Hearns v. Rizzolo, 2012 NSSC 256

SUPREME COURT OF NOVA SCOTIA Citation: Hearns v. Rizzolo, 2012 NSSC 256 Date: 20120612 Docket: Hfx. 356703A Registry: Halifax Between: Darren C. Hearns Appellant v. Gary Rizzolo Respondent Judge: The Honourable Justice Arthur W.D. Pickup Heard: July 3, 2012, in Halifax, Nova Scotia Counsel: Philip Whitehead, for the Appellant Erinn G. Moore, for the Respondent By the Court : [ 1 ] This is an appeal by Darren C. Hearns from an order made by an adjudicator of the Small Claims Court dated August 29, 2011. The adjudicator dismissed the claim of Mr.

Hearns against Gary Rizzolo in respect of an exchange or trade of vehicles. Adjudicator ’ s Decision: [ 2 ] The background facts are straightforward. The respondent, Gary Rizzolo, had purchased a jeep from one Mac Kirk Burton in September 2010. He had traded a Toyota truck and paid $4000 in cash in return for the jeep. Apparently at the time of purchase the Burton vehicle was financed through Chrysler Financial. The respondent denied any knowledge of an outstanding encumbrance against the jeep. [ 3 ] Mr. Rizzolo and the appellant, Darren Hearns, agreed to exchange the Rizzolo jeep for the appellant ’ s Dodge.

The parties made the exchange on February 14, 2011 and went their respective ways. Unfortunately for Mr. Hearns, Chrysler Financial later repossessed the jeep. In order to prevent them from selling it to satisfy the encumbrance, Mr. Hearns paid $10,738.18.

[4] Mr. Hearns commenced an action against Mr. Rizzolo in Small Claims Court. Mr. Hearns took the position that the Sale ofGoods Act applies and that there is an implied warranty on the part of the respondent under s. 15(

c) that the vehicle was free from anycharge or encumbrance in favour of any third party. Because there was a breach of this implied warranty, the appellant claimed that therespondent was liable to reimburse him for the cost of clearing the lien, as this is a loss arising directly and naturally from the breach ofwarranty. [5] The respondent’s position was that the rule of caveat emptor applies and the Sale of Goods Act does not apply as this was abarter or exchange, and not a sale of goods within the meaning of the Act. [6] Adjudicator J. Scott Barnett heard this matter on June 13, 2011.

On August 29, 2011 the adjudicator issued a decision findingfor the respondent in determining that the Sale of Goods Act, R.S.N.S. 1989, c. 408, did not apply, as the transaction between the partieswas pure trade, instead of a sale for money consideration or part trade and part payment of money. He found, therefore, that the impliedwarranties under the Sale of Goods Act would not apply. The adjudicator found that there was no evidence of fraud on the part of therespondent or of an expressed warranty as to freedom from encumbrances in the agreement between the parties.

The adjudicator appliedcaveat emptor and dismissed the claim without costs to either party. [7] The adjudicator quoted and reviewed the relevant provisions of the Sale of Goods Act, including the following: 15 In a contract of sale, unless the circumstances of the contract are such as to show a different intention, there is ... (

c) an implied warranty that the goods shall be free from any charge or encumbrance in favour of any third party, not declared orknown to the buyer before or at the time when the contract is made [8] The adjudicator also found s. 4(1) of the Sale of Goods Act relevant.

That provision states that a “contract of sale of goods isa contract whereby the seller transfers, or agrees to transfer, the property in goods to the buyer for a money consideration, called the‘price’, and there may be a contract of sale between one part owner and another.” [9] At the hearing the respondent argued that because there was an exchange of vehicles only, and no exchange of money, theexchange was a barter and not a “contract of sale” falling within the provisions of the Sale of Goods Act. The adjudicator agreed anddistinguished the case of Goodick Estate v.

Conrad Estate, 2011 NSSC 51 , 2011 N.S.S.C. 51, which the appellant submitted. In particular the appellant had referred to para. 77 of Goodick, supra, at which Justice Wright noted: It should be noted that a barter or trade arrangement has the same legal effect as a “sale” for purposes of the Sale of Goods Act and forpurposes of assessing when the title in goods is transferred (see, for example, Smith v.

Billard (1922), 55 N.S.R. 502). [10] The adjudicator found that these comments were made in obiter dictum and that the plain wording of the Statute would lead toa conclusion that the Sale of Goods Act did not apply. [11]

Section 32 of the Small Claims Court Act, R.S.N.S. 1989, c. 430 sets out the powers of the Supreme Court in this appeal asfollows: A party to proceedings before the court may appeal to the Supreme Court from an order or determination of an adjudicator on the groundof:

(

a) jurisdictional error; (

b) error of law; (

c) failure to follow the requirements of natural justice, by filing with the prothonotary of the Supreme Court a notice of appeal. [12] The appellant filed a notice of appeal dated September 29, 2011, appealing from the order or determination of the adjudicatoron the ground of error of law.

He set out the particulars of the alleged error as follows: 1) the adjudicator erred in law in determining that the Sale of Goods Act did not apply; 2) the adjudicator erred in failing to follow the rule of comity and in particular the law as set out in decisions of the Supreme Court ofNova Scotia being a superior court; 3) the adjudicator erred in determining that caveat emptor applied to the situation at Bar. [13] The standard of review for an error of law is correctness (Schwartz v.

Ingenious Ideas Inc., 2009 NSSC 255 , 2009N.S.S.C. 255). [14] As to the first ground of appeal, I am satisfied that the adjudicator committed no error of law. The plain wording the Sale ofGoods Act supports the adjudicator’s conclusion.

I am satisfied that because the exchange of vehicles did not constitute a contract forsale of goods, the implied warranty that the vehicle was “free from any charge or encumbrance in favour of any third party not declaredor known to the buyer before or at the time when the contract is made” (s. 15(c)) was not applicable. [15] Benjamin’s Sale of Goods states that the “consideration of sale of goods must in English law be a price in money, either paid orpromised.

Where the consideration for the transfer of property in goods takes some other form, the contract is of exchange or barter andthe Sale of Goods Act 1979 will not apply to it ...” Likewise, Halsbury’s Laws of Canada - Sale of Goods, defines a “sale” (as percommon law) as “the transfer by mutual assent of the ownership of a thing from one person to another for a money price.

A sale can bedistinguished from barter or exchange, where the consideration for the transfer consists of other goods or some other valuableconsideration (not being money)”. [16] As to the second ground, the Goodick and Smith cases, in my view, dealt with a monetary amount. For example, in Goodick,supra, this was a straight exchange by the customer and the dealership of snowmobiles, however, the exchange of money had taken placeearlier when the original snowmobile was purchased.

The second machine took the place of the original and the two were of almostidentical value, and had the required paperwork been completed, the value of the new machine would have been indicated. By contrastin the present case it does not appear that a monetary price was ever attached to the jeep which was obtained by a straight exchange.

Isee no error in the adjudicator’s reasoning. [17] As to the last ground of appeal, I see no error in the adjudicator applying caveat emptor because there was no evidence of fraudon the part of the respondent, or of an expressed warranty as to freedom from encumbrances in the agreement between the parties. [18] The appeal is dismissed.

Pickup, J.