2014 QCCQ 2671, 2014 QCCQ 2671

Foire de l'auto c. Wilkins 2014 QCCQ 2671 COURT OF QUEBEC Small Claims Division CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-32-129856-110 DATE: APRIL 7, 2014 ______________________________________________________________________ PRESIDED BY THE HONOURABLE MARTINE L. TREMBLAY, J.C.Q. ______________________________________________________________________ LA FOIRE DE L’AUTO Plaintiff v.

ANDREW WILKINS Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Plaintiff, a used car dealership, is claiming $3,175.56 from Defendant, representing the cost it had to pay to replace the defective engine of a GMC Sierra 2008 (the " Sierra ") that Defendant gave as a trade-in when he purchased an Audi A4 2007. [ 2 ] Defendant pleads that he had not made any false representations concerning the mechanical condition of the Sierra at the time of the exchange.

He collaborated with Plaintiff when the latter asked him for a copy of the invoices he received showing that he regularly maintained the Sierra in order to allow Plaintiff to present a claim to General Motors of Canada (“ GMC ”) under the manufacturer’s guarantee. QUESTIONS IN DISPUTE

A) Did Defendant make false representations concerning the existence of the manufacturer's guarantee?

B) Was the Sierra's engine affected by a latent defect?

C) What amount is a fair indemnification of Plaintiff's prejudice? RELEVANT FACTS [ 3 ] Defendant bought the Sierra from a used car dealer in the Fall of 2009. It already had 70,000 km. [ 4 ] When Defendant's wife became pregnant, the couple decided to replace the Sierra. On March 3, 2011, while at Plaintiff's place of business, they decided to buy an Audi, for $22,500, after Plaintiff's representative, Mr. Sarfaty (" Mr. Sarfaty "), had offered to accept the Sierra, valued by him at $18,000, as a trade-in.

The Sierra’s odometer indicated 107,000 km. [1] [ 5 ] Defendant admits that prior to making the offer for the Sierra, Mr. Sarfaty asked him if he had had any problem with the Sierra. Defendant answered negatively. Mr. Sarfaty explains that he did not submit the Sierra to a mechanical inspection. He had already resold it to a wholesaler. He assumed that the manufacturer’s guarantee, including 5 years or 160,000 km on the powertrain, was still valid and would apply.

So did Defendant, who insists at trial on the fact that he transferred his rights in the manufacturer’s guarantee to Plaintiff when he transferred the Sierra. [ 6 ] On March 4, 2011, Defendant took possession of the Audi and remitted the Sierra to Plaintiff. Mr. Sarfaty admits that he examined the Sierra, while the engine was running, but he chose not to test drive it. [ 7 ] On March 5, 2011, the Sierra, parked in Plaintiff's yard in the same place where it had been left the day before, refused to start.

It was towed to a GMC dealership where Plaintiff was informed that the manufacturer ( “GMC” ) considered that the claim was excluded from the manufacturer's guarantee because the engine had been damaged as a result of the owner's failure to have regular maintenance carried out (the “Exclusion Clause ”). [ 8 ] Mr. Sarfaty called Defendant to obtain copy of the invoices showing what maintenance he had done on the Sierra. Defendant submitted evidence covering the 18 previous months but GMC continued to invoke the Exclusion Clause. [ 9 ] Mr. Sarfaty informed Defendant of GMC's decision.

At trial, Defendant admits that even if he had the opportunity to hire his own mechanic to look at the Sierra before the repairs [2] were done, he decided to trust the opinion of the dealership's mechanic. [ 10 ] On July 25, 2011, Plaintiff sent a registered letter [3] to Defendant, demanding the $3,175.56 it paid [4] for the repairs.

