2016 QCCQ 14368, 2016 QCCQ 14368

Domaine de la Côte Mont-Rigaud inc. c. Sabourin 2016 QCCQ 14368 COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division N o : 500-22-208515-133 DATE: October 6, 2016 ______________________________________________________________________ BEFORE THE HONOURABLE DOMINIQUE GIBBENS, J.C.Q. ______________________________________________________________________ DOMAINE DE LA CÔTE MONT-RIGAUD INC. Plaintiff v.

LAURA SABOURIN Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Plaintiff Domaine de la Côte Mont-Rigaud Inc. (“ DCMR ”) seeks from Defendant the return of a deposit of $28,758 made towards the purchase of Defendant’s Icewine juice, which juice DCMR rejected and returned invoking its poor quality. DCMR also seeks damages of $3,000 for expenses and costs incurred. [ 2 ] Defendant contests the action.

She claims that DCMR had no basis to reject the juice and, by way of a cross-demand, she seeks payment of the balance of the purchase price and a commission on the resale of a portion of the returned juice to a third-party. the FACTs [ 3 ] DCMR operates a certified organic vineyard and winery in the Eastern Townships near Montreal, Québec.

Its approach to winemaking is natural and non-interventionist, which involves, notably, fermenting its Icewine products with indigenous yeasts and without the use of additives. [ 4 ] Defendant is the owner and operator of Feast of Fields, a certified organic and biodynamic vineyard in Ontario, through which she offers for sale various wine grape juices, including from the Vidal and Riesling varieties. [ 5 ] In 2010, DCMR approached Defendant because it was looking to buy certified biodynamic wine juice to make biodynamic Icewine.

After negotiating the basic terms of what was intended to be a long-term business relationship, DCMR ordered Vidal Icewine juice in 2010 and was satisfied with the product. [1] [ 6 ] In 2011, it ordered both Vidal juice and Riesling juice. [2] The Vidal juice was satisfactory, but the Riesling juice was rejected and returned to Defendant because DCMR was not satisfied with its quality. [ 7 ] In October 2012, DCMR placed an order with Defendant for the purchase of 2,000 litres of Vidal Icewine juice and 500 litres of Riesling Icewine juice. [3] [ 8 ] After placing the order, DCMR deposited $28,758 with Defendant towards the purchase price, [4] estimated at $47,930 but subject to adjustment based on the VQA-verified volume and Brix (sugar content) of the actual production. [5] [ 9 ] After completion of the picking and pressing of the grapes on January 28, 2013, the juice was poured into DCMR’s totes at Defendant’s farm and the volume and Brix was verified and confirmed as follows:

a) Vidal - 2,300 litres with an average Brix of 39.8 (the “ Vidal Juice ”);

b) Riesling - 220 litres with an average Brix of 39.3 (the “ Riesling Juice ”). [6] [ 10 ] The juice was then shipped by DCMR to its premises in Québec, where it arrived on January 31, 2013 [7] and was immediately transferred to temperature-controlled stainless-steel tanks. [ 11 ] After tasting the Vidal Juice, Mr.

Gerth Hansson, DCMR’s vineyard and winery manager, immediately informed Defendant that it was rejected because of its very low acidity and high Brix and, more generally, its poor quality. [8] [ 12 ] Although Defendant denied the allegations of poor quality and DCMR’s right to reject the Vidal Juice, she sold it to a third- party winery [9] and the sale proceeds were eventually credited to DCMR’s account. [ 13 ] As for the Riesling Juice, it was initially found acceptable on tasting, but laboratory tests revealed in early March 2013 that it contained exceptionally high levels of copper [10] and Defendant was advised on March 14, 2013 that the Riesling Juice was also

rejected. Defendant’s attempts to sell it to a third-party winery failed and it was returned to her on March 25, 2013. [11] [ 14 ] After rejecting the juice, DCMR requested the return of the $28,758 deposit, [12] but Defendant refused. [13] A letter of demand was sent in October 2013 seeking the return of the deposit and damages of $3,000. [14] questions in issue [ 15 ] These facts and the position of the parties call for the resolution of the following questions:

a) Which of Québec or Ontario law governs the contract between the parties (the “ Contract ”)?

b) Was DCMR entitled to reject the juice and, if so, is it entitled to the amounts claimed?

c) If not, is Defendant entitled to the amount claimed by way of her cross-demand? ANALYSIS

a) Which of Québec or Ontario law governs the Contract? [ 16 ] According to Defendant, Ontario law governs the Contract because her place of business is in Ontario. DCMR takes no position on the issue, but submits that it is entitled to the relief sought under either Québec or Ontario law. [ 17 ] The Court agrees with Defendant that Ontario law governs the Contract. [ 18 ] The parties did not designate which law was to apply. In such a case,

