Borgo Upholstery Ltd. et al. v. Canada (Attorney General), (2003) 211 N.S.R.(2d) 374 (SC)

• Judge: LeBlanc, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: February 12, 2003
• Jurisdiction: Nova Scotia
• Citations: (2003), 211 N.S.R.(2d) 374 (SC);2003 NSSC 32

Borgo Upholstery v. Can. (A.G.) (2003), 211 N.S.R.(2d) 374 (SC);

 662 A.P.R. 374

MLB headnote and full text

Temp. Cite: [2003] N.S.R.(2d) TBEd. FE.032

Borgo Upholstery Ltd. and Neil John Funnell (plaintiffs) v. The Attorney General of Canada (defendant)

(SO 144283; 2003 NSSC 32)

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

Nova Scotia Supreme Court

LeBlanc, J.

February 12, 2003.

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 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.

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 Nova Scotia Supreme Court held that where a buyer agreed to inspect and accepted 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 easily dis­coverable on inspection - The plaintiff's offer to remedy the defect did not mean that the defendants' acceptance of the goods was waived - See paragraphs 37 to 74.

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 Nova Scotia Supreme Court 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." - See paragraphs 46 to 53.

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 Nova Scotia Supreme Court rejected the defendant's submission that the plaintiff fundamentally breached the con­tract - The court 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'" - See paragraphs 77 to 81.

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. 40].

Grant v. Australian Knitting Mills Ltd., [1936] A.C. 85 (P.C.), refd to. [para. 47].

Medway Oil and Storage Co. v. Silica Gel Corp. (1928), 33 Comm. Cas. 195, refd to. [para. 48].

Buckley v. Lever Brothers Ltd., [1953] O.R. 704 (H.L.), refd to. [para. 49].

Bezanson v. Kaintz (1967), 61 D.L.R.(2d) 410 (N.S.T.D.), refd to. [para. 50].

Corbett Construction Ltd. v. Simplot Chemical Co., [1971] 2 W.W.R. 332 (Man. Q.B.), refd to. [para. 51].

Alcraft Industries Inc. v. Zeta Oilfield Rentals Ltd. (2000), 192 Sask.R. 188 (Q.B.), refd to. [para. 52].

Conary v. Harvey Hooper Lobsters Ltd. (1982), 38 N.B.R.(2d) 670; 100 A.P.R. 670 (Q.B.), refd to. [para. 54].

Fermes Semences Ouellette ltée v. Mallais (1991), 120 N.B.R.(2d) 361; 302 A.P.R. 361 (Q.B.), refd to. [para. 56].

MacDonald (John) & Co. v. Princess Manufacturing Co., [1926] 1 D.L.R. 718 (S.C.C.), refd to. [para. 58].

Murray v. Reeves Supply Co., [1928] 2 D.L.R. 873 (N.S.S.C.), refd to. [para. 59].

Gagnon v. Geneau, [1951] 1 D.L.R. 516 (N.B.C.A.), refd to. [para. 60].

Steele v. Maurer (1976), 73 D.L.R.(3d) 85 (Sask. Q.B.), varied (1977), 79 D.L.R.(3d) 764 (C.A.), refd to. [para. 61].

Borys v. Kern Hill Co-op Ltd. (1979), 1 Man.R.(2d) 260 (Co. Ct.), refd to. [para. 62].

Thornett & Fehr v. Beers & Son, [1919] 1 K.B. 486, refd to. [para. 71].

Trencon Distributors v. Domar S.A. (1992), 66 B.C.L.R.(2d) 395 (C.A.), refd to. [para. 72].

Hidi v. Blundell et al., [1997] B.C.T.C. Uned. 691 (S.C.), refd to. [para. 73].

Rivtow Equipment Ltd. v. Watt (W.J.) Construction Ltd. (1989), 73 Sask.R. 160 (Q.B.), refd to. [para. 79].

Yachetti et al. v. Duff (John) & Sons and Paolini, [1942] O.R. 682 (H.C.), refd to. [para. 83].

Heil v. Hedges, [1951] 1 T.L.R. 512 (K.B.), dist. [para. 83].

Dor-Val Mfg. Ltd. v. Valley Stationers Ltd. et al. (1997), 164 N.S.R.(2d) 205; 491 A.P.R. 205 (S.C.), refd to. [para. 103].

Matheson (D.W.) & Sons Contracting Ltd. v. Canada (Attorney General) (2000), 187 N.S.R.(2d) 62; 585 A.P.R. 62 (C.A.), refd to. [para. 108].

Statutes Noticed:

Sale of Goods Act, R.S.N.S. 1989, c. 408, sect. 17(a), sect. 17(b) [para. 39].

Authors and Works Noticed:

Fridman, G.H.L., The Sale of Goods in Canada (4th Ed.), pp. 213 [para. 68]; 222, 223 [para. 80].

Counsel:

Kevin C. MacDonald, for the plaintiffs;

G. Michael Owen, for the defendant.

This action was heard on June 11-15 and December 11-13, 2001, at Halifax, N.S., before LeBlanc, J., of the Nova Scotia Supreme Court, who delivered the following judgment on February 12, 2003.