[ 11 ] On August 16, 2011, Plaintiff instituted two lawsuits. This one and one against GMC (the " GMC Lawsuit ") [5] . The two cases were not joined for hearing [6] and Defendant only learned of the GMC Lawsuit at the trial in this case. [ 12 ] The GMC Lawsuit proceeded on November 12, 2013, at which time an expert testified regarding a report prepared at GMC’s request [7] . Plaintiff’s GMC Lawsuit was dismissed on November 23, 2013, when the judge concluded that the Exclusion Clause of the manufacturer’s guarantee was applicable. ANALYSIS

A) Did Defendant make false representations concerning the existence of the manufacturer's guarantee? [ 13 ] The manufacturer's guarantee covered the Sierra at the time of the sale. If Plaintiff's attempt to enforce it failed, it was because of the Exclusion clause in an otherwise valid and enforceable contract. Therefore, Defendant had not made any false representations. The manufacturer’s guarantee existed.

B) Was the Sierra's engine affected by a latent defect? [ 14 ] Defendant owned the Sierra for approximately 18 months. The Sierra had travelled 40,000 km and was regularly maintained. The Court accepts Defendant's testimony that the Sierra was working normally at the time of the trade-in. [ 15 ] The contract of sale for the Sierra [8] stipulates: […] L’acheteur déclare que le véhicule est conforme à la description qui en est faite, qu’il n’est pas susceptible d’être assujetti à des droits en vertu de la

Loi sur les douanes et qu’il ne comporte aucun défaut ou vice, caché ou apparent, à l’exception de ce qui a été décrit dans le rapport d’évaluation ainsi que dans la déclaration écrite, s’il y a lieu, joints aux présentes. [ 16 ] As a result, Defendant not only has a legal obligation to warrant that the Sierra was free of a latent defect at the time of the trade-in [9] but, because of the contract he signed, he has assumed a conventional obligation to guarantee against any apparent defect as well [10] .

It is therefore unnecessary to decide if the engine’s defect was hidden or apparent. [ 17 ] The failure of the Sierra's engine is almost contemporaneous to the trade-in. Plaintiff's testimony to the effect that the Sierra was not driven between the time he received it and the time he brought it to the garage for repair is confirmed by the repairman's invoice [11] , which indicates the number of kilometres. These are serious, precise and concordant facts [12] establishing by presumption [13] that the Sierra’s engine was defective at the time of the trade-in.

C) What amount is a fair indemnification of Plaintiff's prejudice? [ 18 ] Given the context of the trade-in, the Court accepts that the defective motor decreased the usefulness of the Sierra and that Plaintiff would not have provided such a high a price if it had been aware of the situation [14] . However, the reduction of the sale price does not automatically amount to the cost of the required repair since the price is often the result of negotiations. [ 19 ] In this matter, to Defendant's knowledge, the Sierra was bought for resale purposes.

Both parties were expecting that the manufacturer's guarantee would cover major repairs, such as the one that was needed.

Therefore, it was foreseeable [15] that if repairs, expected to be covered by the guarantee, were not covered, Plaintiff would need to pay for them before the resale, thereby sustaining a loss [16] . [ 20 ] Furthermore, when determining what is a fair indemnification of the prejudice [17] resulting from the violation of a contractual obligation, the Court must ensure that Plaintiff is placed in the position he would have been if Defendant had fulfilled his duty. [18] [ 21 ] Considering that the defective engine was replaced by a used engine [19] , the Court accepts Plaintiff's testimony that it did not obtain more for the repaired Sierra than the price that it had agreed upon with the wholesaler prior to the trade-in, when it was evaluating the consideration to give to Defendant. [ 22 ] Therefore, the Court concludes that the amount of the reduction of the sale price is equivalent to the cost of the repairs, namely $3,175.56.

FOR THOSE REASONS, THE COURT: [ 23 ] CONDEMNS Defendant to pay Plaintiff the sum of $3,175.56, with interest at the annual rate of 5% and the additional indemnity provided for under

Article 1619 C.C.Q ., calculated from July 25, 2011. [ 24 ] CONDEMNS Defendant to pay Plaintiff the judicial fees of $176. ________________________________ M ARTINE L. TREMBLAY, J.C.Q.

Date of hearing: February 11, 2014