IN THE SMALL CLAIMS COURT OF NOVA SCOTIA
Citation: East Coast Surf School Inc. v. Padmos, 2023 NSSM 5
Claim No. SCCH 496272
Between:
East Coast Surf School Inc.
Claimant
-and-
Alastair Padmos
Defendant
DECISION & ORDER
Appearances Claimant – Nic Manos, owner
Defendant – Seamus Ryder, Counsel
Introduction
1. This matter was heard on February 21, 2023. Both parties appeared and gave evidence.
2. There was a delay in having this matter set for trial, as the original counsel for the Defendant felt an in-person hearing was required, ostensibly because issues of credibility were in issue. The file was referred to this Adjudicator. Following review, given the Court’s experience with video hearings since the start of the Pandemic, I concluded a video hearing was an appropriate method to use in this matter. Both parties consented and the trial was scheduled for Feb 21.
The Evidence
3. The Claimant runs a surfing school. It has no physical locale but operates from places where the surf conditions make it convenient to teach individuals to surf. Nic Manos is its principal.
4. Nic Manos and the Defendant have known each other since about 2010.
5. The Defendant, a fulltime employee of the Province on Nova Scotia, has a hobby of restoring vintage Volkswagen Vans. His hobby has evolved to a part-time business. He testified that over the last few years he has bought, restored, and sold 6-9 vehicles.
6. In 2017 Mr. Manos contacted the Defendant about the availability of a vintage vehicle. The desire was to have a van they could use to take surf equipment and staff to various beaches. At that time, they were using personal cars for transportation.
7. In the summer Mr. Nanos and the Defendant traveled to the Annapolis Valley to see a VW van that had been advertised for sale on-line. Mr. Manos explained to the Defendant the purpose for which the van would be used. It was to be a place from which they could operate their business and travel to the locations where they offered instruction. They planned to ‘work from the van.’
8. The Defendant acquired this vehicle and agreed to restore it to resell it to the Claimant.
9. By contract dated January 27, 2018, the Defendant agreed to sell a restored VW Transporter (VIN # xxx) to the Defendant. Though the contract names Mr. Manos as the buyer, in evidence and through counsel it was agreed, the principal was acting on behalf of the business.
10. Consistent with the evidence that was adduced, the contract recognized the uncertainly of timing and costs associated with the restoration of 40-year-old automobile. The contract refers to purchase price as the ‘Total Cost Estimate’ and notes it might vary between $16000 and $18000 due to ‘unforeseen mechanical, structural and required detailing’. The document also notes ‘Delivery of finished vehicle is also subject to availability of parts in the event of special ordering required.’
11. The contract stipulated the finished vehicle to include 1) Total body restoration, ….., and 2) Mechanical restoration, tuned engine, installation of single progressive carburetor, Nova Scotia Motor Vehicle pass’.
12. A deposit of $3000 was paid by e-transfer from the Claimant. The Defendant was to be held in escrow by the Defendant.
13. Subject to the provisions of the contract delivery was expected in the summer of 2018.
14. In May the Claimant inquired about the state of the restoration for sale through an extensive exchange of test messages, the parties regularly communicated about the work being done by the Defendant to complete the required work.
15. On the 12th the Defendant he was going to ‘put some pressure on deadlines’. On the 19th of that month, the Claimant indicated it was ‘crunch time’ for their business and looked for information about delivery. The Defendant replied the windows should be installed this coming week and then he would take the van ‘to mechanics for engine install/safety pass.’
16. Follow-up exchanges occurred on May 25, June 16, 20, 28 and 29. On the 28th the Defendant stated he intended to ‘get the mechanical part completed’. On the 29th, the Defendant offered to sell the Claimant his van in lieu of the one being restored. Work would be required to have as the Claimant wanted and he declined the offer. Further follow up occurred in July. The Defendant offered many explanations, excuses for the delay as he relied on others to complete required work. He stated there were issues with the window installation, the painting, the detailing – all work that was part of the initial restoration.
17. In January 2019, the Claimant asks, ‘How is that beautiful van coming along?’ The Defendant replies ‘Than van man! He was tuning the engine on Friday has Pete (referring to Claimant’s employee Peter Cove) kept you up to speed? Had to get a few rounds of parts, some back ordered last fall but have it all now Pretty much new car’
18. On April 12, the Defendant messages the Claimant ‘Van almost ready. Saw it Thursday mechanical pretty much complete, couple cosmetic items left…’
19. On May 20, following another inquiry from the Claimant, the Defendant reported ‘hey bud, …the transmission that came with the van is no good….I got another transmission that he is swapping out this weekend.
