Citation: Bernard v. Hébert Stores Ltd. Date: PESCTD 15 Docket: S-2-SC Registry: Charlottetown

Transcription

1 Citation: Bernard v. Hébert Stores Ltd. Date: PESCTD 15 Docket: S-2-SC Registry: Charlottetown PROVINCE OF PRINCE EDWARD ISLAND IN THE SUPREME COURT - TRIAL DIVISION BETWEEN: ALVINA BERNARD PLAINTIFF AND: HÉBERT STORES LTD. - J & J SEWING CENTRE DEFENDANTS Before: The Honourable Justice David H. Jenkins Alvina Bernard - present and acting on her own behalf Janice Hébert and Joseph Hébert - present on behalf of the Defendants Place and date of hearing - Summerside, Prince Edward Island February 7, Place and date of judgment - Charlottetown, Prince Edward Island February 22, 2002

2 Citation: Bernard v. Hébert Stores Ltd. Date: PESCTD 15 Docket: S-2-SC Registry: Charlottetown BETWEEN: AND: ALVINA BERNARD PLAINTIFF HÉBERT STORES LTD. - J & J SEWING CENTRE DEFENDANTS Prince Edward Island Supreme Court - Trial Division Before: Jenkins J. Date Heard: February 7, 2002 Judgment: February 22, 2002 (7 pages) CONTRACTS: Sale of goods - express undertaking as to character and quality of goods - innocent misrepresentation - remedies of buyer - rescission. CASES CONSIDERED: Bevan v. Anderson (1957), 23 W.W.R. 508 (Alta. S.C.); Adams v. Canadian Co-Operative Implements Limited (1980), 20 A.R. 533 (Alta. Q.B.); Wojakowski v. Pembina Dodge Chrysler Ltd., [1976] 5 W.W.R. 97 (Man. Q.B.). STATUTES CONSIDERED: Sale of Goods Act, R.S.P.E.I. 1988, Cap. S-1. TEXTS CONSIDERED: Fridman, Sale of Goods in Canada (4th ed.).

3 Alvina Bernard - present and acting on her own behalf Janice Hébert and Joseph Hébert - present on behalf of the Defendants

4 Jenkins J.: [1] The plaintiff Mrs. Bernard seeks return of the purchase price of $5,500 that she paid to the defendant J & J Sewing Centre for a new Singer Quantum XL1000 sewing machine and software on January 16, She says that Mr. Joseph Hébert, a principal of J & J Sewing Centre, misrepresented to her the capabilities of the sewing machine by informing her that she would hardly ever, if ever, have to use the override symbol for ordinary sewing and for fancy stitches. She says that she proceeded with the purchase based on that particular representation, and the machine is of no use to her. The problem is that in her business and home sewing, which includes a lot of embroidery stitching and lettering, she continually has to apply the manual override on the computer screen to maintain the tension required to attain expected results. Mrs. Bernard has 35 years sewing experience. She says she would not have bought the machine had she known she would have to manually override the automatic settings to do her embroidery work with such frequency. [2] J & J Sewing Centre is the Singer Authorized Dealer in the province. J & J Sewing Centre denies liability. It s principals, Mr. and Mrs. Hébert, say that the purchase and sale was usual, that the sewing machine works to manufacturer s specifications, and that the sewing machine is the best equipment in the marketplace. They explain that the XL1000 model is capable of 20,000 different stitches and designs, and that the manual override is present on the touch computer screen for the very purpose of allowing manual override of the computerized automatic settings. They say the override would be used only on a very minimal number of stitches, less than 0.05 percent, perhaps four or five out of 20,000, where adjustment would be required. Mr. Hébert acknowledges the statement which Mrs. Bernard attributes to him. He acknowledges as well that he was aware that Mrs. Bernard wanted to do embroidery stitching and letters, although he was not aware of her specific business. He observes that there is no sewing machine made which does not have a manual override. Upon hearing of Mrs. Bernard s problem, he consulted the manufacturer, returned the machine for service, and then made two successive replacements of the machine. Mr. Hébert says that he would not have sold the machine if he had known of Mrs. Bernard s expectation that one or more stitches would require manual adjustment. Mrs. Janice Hébert is a highly experienced Singer representative and sewing consultant. She says the sewing machine works as advertised and as specified, and that she attended with Mrs. Bernard to resolve her problems in using the machine.

