Page: 1 PROVINCE OF PRINCE EDWARD ISLAND IN THE SUPREME COURT - APPEAL DIVISION. TIM O HALLORAN, doing business as Tim s Island Wide Marine Services

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1 Page: 1 PROVINCE OF PRINCE EDWARD ISLAND IN THE SUPREME COURT - APPEAL DIVISION Citation: Whiteway v. O Halloran 2007 PESCAD 22 Date: Docket: S1-AD-1110 Registry: Charlottetown BETWEEN: AND: TIM O HALLORAN, doing business as Tim s Island Wide Marine Services CORY DAVID WHITEWAY APPELLANT RESPONDENT Before: The Honourable Chief Justice G.E. Mitchell The Honourable Mr. Justice J.A. McQuaid The Honourable Mr. Justice K.R. MacDonald Appearances: James W. Macnutt, Q.C., counsel for the Appellant Peter C. Ghiz, counsel for the Respondent Place and Date of Hearing Place and Date of Judgment Charlottetown, Prince Edward Island September 11, 2007 Charlottetown, Prince Edward Island October 31, 2007 Written Reasons by: The Honourable Mr. Justice J.A. McQuaid Concurred in by: The Honourable Chief Justice G.E. Mitchell The Honourable Mr. Justice K.R. MacDonald

2 Page: 2 SALE OF GOODS - Conditions and Warranties - Express warranty of fitness The respondent purchased a rebuilt diesel engine from the appellant. The engine failed after 300 hours. The trial judge found the appellant had given an express warranty as to the fitness of the engine, and he allowed the respondent s claim for damages resulting from the engine s failure. The Appeal Division found the trial judge did not err in fact or law and dismissed the appellant s appeal. Authorities Cited: RULES CONSIDERED: Prince Edward Island Rules of Civil Procedure, Rule 57, Rule 57.01(1); Rule 74: sub-rules 1.01, 19.02, 19.04; STATUTES CONSIDERED: Supreme Court Act, R.S.P.E.I Cap. S-10, s- ss.15.1(1), (2), (3), (4), (5) and (6) Reasons for judgment: McQUAID J.A.: BACKGROUND [1] The appellant appeals from the order of Cheverie J. sitting in the Small Claims Section of the Trial Division. See: Whiteway v. O Halloran 2006 PESCTD 45; [2006] P.E.I.J. No. 57. The appellant asserts the trial judge made errors of law and fact. The appellant asks this division of the court to set aside the judgment entered against him or, alternatively, to order a new trial. [2] The appellant operates a marine engine service in Bloomfield, Prince Edward Island. In June 2004 the appellant sold the respondent a rebuilt 210 Cummins diesel engine. [3] The respondent fishes lobster from the port of Launching, Prince Edward Island. During the 2004 season the respondent was the owner of a 43 foot Darby fishing boat. As the season was coming to an end, the 20-year-old engine in his boat failed. A replacement engine was needed immediately so the respondent could complete the season. This case is about the purchase of a rebuilt engine by the respondent from the appellant and the failure of that engine. THE EVIDENCE [4] The relevant evidence relates to the formation of the contract of sale and the cause of the rebuilt engine s failure.

