Civil Litigation

Court Orders Used Car Seller to Refund Buyer Due to Misrepresentation

April 25, 2024

Photo of used car buyer shaking hands with car salesman representing misrepresentation and consumer protection.

Purchasing a new (or new-to-you) vehicle can be a big decision, and at modern interest rates, it is not uncommon for someone to make sure they are getting a good deal before committing to a significant financial investment. Sometimes, however, if a deal seems too good to be true, it just might be. In the event that something goes wrong following a substantial purchase, such as a vehicle, it is important to know what your options are and whether you will be able to recover financial compensation.

A recent decision from the Alberta Court of Justice illustrates some of the options available to individuals who have been misled when making a substantial investment.

Used Car Buyer Commences Lawsuit After Vehicle Fails on Drive Home

In the matter of Ondoua Ndzana v Machiskinic, 2024 ABCJ 42, the plaintiff (“AN”) was browsing online classified advertisements for cars and came across a listing from the defendant (“VM”) who had listed a 2014 Kia Sorento (“the car”) for $8,900. AN contacted VM regarding the vehicle and decided to fly from Lethbridge to Edmonton to look at it.

After viewing the car upon arrival in Edmonton, AN agreed to purchase the vehicle for $8,500. He paid for the car and started on his drive home to Lethbridge, the car developed engine trouble and had a faulty drivetrain bearing. AN continued to drive the car home at a slow speed and took it to a mechanic, who said the car needed a new engine, which would cost over $10,000.00.

AN subsequently commenced an action against VM seeking either a recission of the contract or damages equal to the cost of a new engine.

Defendant Purchased Vehicle at an Auction

When the matter came before the Court, it noted that much of the evidence was not in dispute. VM was a self-described “car person” who grew up in a family that attended various races and car shows. She had bought and sold approximately ten vehicles in the past and had purchased the car in question at an auction for $6,500. After purchasing the car, she stopped at a Kia Dealership named “Kia North” on the way home due to concerns about the tires. However, the dealership indicated there was nothing of concern and sent her on her way.

VM initially bought the car for personal use, but after four or five trips with the car, she found it was too small for what her family needed. She did not perform any additional maintenance on the car before listing it for sale. VM told the Court that she believed the vehicle was worth closer to $13,000 but decided to sell for less.

Bill of Sale Does Not List Vehicle Sale on “As Is” Basis

When AN originally contacted VM about the car, he was told it was in “perfect condition”, that it had been driven for several months and was maintained by Kia North. After AN saw that the advertised DVD player in the car did not work, nor did one of the inside lights, he negotiated the price down to $8,500. VM prepared a bill of sale for that price and both parties signed the document, which did not include any special conditions, nor did it say that the sale was on an “as is” basis. AN e-transferred the funds to purchase the vehicle to VM.

After discovering the engine trouble and cost of a new engine, AN parked the car and has not driven it since. The mechanic who looked at the car has been licensed for over 30 years and indicated that the “oil level was also low, and very dark” which could have been a result of engine failure, which was supported by a knocking sound in the engine. Although he “could not point to the definite cause of the engine failure… based on his experience, and the fact that there was an upper engine noise, and a lower engine noise, and the copper-coloured substance in the engine oil, he was of the opinion that there was a bearing failure.” This finding was not disputed and was accepted by the Court.

Identifying Innocent Misrepresentation

The Court did not see any evidence that VM knew the car had a faulty bearing, and therefore did not find that she made any fraudulent misrepresentations about the car. However, that does not mean there were not any innocent misrepresentations. The Court stated that “innocent misrepresentations can be either negligent, or non-negligent.”

Alberta common law provides that, even if a misrepresentation is non-negligent, there can be a path for the victim to have a contract rescinded or voided. The Court cited a 1985 decision which laid out the following requirements for this to occur:

“ Such an operative misrepresentation has the following requirements:

1.      A statement,

2.      Intentionally made by the representor,

3.      That is false,

4.      And that is material,

5.      Is communicated,

6.      To the representee.

With respect to the response of the representee, it must be shown that:

1.      The representee reasonably relied on the statement, and

2.      That reliance on that statement was a contributing factor for entering into the impugned contract.”

Court Orders Seller to Return Funds to Buyer

The Court considered that VM had represented herself as a “car person” who was experienced in buying and selling cars and acknowledged that this would have reasonably led the plaintiff to assume she had some expertise in cars. Further, VM told AN that the car had been maintained by Kia North, which was not entirely truthful.

Accordingly, the Court determined that these representations were false and VM was ordered to return the $8,500 vehicle purchase price to AN. The Court granted an order of rescission of the contract and specified that these funds were to be returned to AN within a specified period of time. Furthermore, VM had until May 1 to collect the vehicle and if she failed to do so, AN was permitted to dispose of the vehicle in a manner that he saw fit.

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