5 Page: 2 [3] At issue now is the consequence, if any, of the particular statement by Mr. Hébert to Mrs. Bernard that she would hardly ever, if ever, have to use the override symbol. As plaintiff, Mrs. Bernard bears the onus of proving on a balance of probabilities that the statement amounted to a representation with binding legal effect, and of such a fundamental nature that the contract should be avoided. [4] Although the amount of money in issue brings the case within the Small Claims Division, the legal principles applicable to the retail sale of goods need to be understood and properly applied. I am including a synopsis of the law applicable to the transaction between the parties. [5] Statements by a seller to a buyer about goods may or may not have legal consequences. Where they do, a buyer s remedy may range from damages to the right to repudiate the contract, depending on the circumstances. Express statements about the character or quality of goods which are the subject matter of a contract of sale have different legal effects according to their appropriate legal nature. Such statements take the form of undertakings as to the nature of the goods or their fitness either in general or regarding a particular purpose of use. A seller s statement can be a contractual promise by which the seller intends to be bound, or a mere representation, or puff with no legal effect. The law does not attach consequences to statements which are only intended to extol the virtues of the goods, which would not usually be regarded by an ordinary reasonable buyer as being of any greater import. The law is concerned only with statements which take the form of remarks about the goods that are significant in nature and are intended to be taken as true assertions of the present or future fact. Those statements may be considered part of the contractual promise made by the seller, and have binding effect. [6] Where a statement passes the threshold of having legal consequence, its effect will differ according to the category into which it ultimately falls. This depends on the circumstances, which may refer to the time when the statement was made, the nature of the statement, or both. The treatment of fraudulent and innocent misrepresentations differs too. A statement known by the seller to be false that induces the making of the contract is a ground for having a contract declared void and for damages. On the other hand, an innocent misrepresentation, being a misstatement not known by the seller to be a

6 Page: 3 misstatement, does not entitle a mislead buyer to damages, except where the misstatement is made negligently; and it only justifies avoidance of the contract in some circumstances where it is the basis of a mistake of a fundamental nature and the resulting failure of consideration is significant and not merely trivial or insubstantial. A representation may be viewed as a condition or as a warranty. Distinction is made between a condition, being a term so essential or fundamental as to entitle a buyer to treat the contract as repudiated if it is broken, or a vital term, and a warranty which may be regarded as a binding promise of less consequence, or a subsidiary term. Whether a contractual term is viewed as a warranty or as a condition is a matter of construction of the contract, which has important and far-reaching consequences regarding remedy: see Fridman, Sale of Goods in Canada (4th ed.), Chapter 7, Express Undertakings as to the Character and Quality of Goods. [7] Most sale of goods disputes are resolved by reference to the provisions of the Sale of Goods legislation. To the extent it applies to a particular contract, the Sale of Goods Act, R.S.P.E.I. 1988, Cap. S-1, supersedes the rules made in common law and equity regarding the sale of goods, and for the most part codifies those rules. Two provisions of the Act are noteworthy here. Section 13 provides for repudiation of a contract of sale for the breach of a condition, and allows a buyer to elect to treat the breach of a condition as a breach of warranty and to seek damages instead of repudiation. Section 13 also stipulates that where the buyer has accepted the goods and the property and the goods has passed to the buyer that breach of condition can then be treated only as a breach of warranty, thereby excluding repudiation of the contract and rejection of the goods, and substituting the remedy in damages. Section 16 is a general exclusion of implied warranty or condition as to the quality or fitness of goods subject to specified exceptions, including (i) where a buyer has made known to a seller the particular purpose for which she requires the goods, and the buyer relies on the seller s skill or judgment, provided, however, that no implied condition is introduced where the goods are sold under a patent or a trade name; and (ii) where the goods are bought from a seller by description that they will be of merchantable quality. [8] Except where inconsistent with the expressed provisions of the Sale of Goods legislation, the rules of common law continue to apply to contracts for the sale of goods. Fridman, supra, in Chapter 16, Remedies of the Buyer

