Borgo Upholstery Ltd. et al. v. Canada (Attorney General), 2004 NSCA 5

• Judge: Roscoe, Freeman and Bateman, JJ.A.
• Court: Court of Appeal of Nova Scotia (Canada)
• Case Date: January 13, 2004
• Jurisdiction: Nova Scotia
• Citations: 2004 NSCA 5;(2004), 220 N.S.R.(2d) 302 (CA)

Borgo Upholstery v. Can. (A.G.) (2004), 220 N.S.R.(2d) 302 (CA);

 694 A.P.R. 302

MLB headnote and full text

Temp. Cite: [2004] N.S.R.(2d) TBEd. JA.025

Attorney General of Canada (appellant) v. Borgo Upholstery Ltd. and Neil John Funnell (respondents)

(CA 198623; 2004 NSCA 5)

Indexed As: Borgo Upholstery Ltd. et al. v. Canada (Attorney General)

Nova Scotia Court of Appeal

Roscoe, Freeman and Bateman, JJ.A.

January 13, 2004.

Summary:

The plaintiff's tender to supply 806 chairs built to the defendant's specifications was accepted. The contract provided for delivery F.O.B. the manufacturer's plant. The defendant thoroughly inspected sample chairs at the plant and accepted the goods. Subsequently, the defendant discovered the chairs tipped if you sat on the front edge of the seat. In their inspection, the defendant's employees had not thought to test for this. The defendant advised that it rejected the chairs as not reasonably fit for the purpose. The plaintiff offered to remedy the situation by installing wedges under the front legs. The defendant was not satisfied and eventually returned the chairs. The plaintiff sued for breach of contract.

The Nova Scotia Supreme Court, in a judgment reported (2003), 211 N.S.R.(2d) 374; 662 A.P.R. 374, allowed the action. The chairs were not reasonably fit for the purpose. However, this was not a latent defect. It was a patent defect that was easily discoverable had the defendant properly inspected the chairs. Where a buyer agrees to inspect and accepts delivery at the manufacturer's plant, the buyer cannot later reject the goods as being unfit for the purpose intended, or for lack of merchantable quality, where the defect is patent (not latent) and was discoverable on a reasonable inspection. The plaintiff's offer to remedy the defect did not mean that the defendant's acceptance of the chairs was waived. The defendant appealed. The plaintiff cross-appealed.

The Nova Scotia Court of Appeal dismissed the appeal and the cross-appeal.

Sale of Goods - Topic 4106

Conditions and warranties - Implied or statutory terms as to quality or fitness - Fitness or suitability of goods - The plaintiff manufactured 806 chairs to the defendant's specifications - Delivery was F.O.B. the manufacturer's plant - The chairs were not reasonably fit for the intended purpose, as they tipped when you sat on the front edge of the seat - The defendant had thoroughly inspected the chairs at the plant before accepting delivery, but had neglected to test for forward tipping, which was a patent defect easily discoverable on inspection - The defendant subsequently rejected the goods on the basis of unfitness and lack of merchantable quality - The trial judge held that where a buyer agreed to inspect and accepted delivery at the manufacturer's plant, the buyer could not later reject the goods as being unfit for the purpose intended or for lack of merchantable quality where the defect is patent (not latent) and was easily discoverable on inspection - The Nova Scotia Court of Appeal affirmed the decision.

Sale of Goods - Topic 4108

Conditions and warranties - Implied or statutory terms as to quality or fitness - Merchantable quality - [See Sale of Goods - Topic 4106 ].

Sale of Goods - Topic 4110

Conditions and warranties - Implied or statutory terms as to quality or fitness - Buyer relying on seller's skill - The plaintiff modified its standard chairs to meet the defendant's specifications - The chairs were unsafe (tipped forward when sitting on the front edge of the seat) and were not reasonably fit for the purpose - The plaintiff submitted that there was no reliance on its skill by the defendant - The trial judge stated that "while the buyer's reliance on the seller's skill and judgment was not total, given the relatively detailed specifications contained in the contract, it was still a 'substantial and effective inducement' that led the buyer to purchase the goods. The fact that the defendant specified certain features of the chairs does not oust its reliance on the plaintiffs. The buyer relied on the seller to provide a safe and stable classroom chair." - The Nova Scotia Court of Appeal held that the trial judge did not err.

Sale of Goods - Topic 6005

Performance of the contract - Delivery - Inspection - Right of inspection - [See Sale of Goods - Topic 4106 ].

Sale of Goods - Topic 6044

Performance of the contract - Acceptance - What constitutes acceptance - [See Sale of Goods - Topic 4106 ].

Sale of Goods - Topic 6507

Breach - Remedies of buyer - Rescission - Fundamental breach - The plaintiff supplied chairs to the defendant - The chairs were not reasonably fit for their intended purpose, because they easily tipped forward if a person sat on the front edge of the seat - The trial judge rejected the defendant's submission that the plaintiff fundamentally breached the contract - The judge stated that "while the chairs were seriously defective and indeed unfit for the purpose for which they were intended, this does not necessarily constitute defect so flagrant as to make the chairs 'essentially different in character from that which the parties contemplated'" - The Nova Scotia Court of Appeal affirmed the decision.

Sale of Goods - Topic 6648

Breach - Duties of buyer - Respecting defects - [See Sale of Goods - Topic 4106 ].

Cases Noticed:

Sound Images Inc. v. Solar Audio and Recording Ltd., [1995] N.S.J. No. 91 (S.C.), refd to. [para. 27].

Grant v. Australian Knitting Mills Ltd., [1936] A.C. 85 (P.C.), refd to. [para. 46].

Medway Oil and Storage Co. v. Silica Gel Corp. (1928), 33 Comm. Cas. 195, refd to. [para. 46].

Statutes Noticed:

Sale of Goods Act, R.S.N.S. 1989, c. 408, sect. 29 [para. 38].

Authors and Works Noticed:

Fridman, G.H.L., The Sale of Goods in Canada (4th Ed.), p. 213 [para. 34].

Counsel:

G. Michael Owen, for the appellant;

Kevin C. MacDonald, for the respondents.

This appeal and cross-appeal were heard on November 24, 2003, at Halifax, N.S., before Roscoe, Freeman and Bateman, JJ.A., of the Nova Scotia Court of Appeal.

On January 13, 2004, Freeman, J.A., delivered the following judgment for the Court of Appeal.