Article 3114 of the Civil Code of Québec (“ CCQ ”) provides that the contract is governed by the law of the seller’s residence or business establishment or, exceptionally, by the law of the buyer’s residence or business establishment, if the contract was negotiated and concluded there, if delivery is to take place there or if the buyer determined the terms of the contract, following a call for tenders. [ 19 ] Here, all aspects of the Contract point to the application of Ontario law: ➢ The seller’s establishment is in Ontario; ➢ The contract followed negotiations in Ontario and was formed in Ontario upon receipt by Defendant of DCMR’s acceptance of her offer to sell; [15] and ➢ On the facts, delivery was to be performed in Ontario, through the transfer of the juice to DCMR’s totes. [ 20 ] The parties referred the Court to the Sale of Goods Act [16] (the “ SGA ”) which provides, notably, that: ➢ The breach of a “condition” (i.e. an obligation that is a vital term of the contract) entitles the buyer to reject the goods and to treat the contract as repudiated; [17] ➢ The breach of a “warranty” (i.e. an obligation that is not so vital and does not go to the substance of the contract) does not entitle the buyer to reject the goods, but grants the buyer a right to sue for damages; [18] ➢ Implied conditions as to the quality of the goods and fitness for their intended purpose are statutorily imported into contracts under certain circumstances; [19] ➢ Where the buyer has accepted the goods, the breach of a condition must be treated as a breach of warranty and not as a ground for rejecting the goods. [20] [ 21 ] The questions in issue shall be decided on the basis of the relevant provisions of the SGA .

b) Was DCMR entitled to reject the juice? [ 22 ] DCMR submits that the Vidal Juice and Riesling Juice were poor in quality, defective and unfit for their intended use. It argues that Defendant thus breached the express and implied conditions of the Contract as to quality and fitness for purpose, entitling DCMR to reject the juice and, consequently, treat the Contract as repudiated. [21] [ 23 ] To determine whether DCMR is correct, the Court must first identity the nature and extent of the conditions of the Contract with respect to quality and fitness for purpose. i.

The conditions of the Contract with respect to quality and fitness for purpose [ 24 ] Certain conditions of the Contract were explicitely set out by the parties. Thus, the parties agreed that the juice had to be certified organic and biodynamic and that the level of Brix in the juice had to be between 35 and 40, with a target of 36 to 38. [22] Estimated volumes were also agreed to. [ 25 ] Defendant submits that these conditions are the only ones that she agreed to with respect to the juice.

The Court disagrees. [ 26 ] It is clear from the written exchanges between the parties in 2010 [23] and 2012, [24] as well as from the discussions at the time to which Mr. Hansson and Ms. Overing testified, that Defendant undertook to supply a high quality Icewine juice, one that would allow for the making of an “outstanding certified organic product”. [25]

[ 27 ] Moreover, the Contract contained an implied condition that the juice would be fit for the purpose intended by DCMR (i.e. to make high quality organic and biodynamic Icewine using DCMR’s natural approach). This results from

Section 15, para. 1 of the SGA , which provides: “1. Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required so as to show that the buyer relies on the seller’s skill or judgment, and the goods are of a description that it is in the course of the seller’s business to supply (whether the seller is the manufacturer or not), there is an implied condition that the goods will be reasonably fit for such purpose, but in the case of a contract for the sale of a specified

article under its patent or other trade name there is no implied condition as to its fitness for any particular purpose. […]” [ 28 ] Indeed, based on the evidence, the prerequisites for such an implied condition are present: (

a) the juice sold under the Contract is of the kind that Defendant normally supplies; (

b) the Court accepts Mr. Hansson and Ms. Overing’s testimony that DCMR’s natural processes were discussed at length during the 2010 and 2012 negotiations and that Defendant was made well aware that DCMR intended to use the juice to make Icewine without adding any substances; and (

c) DCMR clearly relied on Defendant’s expertise as an organic and biodynamic Icewine juice producer. [ 29 ] The Court therefore concludes that in addition to the explicit requirements, the Vidal Juice and Riesling Juice had to be of high quality and appropriate to make Icewine using DCMR’s natural and non-interventionist approach. These were essential conditions of the Contract. ii. Was DCMR entitled to reject the Vidal Juice? [ 30 ] Mr. Hansson testified that he tasted the Vidal Juice when it arrived at DCMR’s premises and found it muddy, indistinct in taste and with a mouldy smell.

He immediately felt that it was poor quality Icewine juice, but he nonetheless allowed it to settle and clarify and tasted it again, reaching the same conclusion. He also measured the acidity level and was shocked to see that it was extremely low, so low in fact that it could not be used by DCMR to make organic and biodynamic Icewine. Ms. Overing also tasted the Vidal Juice and reached the same conclusion. [ 31 ] DCMR’s expert, Ms. Barbara Jiménez Herrero, a professional oenologist with BJH Eonologie Conseil Inc., also confirms Mr.

