Vehicle Sale (Previous Accident)

Motor Vehicle Dealers Act, 2002, SO 2002, c 30, Sch B

Disclosure by motor vehicle dealers

30 (1) Motor vehicle dealers shall disclose in writing to customers and to motor vehicle dealers such information as may be prescribed and shall make the disclosure at such time as may be prescribed. 2002, c. 30, Sched. B, s. 30 (1).

Remedies

(2) If a motor vehicle dealer fails to make a disclosure as required under subsection (1) or fails to do so in a timely way, in addition to any other remedies that may be available, the person to whom disclosure should have been made is entitled to such other remedies as may be prescribed. 2002, c. 30, Sched. B, s. 30 (2).

O. Reg. 333/08: GENERAL under Motor Vehicle Dealers Act, 2002, S.O. 2002, c. 30, Sched. B

Contracts for sales of new motor vehicles

39. (1) Before entering into a contract to sell a new motor vehicle to a purchaser who is not a registered motor vehicle dealer, a registered motor vehicle dealer shall ensure that the person providing financing for the purchase has provided to the purchaser the information that must be disclosed in any initial disclosure statement required under section 79 of the Consumer Protection Act, 2002 with respect to the financing if,

(a) the purchaser is a consumer within the meaning of that Act; and

(b) the dealer is providing the financing or the application for the financing to the purchaser. O. Reg. 333/08, s. 39 (1).

(2) A registered motor vehicle dealer shall ensure that any contract that the dealer enters into to sell a new motor vehicle to a purchaser who is not another registered motor vehicle dealer includes, in a clear, comprehensible and prominent manner, the following:

1. The name and address of the purchaser.

2. A registered name and the registration number of the dealer that entered into the contract, together with the legal name of the dealer if it is different from the registered name.

3. The business address of the place at which the dealer entered into the contract.

4. If the contract is made through a motor vehicle dealer registered as a general dealer in the subclass of new and used motor vehicles, the registered name and registration number of that dealer, together with the legal name of that dealer if it is different from the registered name.

5. If a registered salesperson is acting on behalf of the dealer respecting the sale, the registered name and registration number of the salesperson.

6. The date of the sale.

7. The date that the vehicle is to be delivered or a manner for determining that date.

8. The colour of the vehicle.

9. The vehicle identification number of the vehicle, if known.

10. The body type of the vehicle.

11. The manufacturer’s suggested retail price for the vehicle, excluding the price described in paragraph 12.

12. An itemized list of the manufacturer’s suggested retail price of all extra equipment and options that, under the contract, will be sold to the purchaser in connection with the vehicle or installed on the vehicle at the time of the sale.

13. The total manufacturer’s suggested retail price for the vehicle, being the total of the price described in paragraphs 11 and 12.

14. An itemized list of the charges that the purchaser is required to pay under the contract to conclude the transaction, including charges for freight, charges for inspection before delivery of the vehicle, fees and levies.

15. An itemized list of items or inducements, including guarantees or extended warranties, service plans or rights under sales policies if the dealer has agreed to provide the items or inducements to the purchaser and there is no extra charge to the purchaser for them beyond the total sale price of the motor vehicle under the contract, and the list shall show a fair and accurate description and the retail value, if any, of each of the items or inducements.

16. The total sale price under the contract, including the charges described in paragraph 14.

17. The down payment or deposit, if any, paid by the purchaser.

18. The balance that the purchaser will be required to pay under the contract.

19. An itemized list of all other charges that the purchaser will be required to pay in connection with the vehicle at the time of delivery but that are not required under the contract, such as taxes.

20. A statement that the dealer has complied with subsection (1), if that subsection applies to the dealer with respect to the contract.

21. If the dealer or the salespersons registered to the dealer have received or will receive, from any source other than the dealer, a commission, remuneration or any other incentive for providing the application for financing for the purchase to the purchaser, a statement to that effect that is initialled by the purchaser.

22. The information required to be included under section 42.

23. If there is a trade-in of another motor vehicle under the contract, anything required to be included under section 43.

