July 20, 21, September 11, 2020 Date of Judgment: November 3, 2020 BACKGROUND

BACKGROUND [ 1 ] The claimant, Evergreen Kitchen Cabinets Ltd. (“Evergreen”), is a kitchen cabinet company located in Surrey, B.C. They required a new compressor. After meeting and conferring with a salesperson for Kaeser Compressors Canada Inc. (“Kaeser”), Evergreen ordered and paid almost $11,000 for a compressor, the terms of which were agreed to on June 29, 2017. [ 2 ] However, Kaeser are located in Quebec, such that transportation of the compressor became necessary.

The Kaeser salesperson assisted Evergreen by helping to arrange for that with Clarke Transport Inc. (“Clarke”), but Evergreen was required to pay Clarke directly. [ 3 ] The compressor, which was actually built in Germany, was inspected after arrival and packaged for transport by Kaeser from the warehouse in Quebec. It was surrounded by a cardboard covering and strapped to a pallet.

It had a tilt alarm, which would reveal if the pallet has been significantly tipped, as well as markings on the cardboard covering to indicate it should be kept upright. [ 4 ] It was then picked up by Clarke, and accepted by their driver and transported to Evergreen in Surrey, B.C. When the compressor arrived on July 18, 2017, it was accepted through a signature by a representative of Evergreen, who also paid the delivery cost directly to the driver.

The driver for Clarke left. [ 5 ] However, Evergreen says that after removing the strapping and cardboard, they discovered that there was some obvious damage to the upper side and top of the compressor. [ 6 ] Evergreen contacted Kaeser and Clarke. Clarke sent out an inspector the next day on July 19, 2017, who noted in the Claim Report that, in addition to the visual damage to the compressor, the cardboard covering had a puncture and was dirty on one side, and the tilt alarm was activated.

A representative of Evergreen signed that Claim Report, but says that he didn’t understand it and another said that they were rushed to make the claim by the inspector.

Some photographs were taken of the cosmetic damage to the compressor, but there were no photographs of the cardboard covering offered to confirm its condition (other than a partial view in the background of a photograph of the compressor). [ 7 ] The following day a technician from Kaeser attended and was unable to get the compressor operating. [ 8 ] The parties accepted (and I was satisfied from the evidence) that the compressor likely toppled at some point, resulting in the damage that was both observable on the top and side and that caused the loss of function (the “damage”). [ 9 ] As a result of the damage, Evergreen sought recovery of the cost of the compressor from Clarke, but Clarke’s liability was limited to the calculation of $2.00 per pound or just over $1,000.

Insurance coverage for the actual value of the compressor would have required the purchasing of extra insurance. Although Clarke denied liability for the damage and loss, they offered to pay out that claim. Evergreen accepted that pay out. [ 10 ] Evergreen then pursued Kaeser, initially seeking replacement and then repair of the compressor at a reasonable cost. Kaeser refused to replace the compressor and the estimated cost to repair was nearly the cost of the compressor itself.

COURT ACTION [ 11 ] Evergreen then started this action against Kaeser, arguing that having made it known to Kaeser the purpose of the compressor and relying on their advice, Kaeser failed to provide the compressor in a fit condition suitable for its purpose, contrary to s.18 of the Sale of Goods Act (“the SOG Act”) . The pleadings allege, among other things, a failure by Kaeser to “inspect”, “package” and “deliver” the compressor in that fit condition. [ 12 ] Despite the payment out of the insurance claim, Evergreen also joined Clarke as a co-defendant.

They plead that Clarke, acting as an agent of Kaeser, failed to properly inspect the compressor before it was loaded for delivery, as well as failed to deliver the compressor undamaged. [ 13 ] However, during the trial Evergreen withdrew its claim against Clarke. LAW [ 14 ]

Section 18 of the Sale of Goods Act states as follows: Implied conditions as to quality of 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 of goods 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 are required, so as to show that the buyer or lessee relies on the seller’s or lessor’s skill of judgment, and the goods are of a description that it is 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 implied condition 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

article under 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 the manufacturer or not, there is an implied condition that the goods are of merchantable quality; but if the buyer or lessee has examined the goods 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 they would 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.

Section 36 of the Sales of Goods Act states as follows: Delivery to carrier 36

(1) If, in pursuance of a contract of sale, the seller is authorized or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for transmission to the buyer is deemed, unless there is evidence to the contrary, to be a delivery of the goods to the buyer.