3 Page: 3 [5] The appellant s evidence is that on June 25, 2004, when he was initially contacted by the respondent concerning the acquisition of the rebuilt engine, he advised the respondent in their telephone conversation that the price was $10,500. which included a Warranty for one season. This meant that if any problem arose with the engine during the season immediately following the purchase, the parties would share the cost of repairs on a basis. [6] Later in the evening of June 25th, when the appellant met the respondent to deliver the engine, the evidence of the appellant was that the respondent asked him if he could do better on the price. In reply to this request, the appellant states in his evidence that he offered the respondent the engine with no warranty, as is, for $8,500. According to the appellant, the respondent accepted delivery on these terms after discussing it with his father who accompanied him to take delivery. [7] According to the evidence of the appellant, prior to taking delivery, the appellant, at the respondent s request, started the engine and allowed it to run for up to five minutes. The appellant indicated in his evidence that he had run the engine in his shop for more than an hour prior to arriving at the point of delivery. There were no problems detected at these times. [8] According to the appellant, the respondent provided the appellant with a cheque. The respondent asked the appellant to hold the cheque for a few days because the respondent thought he might have to obtain money from his fish buyer to cover the cheque. The appellant said he would do so and that he would deliver the receipt or invoice after the cheque cleared. This he did and when he delivered the invoice it indicated that a term of the sale was No warranty. The invoice appears to be dated either the 25 th or 28 th of June [9] The appellant admitted to telling the respondent that he guaranteed his work. He also admitted to advising the respondent the engine would operate like a new one. [10] The respondent s evidence was that the appellant advised him in their telephone conversation that the price was $8,500. He goes on to state that when they met at the point of delivery the price was negotiated to $8,400. With taxes the total agreed upon price was $8,988. [11] In his evidence the respondent states that when he took delivery, he inquired about the condition of the engine. He does not agree the sale was without a warranty. It is the evidence of the respondent the appellant told him that he guaranteed his work and that the rebuilt engine would operate like a new one. The respondent said that except for the variation of $100., the price was agreed upon when the parties discussed the transaction on the telephone. He confirmed that he and his father discussed the terms of purchase at the point of delivery before completing the sale.

4 Page: 4 [12] The respondent testified that he used the engine in 2004 for the balance of the lobster fishing season (three days) and for the herring fishing season of four weeks. The total operating time was estimated to be in the vicinity of 300 hours. [13] In the winter of 2005 the respondent purchased a new boat, known in the industry as Tillman Arsenault boat. This boat is four feet wider in the stern than the Darby boat. The respondent had the engine transferred to the new boat which he purchased from a fisher, who was a friend or acquaintance of the appellant. To assist his friend, the appellant used his truck to lower the rebuilt Cummins engine into the respondent s new boat. [14] On April 29 th, at the commencement of the 2005 lobster fishing season, the respondent began to experience problems with the engine overheating and losing power. He was advised that his only option was to acquire a new engine. [15] The rebuilt engine was disassembled by a marine engine mechanic, Lee Bloom, who gave evidence on behalf of the respondent and who was qualified as an expert witness by the trial judge. It was the opinion of Mr. Bloom that, in the course of the engine being rebuilt, the deck of the engine block had been improperly planed and an improper head gasket was installed. This resulted in the engine valves touching the pistons, causing friction and overheating. Mr. Bloom s evidence was that this would substantially compromise the life of the engine [16] The appellant did not plane the engine himself. He had this work performed by a third party who was not involved in this proceeding. [17] Mr. Thomas Keehn, a Master Engine Analyst, gave evidence on behalf of the appellant. He was also qualified as an expert witness by the trial judge. In the opinion of Mr. Keehn, the engine failed because it was overloaded. He stated that if the engine s failure was caused by improper planing which, in turn, resulted in the valves contacting the pistons, the engine would never have operated for 300 hours and certainly not without some detectable noise. [18] Furthermore, Mr. Keehn was of the view that if there had been valve to piston contact to the degree stated by other witnesses, this would have resulted in bent push rods. Because Mr. Keehn examined the engine quite some time after it was disassembled, he did not have an opportunity to examine all the parts including the push rods; however, in conversations with the mechanic who sold and replaced the engine, he was never advised that bent push rods existed. He concluded from this they were never bent. [19] In the opinion of Mr. Keehn the engine was overloaded because of the increased size of the Tillman Arsenault boat. The overloading resulted in the temperature rising within the engine causing the damage and rendering the engine inoperative. Mr. Keehn