24. On the same page of the contract as the purchaser’s signature and next to it, a statement in accordance with subsection (3) in 12 point bold font, except for the heading which shall be in 14 point bold font.

25. A statement in accordance with subsections (4) and (5) in 12 point bold font, except for the heading which shall be in 14 point bold font.

26. A statement in accordance with subsection (6) or (7), as the case may be, in 12 point bold font, except for the heading which shall be in 14 point bold font.

27. A statement by the purchaser of all particular facts, if any, respecting the vehicle that the purchaser considers material to the purchase. O. Reg. 333/08, s. 39 (2); O. Reg. 221/09, s. 13.

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Additional information in contracts of sale and leases

42. For the purposes of section 30 (1) of the Act, the information mentioned in paragraph 22 of subsection 39 (2) and paragraph 11 of subsection 41 (1) of this Regulation is the following:

1. If the motor vehicle is a new motor vehicle and the contract for the sale or the lease of the vehicle identifies a specific motor vehicle, the maximum distance that will be shown on the odometer of the vehicle when it is delivered to the purchaser or the lessee, as the case may be.

2. If the motor vehicle is a new motor vehicle and the contract for the sale or the lease of the vehicle does not identify a specific motor vehicle,

i. the maximum distance that will be shown on the odometer of the vehicle when it is delivered to the purchaser or the lessee, as the case may be, or

ii. a statement initialled by the purchaser or the lessee, as the case may be, that nothing is specified in the contract in respect of the maximum distance that will be shown on the odometer of the vehicle when it is delivered to the purchaser or the lessee.

3. If the motor vehicle is a used motor vehicle, the total distance that it has been driven if the registered motor vehicle dealer can determine the distance.

4. If the motor vehicle is a used motor vehicle and the registered motor vehicle dealer cannot determine the total distance that the vehicle has been driven but can determine the distance that the vehicle has been driven as of some past date, a statement of that distance and date, together with a statement that the total distance that the vehicle has been driven is believed to be higher than that distance.

5. If the motor vehicle is a used motor vehicle and the registered motor vehicle dealer can determine neither the total distance that the vehicle has been driven, nor the distance that the vehicle has been driven as of some past date, a statement that the total distance that the vehicle has been driven is unknown and may be substantially higher than the reading shown on the odometer.

6. If the motor vehicle’s odometer is broken or faulty, has been replaced, has been rolled back or is in miles, a statement to that effect.

7. If any of the following is true of the motor vehicle, a statement to the effect that the vehicle was previously,

i. leased on a daily basis, unless the vehicle was subsequently owned by a person who was not registered as a motor vehicle dealer under the Motor Vehicle Dealers Act or the Motor Vehicle Dealers Act, 2002,

ii. used as a police cruiser or used to provide emergency services, or

iii. used as a taxi or limousine.

8. If the motor vehicle has sustained any damage caused by fire, a statement to that effect.

9. If the motor vehicle has sustained any damage caused by immersion in liquid that has penetrated to the level of at least the interior floorboards, a statement to that effect.

10. If there has been structural damage to the motor vehicle or any repairs, replacements or alterations to the structure of the vehicle, a statement to that effect.

11. If the motor vehicle is equipped with an anti-lock braking system that is not operational, a statement to that effect.

12. If any of the motor vehicle’s airbags are missing or are not operational, a statement to that effect.

13. If the motor vehicle requires repair in any of the following, a statement to that effect:

i. the engine, transmission or power train,

ii. the subframe or suspension,

iii. computer equipment,

iv. the electrical system,

v. the fuel operating system, or

vi. the air conditioning.

14. If the motor vehicle is materially different from the original or advertised production specifications, a statement to that effect.

15. If the motor vehicle has two or more adjacent panels that are not bumper panels and that have been replaced, a statement to that effect.

16. The trim level of the motor vehicle.

17. The make, model and model year of the motor vehicle.

18. If any badge or other indication on the motor vehicle relates to a different model than the model of the vehicle, a statement to that effect.