7 Page: 4 Against the Seller, advises regarding common law and equitable remedies which may be available to the buyer side by side with remedies under the Act. The claim for return of the purchase money by a buyer from a seller where the consideration for the payment of it has failed is expressly reserved by section 54 of the Act. Thus, a buyer may rescind a contract in appropriate cases of misrepresentation or mistake: Fridman, at pp Also, the position with respect to a totally innocent misrepresentation is difficult to assess. An innocent misrepresentation not forming a term in the contract document can be the grounds for an action for rescission. Where property in the goods has passed to the buyer, then depending on the conduct of the buyer, then in some situations rescission can still be granted: Bevan v. Anderson (1957), 23 W.W.R. 508 (Alta. S.C.). Rescission can also be granted based on the related doctrine of mistake, or error in substantialibus, to permit invalidation of an otherwise executed contract. In Adams v. Canadian Co-Operative Implements Limited (1980), 20 A.R. 533 (Alta. Q.B.), a farmer purchased a used hay stacker from a seller, who represented that the hay stacker would work with the 540 rpm power take-off on the buyer s only tractor. The hay stacker would operate only on a 1,000 rpm power take-off. The Court allowed the buyer s claim for rescission of the contract of sale and a return of the purchase price on the ground of the seller s innocent misrepresentation. [9] There is presently considerable muddle in Canadian courts with respect to the availability of relief by way of rescission in cases of innocent misrepresentation. What seems to be happening is that the courts are attempting to navigate the difficult waters of the older equitable doctrine with its restricted view of when rescission could be obtained and what manner of relief was obtainable in order to provide an aggrieved buyer with a remedy when none might otherwise be available to her: Fridman, at pp [10] The statement involved in this case was a misrepresentation substantially affecting the nature and identity of the consideration to be received by the buyer. It went to the root of the contract in the circumstances known between the parties at the time of the transaction, and amounted to a failure of consideration. Mrs. Bernard did embroidery and fancy stitching. When Mr. Hébert advised her that she would hardly ever have to use the manual override, she responded Wow. Upon taking delivery, she found to her dismay that she had to use the manual override continually to do the particular stitches that she would make with her use of the machine. As such,

8 Page: 5 the machine represented to her a very real and significant frustration, to the point where she concluded it was of no use to her, and she reverted to using her old machine. [11] Alternatively, the statement was an error in substantialibus; it introduced a mistake into the transaction. The minds of the seller and the buyer did not meet over the meaning and implications of Mr. Hébert s statement. Mr. Hébert made the statement regarding what he viewed as an infinitesimal numerical proportion of total stitches that the machine could do. Mrs. Bernard viewed the statement as advising her that the particular stitches for which she would use the machine would hardly ever require manual override. Unfortunately, the override requirement applied regarding the stitches she commonly used in her embroidery work, so that as it applied to her as a buyer the statement was false. The XL1000 model is a relatively expensive, sophisticated product. [12] Invocation of the equitable remedy is based on the failure of consideration and does not require any finding of negligence regarding the misrepresentation. However, for consideration of the statutory and common law bases of relief I add this. As the Singer dealer, the seller, and not the buyer, should retain responsibility for the accuracy of such a material representation, and should incur the consequences of it reasonably amounting to a misrepresentation. Mrs. Bernard s conclusion as to the implication of the statement to her intended uses was reasonable. Being generally aware that Mrs. Bernard did embroidery and fancy stitching, and having observed her pronounced enthusiasm in response to his statement about the capability of the machine, Mr. Hébert allowed the statement to stand without any qualification or limitation or any further enquiry regarding the expectation of the buyer which his statement apparently generated. [13] The transaction in issue was not for the parties an entirely isolated event. They had known each other for about two years, had previously carried on some business, and the seller had made service calls out of its Charlottetown store to the Wellington area where the buyer and her friends and associates were involved in a quilting shop. A few days prior to the transaction, Mrs. Bernard had attended at the J & J Sewing Centre with a friend who was the happy owner of an XL1000 unit. After the sale, during the period when the problem with the machine was under consideration, the