Hansson’s conclusions with respect to the taste, smell and low acidity of the Vidal Juice. She was retained in February 2013 to taste the Vidal Juice and analyze Mosti Mondiale Laboratory’s test results. [26] In her opinion, the Vidal Juice was of low quality and could not be used for DCMR’s purposes. [ 32 ] Defendant offered no direct evidence of the quality of the Vidal Juice. She nonetheless offered many grounds of contestation, but they were unconvincing or irrelevant to the questions in issue. Notably:

a) She questioned whether the samples tested by Mosti Mondiale were really from her juice, but offered no information that could cast a doubt of the probative value of DCMR’s evidence in this respect;

b) She argued that DCMR intended to make Icewine by mixing low-acid juice from Ontario with high-acid juice from Québec so that the low-acid was not a material issue; however, she acknowledged herself in an email in 2010 that such a mix was impossible; [27]

c) She claimed that the low acid in the Vital Juice could have been easily remedied by adding acid, but this is contrary to the testimony of DCMR’s expert, Ms. Herrero, that such an addition would have been impossible, as well as incompatible with DCMR’s no additives approach. [ 33 ] The Court therefore concludes that the Vidal Juice breached the quality and fitness for purpose conditions of the Contract, entitling DCMR to reject it. [28] iii.

Was DCMR entitled to reject the Riesling Juice? [ 34 ] DCMR has also established to the satisfaction of the Court that the Riesling Juice did not meet the quality requirements of the Contract because it contained levels of copper that Ms. Herrero, DCMR’s expert, qualified as “toxic”. [29] [ 35 ] Here, Defendant’s main argument concerns the timing of DCMR’s rejection. She argues that: (

a) DCMR failed to test and accept/reject the Riesling Juice on a timely basis; (

b) this was prejudicial to her as it made it impossible for her to sell the Riesling Juice to a third-party winery as she did for the Vidal Juice; and (

c) DCMR should be precluded from rejecting it on this basis. [ 36 ] Again, the Court finds Defendant’s arguments unconvincing. [ 37 ] Firstly, she did not prove that the delay was prejudicial to her.

On the contrary, the evidence shows that the third-party winery that refused to purchase the Riesling Juice in March 2013 did so because it found the high level of copper too risky. [30] Nothing in the evidence suggests that the result would have been any different had the Riesling Juice been offered to wineries in February rather than March 2013. [ 38 ] Secondly, DCMR had the right, after delivery, to examine the Riesling Juice to ascertain its conformity with the Contract prior to accepting it. [31] Although waiting an unreasonable period of time before rejecting the Riesling Juice could constitute acceptance, [32] the Court does not believe, on the facts, that the delay was unreasonable. [ 39 ] The delay before Defendant was advised of the rejection on March 14, 2013 may appear long, but it was not unreasonable given the need to proceed to laboratory testing and the delays needed to do so, in addition to the fact that the dispute with respect to the Vidal Juice mobilized the parties until February 18, 2013. [ 40 ] In any event, even if DCMR was deemed to have accepted the Riesling Wine, this would not preclude recovery from

Defendant. Indeed, DCMR would be entitled to seek damages, the measure of which would be the difference between: (

a) the value of the Riesling Juice at the time of delivery; and (

b) its value had it met all contract conditions. [33] [ 41 ] Given that the Riesling Juice was unusable for DCMR and it was returned to Defendant, DCMR would be entitled to damages for its full value. [ 42 ] Finally, the Court considered the many other arguments put forward by Defendant in her written observations, but found them unsubstantiated or irrelevant to the determination of the questions in issue. [ 43 ] Notably, Defendant claimed that the Grape Growers of Ontario’s 2012 Regulations [34] were incorporated into the Contract at the request of DCMR.

However, she failed to provide conclusive evidence of this. On the contrary, the Court accepts the testimony of Mr. Hansson and Ms. Overing that the incorporation of these regulations into the Contract was never discussed, let alone agreed. iv. Conclusion [ 44 ] The Court therefore concludes that Defendant was entitled to treat the Contract as repudiated and is therefore entitled to the return of the deposit of $28,758. It is also entitled to costs, including the cost of its expert witness, Ms.

Herrero, whose testimony was useful to the Court in reaching its conclusions. [ 45 ] DCMR has not proven the alleged shipping costs and other expenses of $3,000 claimed in its action. This portion of its claim must be dismissed for lack of evidence.

d) Is Defendant entitled to the amount claimed by way of a cross-demand? [ 46 ] Given the Court’s conclusions that DCMR was entitled to repudiate the Contract and obtain the return of the deposit, it follows that Defendant is not entitled to recover the balance of the purchase price for the juice. [ 47 ] Her cross-demand must therefore be dismissed. FOR THESE REASONS, THE COURT: GRANTS the action; CONDEMNS Laura Sabourin to pay to Domaine de la Côte Mont-Rigaud inc. $28,758.00, together with interest at the legal rate of 5% plus the additional indemnity provided by

Article 1619 of the Civil Code of Québec from November 5, 2013; DISMISSES the Cross-Demand; THE WHOLE WITH LEGAL COSTS in favour of Plaintiff , including the cost of the expert witness. __________________________________ DOMINIQUE GIBBENS, J.C.Q. Dates of hearing: March 9, 10 and 11, 2016 Me Matthew McLaughlin ROBINSON SHEPPARD SHAPIRO Attorney for Plaintiff Ms. Laura Sabourin For herself