20. Through the early summer there are numerous exchanges about the state of the van and the work being done by the mechanic. An exchange on August 30, notes they are awaiting a master cylinder.
21. The restoration work was completed in September. On the 12th the Defendant wrote to the Claimant ‘A light came on when driving home and didn’t start last evening might be battery, I have it charging now and will test it out to make sure all is well’.
22. Throughout the restoration primary contact with the Claimant was with Peter Cove, its General Manager. He testified contact took place via text messages, as is evident from those noted, and by phone. When the van was about to be delivered, the September 12 breakdown occurred. This led to a phone conversation between Mr. Cove and Mr. Padmos. Mr. Cove was on a speaker phone so Mr. manos could hear the conversation.
23. Mr. Cove was losing faith in the Defendant and the vehicle once he learned on the issues reported by the Defendant. He stated because of his fear the van would break down he asked for a ‘warranty’ during that phone conversation. Following that conversation, the Claimant wrote to the Defendant ‘So a month is what we came up with for you to cover mechanical issues with the van? Just want to have it in writing. The Defendant replied, ‘in writing (emoji) haha You mean like the original contract?.’ The reply was ‘Just son here that this is what we agreed on. So we have something to reference’ The Defendant says ‘sure’ signifying his agreement.
24. On September 19, discussions occurred re delivery of the van. The Defendant was going to drive it to the Claimant and Mr. Cove offered to drive him home, to get some experience with it. In response to that offer, the Defendant states ‘I have been pondering it a bit this afternoon(.) as it flooded on me later in the day, since we have a month of support added I am wondering if a final tune up is best’ (emphasis added). Delivery was further postponed so the van could be returned to the mechanic for further. In this exchange the Defendant speaks about the uniqueness of the engine in this model of VW vans.
25. In his testimony, the Defendant denies there was a phone conversation where a warranty was discussed. He stated his belief the reference to ‘what we came up with’ in the text exchange referred to discussions between Mr. manos and Mr. Cove. He did not deny being the author of the text on September 19 that referred to a month of support. He stated, ‘I do not recall providing a warranty.’
26. By ‘support’ he meant he had ‘tons of parts and resources’ and he would provide ‘general help.’ He stated he was not a mechanic.
27. On September 15, title to the vehicle was transferred and it was delivered on February 26. Immediately there were a series of problems with it. The horn didn’t work, nor did the right signal indicator. A fan belt came off its wheel and the Claimant had to reinstall it.
28. On October 18, 23 days after it was delivered, the van stopped working. He Claimant advised the Defendant who suspected the battery was dead. The Defendant suggested it needed a new batter and alternator.
29. The Claimant was at a shop called Coastal Collision where the mechanic identified the alternator needed to be rebuilt. Enquiries occurred about where repairs should be performed and after several months it was determined the van should be taken to Mike Suttle, the mechanic who did the initial mechanical work for the Defendant.
30. Mr. Suttle and the Defendant had worked collaboratively on at least four vehicles. Rather than charging for hie labour, Mr. Suttle traded labour for services provided to him by Mr. Padmos.
31. Mr. Suttle testified the work done for Mr. Padmos involved removing an engine from another van and installing it in the vehicle the Claimant was purchasing. He stated it would have been preferable to do a full tune up or rebuild the engine to ensure it was it reliable. Neither of those tasks was performed.
32. Following the breakdown of the Claimant’s vehicle it was returned to Mr. Suttle for repair. He stated Mr. Padmos saw the van in his shop and knew of the issues with it.
33. Mr. Suttle noted some work, such as the installation of the gas pedal, were ‘questionable.’
34. The van’s engine failed because it was overheating due to low compression in three of four cylinders. Air cooled engines in VW vans have tin installed in the cylinder heads. In this van it was missing or had weakened from age. He described this as metal fatigue.
35. He stated there were three options available to the Claimant – purchase a new engine, purchase a used engine, or rebuild the van’s engine. The third option was determined to be the most practical and cost effective. The work was performed and charged to the Claimant in the sum of $5172.12. Of that $1900 + HST was attributable to Mr. Suttle’s labour.
36. After the van broke down there was little detailed communication between the parties after an initial flurry of text messages. The Defendant says he saw the van at Mr. Suttle’s garage then later contradicted himself by saying after the van stopped working, he did not know where it was. He was not asked to approve any repairs and did not do so.
37. The Defendant suggested there were cheaper repair options and suggested he had an available engine that could have been installed in the van. He did not offer that to either the Claimant or Mr. Suttle.