(2) Unless otherwise authorized by the buyer, the seller must make such contract with the carrier on behalf of the buyer as may be reasonable, having regard to the nature of the goods and the other circumstances of the case.

(3) If the seller fails to act as required under subsection (2), and the goods are lost or damaged in course of transit, the buyer may

a) decline to treat the delivery to the carrier as a delivery to the buyer, or

b) hold the seller responsible in damages.

(4) Unless otherwise agreed, if goods are sent by the seller to the buyer by a route involving sea transit, under circumstances in which it is usual to insure, the seller must give such notice to the buyer as may enable the buyer to insure them during their sea transit.

(5) If the seller fails to give notice as required under subsection (4), the goods are deemed to be at the seller’s risk during the sea transit. ISSUE [ 15 ] The claim against Kaeser as submitted by Evergreen comes down to two alternative scenarios: 1. That the damage occurred while in the control of Kaeser, before the compressor was packaged and transported from Quebec, which would support the claim under s. 18 SOG Act ; 2.

Alternatively, if the damage occurred in transport, Kaeser failed in their duty to Evergreen to make or arrange an insurance contract with Clarke that fully protected their loss, relying on s. 36 SOG Act. [ 16 ] The issue is whether Evergreen has established on the balance of probabilities that the damage occurred while in the control of Kaeser and before transport, or established that it occurred during transport, and that Kaeser had a duty and failed in its duty to protect Evergreen from its loss.

ANALYSIS [ 17 ] There was no evidence presented regarding the standard of care with respect to the “inspection”, “packaging” or even “delivery” of goods, such as this compressor. Having said that,

Section 18 SOG Act has application in the event that the seller fails to provide the item to the purchaser in a fit condition, which would include in these alleged circumstances---the arrival of a compressor that does not work and requires extensive repair close to its original cost. That does not require expert evidence. [ 18 ] However, where there was an intervening event, such as damage in transport, or following arrival, that caused the item to no longer be fit for the purpose, the SOG Act offers limited assistance to the purchaser.

That is because the obligation of the seller is to provide the item to the carrier (transporter) in that fit condition, which is deemed delivery to the purchaser (s. 36(1) SOG Act ). [ 19 ] In the event of damage during transit, if the seller, being required or with authority to do so, failed to make a “reasonable contract” with a carrier on behalf of the buyer, which would arguably include obtaining extra insurance in this case, the seller may be held responsible to the buyer for any damage or loss in transit (s. 36(3) SOG Act ). [ 20 ] If the damage occurred after delivery, the buyer has no claim. [ 21 ] The first question in this case is: When did that damage occur?

There are three possibilities— before transport , during transport , or after delivery . Before transport [ 22 ] Perhaps not surprisingly, there was no direct evidence of damage to the compressor while in the possession of Kaeser, before packaging and pick up by the Clarke driver. [ 23 ] Instead, Evergreen relies upon the testimony of its three representatives that the cardboard packaging covering the compressor was entirely unblemished, including at the time that the Clarke inspector attended and completed his Claim Report.

If that were the case, then by inference the compressor was more likely damaged before transport and while in the possession of Kaeser. [ 24 ] However, I was not convinced by that testimony. Surely if the packaging was unblemished, the Clarke inspector would have made the same observation. Undamaged packaging would have suggested that Clarke was not likely responsible. Instead it is suggested by Evergreen that the Clarke inspector made an inaccurate observation and placed it in the Claim Report which, on its face, supports that the damage may have occurred during transport.

I found that Claim Report to be relevant and, based on it being contrary to interest, highly trustworthy (see s. 16.(1) of the Small Claims Act Rules).

[ 25 ] I was equally unconvinced by the evidence of the Evergreen representative, Mr. Kulvinder Dhaliwal, who signed the Claim Report, that he didn’t understand what was in it and that he was rushed to make the claim. Firstly, the results of the inspection and Claim Report, which was brief and to the point, should have been of significant interest to Evergreen, since it would possibly entitle them to compensation for their loss. They were not then aware of the limitations of the recovery available from Clarke. Secondly, clarification could have been sought, even accepting that English was not his first language.

In fact, Mr. Amanveer Tiwana, the third representative of Evergreen, who suggested they were rushed by the Clarke inspector to make the claim, was also present.