19. If the total costs of repairs to fix the damage caused to the motor vehicle by an incident exceed $3,000, a statement to that effect and if the registered motor vehicle dealer knew the total costs, a statement of the total costs.

20. If the manufacturer’s warranty on the motor vehicle was cancelled, a statement to that effect.

21. If the motor vehicle was declared by an insurer to be a total loss, regardless of whether the vehicle was classified as irreparable or as salvage under section 199.1 of the Highway Traffic Act, a statement to that effect.

22. If the motor vehicle previously received treatment in a jurisdiction other than Ontario that was equivalent to having had a permit issued under section 7 of the Highway Traffic Act or having been traded in Ontario, a statement to that effect and a statement of which jurisdictions, except if one or more permits have been issued for the vehicle under section 7 of that Act to cover at least the seven previous consecutive years.

23. If the motor vehicle has been classified, under section 199.1 of the Highway Traffic Act, as irreparable, salvage or rebuilt, a statement as to how it was last classified.

24. If the motor vehicle had been recovered after being reported stolen, a statement to that effect.

25. Any other fact about the motor vehicle that, if disclosed, could reasonably be expected to influence the decision of a reasonable purchaser or lessee to buy or lease the vehicle on the terms of the purchase or lease. O. Reg. 333/08, s. 42; O. Reg. 221/09, s. 15.

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79. (1) A customer of a registered motor vehicle dealer is entitled to compensation from the Fund in respect of a claim for a pecuniary loss if,

(a) the claim arose from a trade in a motor vehicle between the customer and the dealer;

(b) the claim meets the requirements set out in a paragraph of subsection (3);

(c) at the time of the trade, the dealer was a registrant;

(d) the customer was acting in the trade as a consumer within the meaning of the Consumer Protection Act, 2002; and

(e) the customer has given the dealer, in accordance with section 37 of the Act, a written notice of demand for payment of the claim and the dealer has refused to pay the claim or is unable to do so. O. Reg. 333/08, s. 79 (1).

(2) Subsection 37 (3) of the Act does not apply to a notice given under clause 79 (1) (e) of this Regulation. O. Reg. 333/08, s. 79 (2).

(3) The requirements for a claim mentioned in clause (1) (b) are the following:

1. The claim arose from an act or omission of the registered motor vehicle dealer that was the subject of a proposal under clause 9 (1) (a) or (b) of the Act to suspend, revoke or refuse to renew the registration of the dealer and,

i. the dealer did not request a hearing by the Tribunal, or

ii. the dealer requested a hearing by the Tribunal and the Tribunal ordered the registrar to suspend, revoke or refuse to renew the registration of the dealer.

2. The claim arose from a trade in connection with which the registered motor vehicle dealer has been convicted of an offence.

3. The trade from which the claim arose was a purchase or lease of a motor vehicle from the registered motor vehicle dealer. A law enforcement authority has seized the vehicle and indicated that it will not be returned to the purchaser or the lessee.

4. The trade from which the claim arose was a purchase or lease of a motor vehicle from the registered motor vehicle dealer. A creditor, other than a creditor of the customer, has legally seized the vehicle and indicated that it will not be returned to the purchaser or the lessee.

5. The trade from which the claim arose was a purchase or lease of a motor vehicle from the registered motor vehicle dealer. The claim does not exceed the total sale price of the vehicle at the time of the purchase, if the claim arose from a purchase of the vehicle, or the lease value of the vehicle included in the information mentioned in subparagraph 1 i of subsection 41 (1) at the time of the lease, if the claim arose from a lease of the vehicle. The claim is for a deficiency that the dealer has refused to remedy. The deficiency is something that,

i. the vehicle does not have and the customer had indicated was material to the trade for the vehicle to have, or

ii. the vehicle has and the customer had indicated was material to the trade for the vehicle not to have.

6. The claim is for the return of a deposit or other payment by the customer under a contract for the purchase or lease of a motor vehicle from the registered motor vehicle dealer. The dealer has not delivered to the customer, within the time period required by the contract, the vehicle or an alternative motor vehicle that is acceptable to the customer. The customer has made a demand for a refund of the deposit or payment. The dealer has refused without legal justification to make the refund or is unable to make the refund by reason of bankruptcy or insolvency.