9 Page: 6 parties maintained a positive relationship, to the point that in March the Héberts offered Mrs. Bernard employment in their new Bedeque sub-store location. [14] The conduct of a buyer which might otherwise seem to amount to acceptance of the goods may in some circumstances be viewed as conditional, and not have the effect of acceptance for the purpose of depriving the buyer of the remedy of rescission: Wojakowski v. Pembina Dodge Chrysler Ltd., [1976] 5 W.W.R. 97 (Man. Q.B.). I find that Mrs. Bernard did not in fact accept the goods within the legal meaning of acceptance. [15] Mrs. Bernard acted promptly to state her wish to repudiate the contract of sale, she was consistent in her position, and she never waived her right to return the machine. Upon receiving delivery and trying out the machine on her work, she informed Mr. Hébert of her concerns about the loose tension on the scallop stitch and the extensive required use of the override. She allowed Mr. Hébert to make efforts to service the machine and correct the problem, but those efforts were to no avail. Only then was she made aware of the seller s no refund policy. Mrs. Bernard responded that if the machine did not do what she was told it would do, there was something wrong. She asked for and received a replacement machine. The problem remained. Mr. Hébert then involved the manufacturer, who informed her that the machine was working to specifications, and that the matter was between buyer and seller based on what was said at the time of sale. Mr. Hébert then acknowledged something was wrong with the tension, and the next day, March 16th, Mrs. Hébert delivered yet another new machine. Mrs. Bernard was dismayed to find the same problem. On Mrs. Hébert s suggestion, Mrs. Bernard sent a sample of her stitches to Singer. According to Mrs. Bernard, after not hearing back from Singer for a while, she advised Mr. Hébert she had had enough, and she commenced this proceeding. In the circumstances, Mrs. Bernard did not at any point accept the machine. The sale was by telephone order and delivery from the manufacturer. Mrs. Bernard s acceptance was conditional upon the sewing machine performing in accordance with the representation made by the seller, which it never did. [16] J & J Sewing Centre says that there should be no return of the purchase price for two other reasons: (i) that the sewing machine was a special order which required payment in advance, and there is a very limited market for re-

10 Page: 7 sale, especially for the computer software; and (ii) the store s no return policy is advertised by a sign on the cash register. Mrs. Bernard responds that she made the purchase by telephone, she did not see the sign on the cash register, and that there is no statement against returns on her bill of sale. I deny both those grounds of defence. Recognizing that the defendant operates a small business, it is also the case that the defendant is the Singer Authorized Dealer carrying on the retail business of selling sewing machines and related software. The first concern appears to be a matter for resolution between manufacturer and dealer, and one which should not affect the customer as buyer. Regarding the second matter, the buyer s right to rescission should not be subjugated to the seller s no return policy where the policy was not either expressly or impliedly made part of the contract of sale. There was no express agreement or stated term and the buyer was not made aware of the seller s no return policy at or before the time of sale. [17] In making this decision, I am conscious to not impugn the good reputation of the defendant. I am satisfied that Mr. Hébert s statement was truthful, in the manner in which he intended it be received, and that he had no intention to mislead. It was an innocent misrepresentation. I am also satisfied that Mr. and Mrs. Hébert both made sincere efforts to rectify the problem. As well, I accept the evidence that J & J Sewing Centre values its customers, and emphasizes customer service. Regarding the machine itself, it may well deserve its top-of-the-line billing and be enjoyed by other customers. Mrs. Bernard s right as buyer to rescind exists in this case despite all those factors favourable to the defendant s character, because the sewing machine was in substantial character not what the seller represented to buyer it would be. [18] In summary, Mrs. Bernard is entitled to return the goods and receive her money back. The equitable doctrine of mistake operates in the face of Mr. Hébert s statement having created an error in substantialibus permitting invalidation of an otherwise executed contract. This equitable ground is conclusive and I have decided the matter on that basis. Alternatively, at common law the same remedy exists based on the statement being a misrepresentation of a condition giving rise to the right of rescission. Although it is unnecessary to consider the statutory provisions, I would conclude in the further alternative that under section 13(2) of the Act the statement amounts to a stipulation giving rise to a right to treat the contract as repudiated, and the goods were never accepted. The seller s statement about the manual override

11 Page: 8 was a material misrepresentation, upon which the buyer relied when she purchased the sewing machine. Though innocently made, and appearing to the seller as incidental, the misrepresentation was for the buyer fundamental to her use and enjoyment of the sewing machine. The seller made the statement and was sufficiently aware of the buyer s sewing activities to be held responsible for the consequences of the misstatement. The contract was voidable at the instance of the buyer. She acted expeditiously and consistently in that regard. The seller is to return to the buyer the full purchase price of $5,500, and the buyer is to return the goods in like-new condition. [19] J & J Sewing Centre shall also pay to Mrs. Bernard her reasonable expenses incurred in pursuing the matter with the seller, Singer, and the Better Business Bureau, for which she claimed $50, and her out-of-pocket disbursements for costs (filing fees of $25, Sheriff s service of $40, and $35 transportation costs) in sum at $100, for total assessed expenses and costs of $150. February 22, 2002 Justice David H. Jenkins