His command of English was stated to be better than the other representatives and he was responsible for much of the email correspondence for Evergreen. [ 26 ] Finally, I note that there was no evidence that Evergreen brought to Clarke’s attention the observations they now claim in their testimony regarding the cardboard covering, despite a significant period after the inspection and before the payment of the claim by Clarke. [ 27 ] I find that the testimony of the Evergreen representatives on this issue was designed to claim against Kaeser directly, arising out of the limited recovery already accepted from Clarke, and I give that testimony, together with the claim that the compressor did not topple after delivery, little or no weight. [ 28 ] Similarly, not surprisingly there was also no direct evidence that the compressor that left Kaeser in Quebec was without damage.

It is not realistic to expect, as was suggested by Evergreen, that there should be a picture of all compressors as they arrive or are about to leave the warehouse. Instead, the evidence of the Kaeser employees, given through video from Quebec, and the documentary evidence, was of a method of inspection upon arrival of the compressors from Germany, and the packaging of the compressors for delivery. [ 29 ] I accepted that evidence as accurate of the method of inspection and packaging, and which suggests it is unlikely that an obviously damaged compressor would be packaged for delivery.

Indeed, if the compressor was already damaged in this obvious manner upon arrival from Germany (or somehow occurred after arrival), the Kaeser employees would have seen the damage with minimal inspection before packaging. Why would they then send such an obviously damaged compressor? I conclude that they would not likely do so, since it would almost certainly end up being sent back for even cosmetic damage. [ 30 ] I conclude that Evergreen has failed to establish on the balance of probabilities, that Kaeser delivered the compressor to the carrier, Clarke, for transport to Evergreen, in less than a fit condition .

During transport [ 31 ] It is certainly possible that the damage occurred during transport. [ 32 ] Clarke’s position was that it did not, although they paid out the claim. Clarke are certainly experienced, being in the business of transport, even if accidents do occur. The acceptance at pick up by the Clarke delivery driver, together with the acceptance by the representative of Evergreen upon delivery, supports no apparent signs of damage at pick up or during transport.

The observations of the Clarke inspector is consistent with toppling and damage either during transport (but not noted by the driver or the Evergreen representative accepting delivery), or damage occurring after delivery to Evergreen. After delivery [ 33 ] It is also possible that the damage occurred after arrival at Evergreen, which in these circumstances would not entitle them to make a claim. [ 34 ] Evergreen is not in the business of moving, or of storing compressors. They are kitchen cabinet producers and installers. The Clarke driver delivered the packaged compressor to Evergreen, who accepted it.

The compressor could have toppled after delivery to Evergreen and before the removal of the packaging, which would be consistent with the Claim Report of the Clarke inspector. [ 35 ] My assessment of the testimony of the Evergreen representatives leaves me unable to find it any less likely that the toppling occurred after delivery than during transport.

CONCLUSION [ 36 ] The onus is on the Claimant, Evergreen, to prove their case, which includes that the damage likely occurred before delivery, and they have failed to do so. [ 37 ] For that reason, I need not consider whether Kaeser was authorized or required to send the compressor to Evergreen pursuant to s. 36(1) SOG Act , or had a duty to make sure that Evergreen was provided with extra insurance against damage during transport with Clarke, as might be found pursuant to s. 36(2) SOG Act . [ 38 ] I would only add that there was also a clear obligation for Evergreen to pay for Clarke’s transport services directly, such that there was a separate contract between those parties.

Evergreen could have refused to accept the terms in the contract with Clarke, or even refused to use Clarke as the transporter, separate from the agreement to purchase the compressor from Kaeser. [ 39 ] That is certainly different than many of the common arrangements with Kaeser, as offered in their testimony, in which the transportation is entirely arranged by Kaiser, who directly contract with transport companies (of which Clarke is not one), and which is inclusively billed by Kaeser to their customers and typically included the routine purchase of extra insurance. [ 40 ] All of that suggests that, pursuant to s. 36(1) SOG Act , Kaeser was “authorized” to assist Evergreen to arrange for delivery, but not necessarily authorized to send the compressor. [ 41 ] I would also note that the provision of extra insurance is optional, such that a basic shipping fee without that extra insurance may have been, pursuant to s. 36(2) SOG Act , “reasonable”, having “regard to the nature of the goods” and any “other circumstances”,

especially without any evidence from Evergreen that, were it within its power, it would have purchased the optional extra insurance. It is worth noting that s. 36(4) SOG Act requires special consideration for insurance when sea transit is involved, which was not the case for this transport. [ 42 ] Despite the significant efforts of the counsel on their behalf, Evergreen has failed to prove its case. ORDER [ 43 ] Therefore, I dismiss the remaining claim against Kaeser. _____________________________________ The Honourable Judge D.M. SUDEYKO Provincial Court of British Columbia