5 Page: 5 conceded, however, that he was not a marine mechanic and he could not therefore, express an opinion as to which particular engine would equip a particular boat. THE TRIAL JUDGE S DECISION [20] The trial judge concluded the issue in the case was the determination of the ultimate cause of the engine s failure. He concluded this issue could be resolved by the acceptance or rejection of one of the two theories put forward by the two expert witnesses. [21] The trial judge described the theory of Mr. Keehn as being based on the fact the boat was overloaded as the result of carrying too many lobster traps on the opening day of the 2005 season. The trial judge found there was no evidence the boat was overloaded, and he refused to accept the theory put forward by Mr. Keehn. [22] The theory of Mr. Bloom who testified on behalf of the respondent was founded on the fact that the engine block was improperly planed and an improper head gasket was installed. These defects caused overheating within the engine and the ultimate failure of the engine. The trial judge was of the view that because the facts upon which this opinion rested had been proven, he would accept Mr. Bloom s opinion. The trial judge concluded the engine failed because of the improper workmanship of the appellant. [23] The trial judge found the appellant had given an express guarantee as to the quality of his work and, therefore, the respondent was entitled to have judgment against the appellant in the amount of $8,000. being the maximum recoverable amount in the Small Claims Section, less, $3,000. as the trade-in value of the damaged rebuilt engine, plus, $517. which was the cost of installing that engine. The total judgment was $5,517. plus costs, which the trial judge set at $500. GROUNDS OF APPEAL [24] The notice of appeal set forth seven grounds of appeal with numerous sub-grounds. In summary, the appellant alleges the trial judge erred as follows: - in his interpretation and application of the Sale of Goods Act. - in assessing the evidence of those qualified to give evidence as experts for both the appellant and the respondent. - in making certain factual findings and in the weight he gave to certain evidence. - in failing to consider relevant evidence and in misapprehending relevant evidence. - in acting beyond his judicial role by assisting the respondent who was representing himself at trial. - in qualifying the individual put forward as an expert witness by the

6 Page: 6 respondent. DISPOSITION [25] I would dismiss the appeal. ANALYSIS [26] Absent a finding of fact that did not have a reasonable basis in the evidence resulting in a palpable and overriding error on the part of the trial judge, this division of the court has no jurisdiction to interfere with the trial judge s factual findings. This is a trite statement as to the power of this division of the court to review factual findings of a trial judge. [27] As the trial was in the Small Claims Section of the Trial Division, I refer to s- s.15.1(1) of the Supreme Court Act, R.S.P.E.I Cap. S-10 which provides inter alia that in exercising its jurisdiction in small claims cases the court... shall hear and determine in a summary way all questions of law and fact and may make such order as the court considers just and agreeable to good conscience. In my view this provision represents an indication that an appeal court should show an increased level of deference to not only the factual findings of a trial judge sitting in the small claims section, but as well to that trial judge s decision on questions of law. [28] In this case the trial judge did not make errors of law nor did he make reversible errors in his findings of fact. [29] The trial judge accepted the evidence of the respondent that a term of the contract was that the appellant guaranteed his work. See: Paragraph seven of the trial judge s reasons for judgment. He did not make reference to the fact that the invoice forwarded by the appellant to the respondent after the sale was completed contained a statement of no warranty. However, in accepting the evidence of the appellant that the latter guaranteed his work, it was unnecessary to refer to the invoice as he had already accepted, based on the appellant s own admissions, the sale was made with an express warranty as to fitness. Furthermore, not only did the appellant represent to the respondent that he guaranteed his work, he told the respondent the rebuilt engine would work like a new one. According to the evidence, a new engine would have a life of at least 10,000 hours. [30] The trial judge accepted the opinion evidence of the respondent s expert witness. It is within the sole province of a trial judge to accept or reject evidence, including the opinion evidence of a witness qualified by the court as an expert. [31] The opinion of the respondent s expert was supported by the evidence. The opinion of the appellant's expert, on the other hand, was not supported by the evidence. Although