7. The claim relates to an extended warranty that was sold by the registered motor vehicle dealer or facilitated through the dealer. The claim is for,

i. the return of all payments made by the customer under the warranty that were unearned because the dealer has not complied with clause 47 (7) (c),

ii. subject to subsection (5), the cost of repairs or replacement that should have been, but were not, provided under the warranty, if the dealer was the seller of the warranty, or

iii. the amount for which the dealer is liable under subsection 47 (3), if the dealer was not the seller of the warranty.

8. The claim relates to a service plan that was sold by the registered motor vehicle dealer or facilitated through the dealer. The claim is for,

i. the return of all payments made by the customer under the service plan that were unearned because the dealer has not complied with clause 48 (6) (c), or

ii. the cost of goods or services that should have been, but were not, provided under the service plan, if the dealer was the seller of the plan.

9. The claim is for a refund owed to a customer under clause 50 (10) (b) or (11) (b) if the customer is entitled to a refund under the applicable clause.

10. The amount of the claim is the subject of a judgment or an order made by a court for the payment of compensation or the making of restitution by the registered motor vehicle dealer to the customer. The judgment or order has become final by reason of the expiration of the time for appeal or of having been confirmed by the highest court to which an appeal may be taken.

11. The claim is for a liquidated amount that the registered motor vehicle dealer owes to the customer. The dealer has become a bankrupt or a winding-up order has been made or a receiver appointed in respect of the business of the dealer under the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada) or the Winding-up and Restructuring Act (Canada). O. Reg. 333/08, s. 79 (3); O. Reg. 221/09, s. 19 (1).

(4) Despite subsection (1), a customer is not entitled to compensation from the Fund if,

(a) the customer is related, by blood or adoption, to the registered motor vehicle dealer against whom a claim is made or to a director or officer of the dealer;

(b) the customer is a spouse of the registered motor vehicle dealer against whom a claim is made or a spouse of a director or officer of the dealer;

(c) the customer is associated, as described in subsection 1 (2) of the Act, with the registered motor vehicle dealer against whom a claim is made;

(d) the customer was complicit in illegal conduct relating to the trade;

(e) the customer misrepresents the nature of the claim or provides false or misleading evidence in support of the claim; or

(f) the customer made a previous claim for compensation from the Fund based on the same facts or substantially the same facts. O. Reg. 333/08, s. 79 (4).

(5) If the Board determines that a customer of a registered motor vehicle dealer is entitled to compensation from the Fund in respect of a claim described in subparagraph 7 ii of subsection (3), the Board may direct the Trustee, in addition to paying the compensation, to pay the customer the amount of the premiums that the customer is required to make under the extended warranty that is unearned at the time that the customer makes the claim. O. Reg. 221/09, s. 19 (2).

(6) If the Board directs the Trustee to pay the additional payment described in subsection (5) from the Fund, the customer is not entitled to compensation from the Fund for any further claims described in subparagraph 7 ii of subsection (3).

Coyne v. 1072984 Ontario Inc., 2004 CanLII 12104 (ON SC)

[15] The plaintiff pleads that the defendant misrepresented the vehicle to him in as much as he did not disclose to the plaintiff that the vehicle had previously been damaged in an auto collision resulting in repairs in excess of $5, 400.00 prior to the purchase nor was it disclosed to him that the vehicle had been leased by a third party prior to the sale to the plaintiff. The plaintiff seeks restitution for the purchase price of the van ($19, 164.65) plus repairs to the engine ($4,817.18 Can.) less a credit for the use of the van (in the amount of $7,200.00 calculated on the basis of a fair rental charge of $300.00 per month for 2 years) and less a credit for the amount of the sale of the van in December 2002 ($4,000.00) for a total of $12,781.73. The plaintiff seeks restitution based on rescission of the contract as a result of the failure of the defendant to disclose.