38. Regarding initial work done by Mr. Suttle, the Defendant denied that Mr. Suttle had suggested the engine be rebuilt. The mandate for his mechanic was to make the engine work.
The issues
39. The claim is for recovery of the costs incurred to repair the engine. It is based on the Claimant’s reliance on the ‘warranty’ provided by the Defendant or the Defendant’s breach of its obligations under the Sale of Goods Act.
40. The defence is that no warranty was provided and if there was an agreement to provide one it was not enforceable because there was no fresh consideration for it. The Defendant also suggests any warranty is voided because the Defendant was not given an opportunity to approve the repairs. The Defendant also suggested, without pursuing it in detail, that spoliation should be considered.
41. Though initially pleading the contract was with Nic Manos, the Defendant abandoned that portion if his defence.
Findings
42. Though the facts are straight forward and agreed upon, there are a few areas where factual findings must be made.
43. The Claimant gave his testimony in a straightforward manner. He acknowledged that discussions took place over 5 years ago and some details he could not recall. However, he was clear in his recollection that given the significant delay in delivery of the van, which was an essential element of how he wished to deliver his business, and that there were breakdowns on the eve of delivery, that the Defendant agreed to provide a 30-day warranty. He had not paid the balance owing on the van. He had the option of walking away from the deal if he were not assured the VW would be in workable condition.
44. The Defendant in both his oral testimony and in his numerous explanations for the late delivery, failed to take responsibility for delays or the ultimate failure of the van. He denied the existence of an agreement to warrant the quality of the van for 30 days. He denied that Mr. Suttle had recommended a rebuild of the VW engine. He was quick to blame others for anything that did not go well and readily made excuses or attributed responsibility to someone else.
45. Where the Defendant’s evidence differs from that of Mr. Manos or Mr. Suttle, I favour their evidence. The testimony is not as reliable as theirs.
46. I find the Defendant was in the business of buying, restoring, and selling used VW vehicles. Though it may have been a hobby and not always carried on with a profit motive, he held himself out to the Defendant as a business, with written contracts, deposits, and expected delivery times, all of which are indicia of a used vehicle business.
47. I find the Defendant chose not to have the engine rebuilt, an approach to the restoration that increased the risks the engine would fail. Mr. Suttle recommended a rebuild. The Defendant chose a less expensive option.
48. I find the Defendant was aware of the escalating concerns of the Claimant relating to delays in delivering their van. The project was two years delayed and the Defendant knew how the van was intended to support the Claimants business model. When he reported mechanical issues after receiving the van from Mr. Suttle and advising the Claimant of a further delay, he agreed, to provide some comfort to the Claimant, in the form of an agreement to address any problems they encountered in the first 30 days of ownership. The Claimant refers to this as a warranty. The Defendant referred to it as a month of ‘support.’
49. Regardless of the name, the terms were not very precise nor was it clear to what extent the Defendant intended to guarantee the quality of the work. From the numerous exchanges that took place during the restoration where the Defendant referred to mechanical issues, including work related to the engine; from the fact the contract specified the restoration included ‘mechanical restoration, without limitation; and from the evidence provided by Mr. Suttle, the Defendant always intended the VW van to be in good mechanical working order. His failure to deliver a van in good mechanical working order, which is evident from the fact the engine failed catastrophically in less than 30 days after delivery, means the Defendant breached his contractual obligations to the Claimant as the mechanical restoration required by the contract was not done to a standard that would be expected.
50. The Claimant does not require there to be an additional warranty to recover from the Defendant. The contract between the parties and the approach to dealing with a breach are governed by s 17 (a) of the Sale of Goods Act, RSNS 1989, c 408, as amended.
17. Subject to this Act and any statute in that behalf, 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, except as follows:
(a) 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 sellers skill or judgement and the goods are of a description that it is in the course of the sellers business to supply, whether he be the manufacturer or not, there is an implied condition that the goods shall be reasonably fit for such purpose, provided that, 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
51. The Claimant met with the Defendant, a person known to him to be in the business of selling vintage Volkswagen vans and described the way in which this classic vehicle would contribute to and support his surfing school business. The parties travelled to identify the vehicle the Defendant would restore. The Claimant relied on the Defendant’s knowledge, skill, and judgement to restore all aspects of the vehicle in accordance with the contract which included requirements for ‘mechanical restoration, so that in the end he was selling to the Claimant a restored Volkswagen van that could be used for the purpose for which it was required.