7 Page: 7 the trial judge may have mis-characterized the opinion of the appellant's expert as being based on the overloading of the boat, as opposed to the overloading of the engine, this was not a material error. There is no evidence the new boat was heavier in weight nor was there any evidence, except the speculation of the appellant s expert, that because the new boat had a wider stern it would place extra stress on the engine causing it to be overloaded and to fail. [32] In addition to the evidence relied upon and referred to by the trial judge, I note the evidence of the appellant that he lowered the rebuilt engine into the Tillman Arsenault boat and did not contact the respondent to express concern that the engine might be overloaded if placed in this boat. Also I note the evidence before the trial judge included an invoice for the new replacement engine purchased by the respondent when the rebuilt engine failed. The replacement engine, according to the terms of this invoice, was a 210 HP Cummins. There was no further evidence in relation to this engine. [33] The appellant s expert witness admitted he was not qualified as a marine engineer, and as a result, he was not qualified to express an opinion as to which particular engine would be suitable for a particular boat. Therefore, regardless of the trial judge s mischaracterization of the evidence of the appellant's expert, there is no evidence that the rebuilt engine by being placed in the Tillman Arsenault boat, had to power a heavier boat or indeed had to power a larger load. On the other hand, the evidence of the expert testifying on behalf of appellant is absent an evidentiary foundation, and it was not unreasonable for the trial to reject his opinion evidence in favour of the opinion evidence given by the respondent s expert witness. [34] The appellant also asserts the trial judge improperly conducted himself in the manner in which he assisted the respondent throughout the trial. I am unable to agree with his position. The transcript of the evidence clearly reflects the trial judge conducted the trial in a fair and evenhanded manner. The respondent represented himself at trial, and the trial judge was placed in the position of having to question the respondent and his witnesses. [35] Parties appearing in the Small Claims Section of the court are frequently not represented by counsel. This places a trial judge in a difficult position, particularly, if the other party is represented by counsel. It is within the role of the trial judge to question witnesses. If the line of questioning is fair and evenhanded, as it was in this case, there is no basis upon which to conclude the trial judge overstepped his judicial role and interfered with the fairness of the trial. [36] The appellant also asserts the trial judge erred in law in qualifying the respondent s expert. Again, I am unable to accept this position. It is within the role of the trial judge to ensure that procedural and evidentiary rules are not used to unjustly hinder the legal interests of self-represented persons. Trial judges sitting in the Small Claims Section of the

8 Page: 8 Trial Division have considerable flexibility in accepting evidence. See: Supreme Court Act ss. 15.1(2),(3),(4),(5)&(6). [37] Because the respondent was representing himself, it was left to the trial judge to question the individual put forth as an expert witness by the respondent in such a manner as to establish his qualifications. The trial judge also did this in a manner which respected the position of both parties thereby maintaining the fairness of the trial. Furthermore, the trial judge pointed out in his reasons that, although the respondent s expert did not have the same paper qualifications of the appellant's, the trial judge was impressed by the manner in which he gave his evidence and more importantly, his opinion evidence was supported or had a foundation based on other evidence given by other witnesses. [38] In conclusion, the trial judge did not err in law or in fact when he found the appellant responsible for the damages suffered by the respondent as the result of the rebuilt 210 Cummins engine failing after 300 hours of use. [39] The manner in which the trial judge calculated the appellant s damages is not in issue. The trial judge found the appellant is entitled to judgment against the respondent in the amount of $5, plus costs of $500. [40] The appeal is dismissed and the respondent shall have his costs of this appeal. [41] Costs were awarded by the trial judge in accordance with sub-rule of Rule 74 which governs proceedings in the Small Claims Section of the Trial Division. Sub-rule limits the amount of costs recoverable by a successful party to 15% of the amount claimed or, the value of the property sought to be recovered unless, the court determines it is necessary to impose a greater amount because of the conduct amounting to unreasonable behaviour. Sub-rule is also subject to the ability of the court to award a counsel fee of up to $300.,if the successful party is represented by a lawyer and, a fee for a student-atlaw up to $150., if the amount claimed by the successful party exceeds $500., exclusive of interest and costs. [42] Sub-Rule 1.01 provides that Rule 74 applies only to proceedings in the small claims section of the trial division. Therefore, sub-rule 19 and the limit it imposes on the quantum of costs does not apply in the appeal division even though the appeal may be from a proceeding which originated in the small claims section. In the Appeal Division, costs are to be ordered and fixed in accordance with Rule 57 of the Rules of Court and in particular Rule 57.01(1). [43] In fixing the costs of the appeal, I have considered the following: (i) this was a proceeding which originated in the Small Claims Section where the amount claimed or recovered was approximately $5,500.;

9 Page: 9 (ii) (iii) the issues were not complex; and the appellant s conduct in defending the claim of the respondent and in pursuing this appeal cannot be said to be frivolous or vexatious. [44] Therefore, I fix the respondent s costs in the appeal at $1,500. plus disbursements of $ The Honourable Mr. Justice J.A. McQuaid I AGREE: The Honourable Chief Justice G.E. Mitchell I AGREE: The Honourable Mr. Justice K.R. MacDonald