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[18] If it can be said that the plaintiff has on the balance of probabilities established a misrepresentation as to the condition of the vehicle or the previous use or its reliability, then he is entitled to a remedy. This court is satisfied that on the totality of the evidence there was no misrepresentation made by the defendant to the plaintiff with regard the vehicle’s condition, previous use, its history, including any collisions it may have been in, or its reliability.

Lefrancois v Ottawa Chrysler Dodge, 2014 CanLII 54172 (ON SCSM)

8. A week later she attended to pick up the vehicle. It was on a typical Ottawa December day, rain and snow. She was shown how the various instruments and controls worked, and she was off with her new purchase. At no time was Mrs Lefrancois told that the vehicle was in a previous accident. According to her, it was a new car and without any blemishes. That is not an unreasonable expectation when purchasing a new vehicle. The odometer showed 242 km. The sales agreement Exhibit # P 2 states that the vehicle is “new. The price was $41,627.47 including a five year extended warranty for $3435.00. It contains no notation that it may have been previously repaired or that it has been in any accident or incident. Mrs Lefrancois had no reason to suspect that the vehicle had been damaged in an accident.

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26. The evidence is uncontroverted that the plaintiff purchased a new vehicle. The sales agreement describes it as “new” with the odometer reading as 242 km.

27. The plaintiff gave evidence that the vehicle was described as new, it was sitting in the defendant’s show room and according to the plaintiff it was described by the salesman as new without any indication of previous damage to the vehicle. I accept her evidence.

28. Based on the evidence of Mr. Shahpou Rahnama and Mr. Gerry Schroeter I also find that it took a considerable amount of force to cause the damage. It is also clear that to that repairs done by the defendant were superficial without addressing the underlying structural damage caused by the accident.

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33. I conclude that while the cosmetic repair only cost $751.55, a proper repair would have cost over $3000.00. Absent evidence from the repair shop that did the repair on behalf of the defendant or anyone with actual knowledge from the dealership, I find that the defendant did not rebut that the damage in this case was both structural in nature and a proper repair would have cost in excess of $3000.00. Accordingly, I conclude that when the car was sold to the plaintiff the vehicle was in a damaged condition.

34. The plaintiff purchased a new vehicle. By selling to the plaintiff a damaged vehicle the defendant has breached its contract. The sale of new vehicles is to be distinguished from the sale of used vehicles. In the latter, one may expect problems, but not if the vehicle is new (see: Peters v. Parkway Mercury Sales Ltd.[1975] N.B.J. No. 74. NBCA))

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55. As Wright J. noted “A misrepresentation can consist of a failure to divulge needed information. (Spinks v. R. 1996 CanLII 4041 (FCA), (1996) 134 D.L.R. (4th) 223 (Fed Ct.))”

56. In the Usenik case the information withheld was that the property was subject to flooding if no proper precautions were taken. In this case, the information withheld was the fact that the “new” vehicle was in a previous collision. It would have been simple enough to advise the plaintiff of the previous incident and to allow her to make her own decision armed with this additional information. However, by doing so, the defendant ran the risk of the plaintiff deciding not to purchase the vehicle at least for the demand price.

57. Silence and half-truths can amount to fraudulent misrepresentation. (Outaouais Synergest Inc. v. Lang Michener LLP, 2013 ONCA 526). Based on the evidence presented by the plaintiff, and the failure of the defendant to rebut the evidence, I find that the defendant knew that only a cosmetic repair was done to the vehicle, and based on the force of the collision he must have known that he is selling a damaged vehicle. In this case the defendant’s failure to advise the plaintiff that the vehicle was damaged amounts to fraud.

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63. The evidence regarding the quantum of damages is conflicting. The estimates of the cost of the full repair to the vehicle range between $1644.95 and $3496.16. The low estimate comes from SRM Auto Repair (Mr. Rahnama), but it does not appear to provide a complete repair. The second estimate, $1946.99 is said to be preliminary in nature. In my view the most reliable estimate comes from Fix Auto Gloucester, in the amount of $3469.16. That estimate is supported by the plaintiff’s expert. The defendant offered no evidence dealing with damages. I accept that the appropriate amount is $3469.16