52. There was a warranty in place, not the one the parties thought they were establishing for 30 days after delivery, but a statutory warranty under the Sale of Goods Act.
53. This conclusion is supported by McAsphalt Ind. Ltd. v. Chapman Bros. Ltd., 2008 NSSC 324 at para. 40, where Justice LeBlanc stated:
[40] The elements of fitness for purpose were reviewed in Sound Images Inc. v. Solar Audio and Recording Ltd., [1995] N.S.J. No. 91 (S.C.), where Palmeter A.C.J. said:
16 For the plaintiff to succeed in establishing this implied warranty it must meet all of the requirements of the statute on the civil burden of proof, that is, by a preponderance of evidence. In its pretrial brief the plaintiff submits, that to succeed under s. 17(a) of the Act it must prove:
(a) it made know[n] the defendants the purpose for which the goods were required;
(b) it relied on the defendant's skill or judgment;
(c) the goods are of a description it is in the course of the defendant's business to supply; and
(d) the goods were not fit for the purpose for which they were required.
[41] The plaintiff acknowledges that it was aware of the purpose for which the PG64 cement was required, and that the PG64 cement is a class of goods which the plaintiff manufactures and supplies in the usual and ordinary course of its business. The plaintiff knew that the defendant proposed to use “conventional equipment” to do the mixing and had informed the defendant that “conventional equipment” was sufficient for the job. The plaintiff’s position, however, is that there is no evidence that the cement was unfit “for use as a binding agent in ‘hot mix’ asphalt made using conventional equipment.” The plaintiff refers to Fridman’s statement, in The Sale of Goods in Canada, supra, at pp. 181-182, that “[f]or the buyer to succeed in making a case of breach of the implied condition, he must show ‘that the defect was such as to destroy the workable character of the thing sold thereby amounting to a fundamental and total breach of the contract.’” (citing Peter Esakin Const. v. Wohlberg (1980), 1980 CanLII 2182 (SK KB), 9 Sask. R. 332 at 335 (Sask. Q.B.).)
54. My analysis is also supported by the reasoning of Adjudicator Slone in TK-Mac Construction v. Forbes Chevrolet 2009 NSSM 3 where, though the facts lead to a different conclusion, his analysis of the applicable law and approach to be applied is to determine if the vehicle is in fact a vehicle when sold to the Claimant. If it does not operate as a car, the conditions imposed by s. 17 of the Sale of Goods Act are not met.
55. Given the Defendant’s breach of its obligations under the Act, namely breach of a condition or warranty, imposed on the contract by the Sale of Goods Act, the question is what remedy applies. The legislation addresses that in s. 54.
Remedy of buyer for breach of warranty
54(1) Where there is a breach of warranty by the seller or where the buyer elects or is compelled to treat any breach of a condition on the part of the seller as a breach of warranty, the buyer is not by reason only of such breach of warranty entitled to reject the goods, but the buyer may
(a) set up against the seller the breach of warranty, in diminution or extinction of the price; or
(b) maintain an action against the seller for damages for the breach of warranty.
(2) The measure of damages for breach of warranty is the estimated loss directly and naturally resulting, in the ordinary course of events, from the breach of warranty.
(3) In the case of breach of warranty of quality, such loss is prima facie the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had answered to the warranty.
(4) The fact that the buyer has set up the breach of warranty, in diminution or extinction of the price, does not prevent the buyer from maintaining an action for the same breach of warranty if he has suffered further damage.
56. The Claimant therefore has a claim for damages in the amount of the ‘loss directly and naturally resulting, in the ordinary course of events, from the breach of warranty.’ Here the costs to have the engine rebuilt to the condition it ought to have been when sold to the Claimant in the first place is the amount of its damages. That sum is $5172.12.
57. The Defendant’s argument that it ought to have been consulted about repairs or have had to approve them, may apply when there is a contractual warranty that established such terms or conditions. That requirement does not apply here.
58. loss directly and naturally resulting, in the ordinary course of events, from the breach of warranty.
59. To have it repaired, the Claimant took the van to the mechanic who performed the initial work on it for the Defendant. He undertook the work which he had advised the Defendant to do in the first place. Though the costs to the Claimant were greater that they would have been had the work been done by the Defendant, because of their arrangements to trade services for services, the value of the labour was a cost the Claimant had to bear and are appropriate damages.
60. The Defendant is ordered to pay to the Claimant:
a. Damages - $5172.12
b. Costs - $199.35
TOTAL - $5371.47
Dated at Halifax, Nova Scotia, February 27, 2023
Darrel Pink, Small Claims Court Adjudicator.