Executive Summary: Key Legal and Evidentiary Issues

• Responsibility of a corporate seller versus its individual administrator for defects in a consumer vehicle sale
• Application of the consumer warranty of normal use to a used vehicle that becomes inoperable shortly after purchase
• Sufficiency of the buyer’s testimony and garage estimates to prove a serious loss of use and the existence of a presumed latent defect
• Whether pre-sale mechanical inspections and post-sale repairs can rebut the presumption of a hidden defect under the warranty of normal use
• Scope of recoverable consequential expenses (repairs, towing, rentals, transport) and the duty to mitigate damages
• Appropriateness of contract annulment and restitution, including reimbursement of useful expenses and court costs in small claims proceedings

Factual background

Kevin Jacinto purchased a 2013 Suzuki Grand Vitara from 9381-2998 Québec inc., operating under the name Auto B2B, in May 2022. The vehicle showed 154,032 kilometres on the odometer and was sold for a price of $10,700. The company’s administrator and shareholder is Mohammed Mahdi, who was also named personally in the small claims action. Almost immediately after the purchase, mechanical issues surfaced. The day after the sale, the check-engine light illuminated, prompting Mr. Jacinto to bring the vehicle back to Auto B2B. The dealer carried out work and told him the vehicle had been repaired, after which he retrieved it. Still in May 2022, a second problem arose when the temperature gauge rose into the red zone. Mr. Jacinto again returned the vehicle to Auto B2B, which performed a second set of repairs at no charge and once more represented that the vehicle was fixed. On 10 June 2022, approximately 20 days after the sale and after the vehicle had covered about 1,200 kilometres, the Grand Vitara broke down while in use. White smoke was observed coming from the vehicle and it could no longer be driven. Mr. Jacinto arranged for the vehicle to be towed to a garage at the end of July 2022. The garage concluded that the engine was badly overheating and producing significant smoke, and it estimated that repairs would cost around $5,200 plus tax—roughly half the purchase price of the vehicle. Following the breakdown, Mr. Jacinto notified Auto B2B of the problem and, on 7 July 2022, had a formal demand letter sent through counsel. Auto B2B replied on 11 July 2022 denying any liability.

Claims advanced by the consumer

As a consumer, Mr. Jacinto relied on the statutory warranty of normal use available under Québec’s Consumer Protection Act (Loi sur la protection du consommateur). He sought annulment of the sale and claimed damages, including reimbursement of the purchase price, recovery of amounts spent on brake and disc repairs undertaken before the breakdown, and compensation for towing, car rental and Uber transportation made necessary by the vehicle’s failure. In addition to suing the corporate seller, 9381-2998 Québec inc. (Auto B2B), he also sued the individual administrator, Mr. Mahdi, arguing that the late filing of corporate update documents in the enterprise register made him fear for the corporation’s reliability and motivated his claim against the individual.

Defence position and preliminary liability issues

Auto B2B argued that, given the vehicle’s age and mileage, the conditions for the separate statutory warranty of good working order (garantie de bon fonctionnement) were not met. It also relied on pre-sale inspection reports, including a Société de l’assurance automobile du Québec mechanical verification certificate, which had not revealed any defects at the time of inspection. The dealer further pointed to its cooperation in performing two free repairs worth nearly $2,000 on a 10-year-old vehicle as evidence of good faith and suggested that an additional third-party “warranty” existed, with which the consumer had attempted to deal. The court addressed at the outset the claim against Mr. Mahdi personally. Under the Consumer Protection Act, recourse on the warranty of normal use is directed against the merchant that is party to the contract of sale; the statute does not, in itself, create liability for administrators or shareholders. To hold an administrator personally liable, a consumer must prove a distinct civil fault committed by that individual and the resulting prejudice. Here, the only conduct invoked against Mr. Mahdi was the late filing of an updating declaration in the corporate register, coupled with the consumer’s general apprehension. The court found that this tardiness and subjective fear were insufficient to establish any civil fault or causal prejudice. Accordingly, the claim against Mr. Mahdi was dismissed, and the litigation proceeded solely against the corporate seller.

Legal framework: Warranty of normal use and latent defect

The judgment focuses on the warranty of normal use rather than the warranty of good working order. Under the Consumer Protection Act, goods sold to a consumer must be fit for the normal use that a reasonable average consumer is entitled to expect, having regard to the nature and intended purpose of the product. The buyer must first prove that the good does not permit the use that a reasonable consumer could objectively expect and, second, that the defect is sufficiently serious. In practice, this means demonstrating a significant loss of utility such that the consumer would not have purchased the good, or would not have paid the same price, had they known the extent of the reduced use. When these two conditions are met, a presumption arises that the good was affected by a latent defect at the time of sale, subject to the caveat that the defect must not have been discoverable through a normal inspection by the consumer. Once the presumption applies, the burden shifts to the merchant, who can only escape liability by proving a genuinely external cause for the defect, such as the fault of a third party, force majeure, or misuse by the consumer. Merely hypothesizing that an external cause “might” explain the failure is not sufficient; the external cause must be positively proven.

Application of the warranty to the facts

On the evidentiary record, the court accepted Mr. Jacinto’s testimony that white smoke was emitted from the vehicle at the time of the breakdown and that the vehicle became undriveable thereafter. As the trier of fact, the judge found his testimony credible and probative. The independent garage estimate confirmed that the engine was badly overheating and emitting substantial smoke, and that addressing the problem would require major repairs costing about half the vehicle’s original purchase price. In light of these facts, the court held that the vehicle failed to provide the level of normal use a reasonable consumer could expect from a recently purchased used car. The severity of the defect—rendering the car inoperable within roughly 20 days and 1,200 kilometres of driving and requiring repairs of this magnitude—amounted to a grave deficit of use. These findings satisfied both conditions for the warranty of normal use and triggered the presumption that the vehicle was affected by a latent defect at the time of sale.

Failure of the dealer’s defences under the warranty of normal use

Once the presumption of latent defect arose, the onus lay on Auto B2B to establish that an external cause was responsible for the breakdown. The dealer did not have the vehicle examined by an expert after receiving notice of the problem. Instead, it relied primarily on the two pre-sale inspections that had been carried out and on its earlier post-sale repairs. The court noted that those pre-sale inspections occurred before the breakdown and did not demonstrate that any external factor—such as misuse, third-party fault, or force majeure—had caused the later failure and white smoke. The fact that the inspections did not reveal issues at the time of sale did not rebut the presumption of a latent defect once the serious loss of use had been established shortly thereafter. The dealer’s performance of two free repairs totalling nearly $2,000 on an older vehicle was also insufficient to discharge its burden, especially given that the vehicle still broke down and became unusable shortly afterward. The existence of a so-called third-party “warranty,” which the court properly characterized in legal terms as insurance, similarly did not relieve Auto B2B of its statutory obligations to the consumer. The dealer remained directly bound by the warranty of normal use and could not shift responsibility to the insurer when that coverage was declined. As a result, Auto B2B failed to rebut the presumption of a latent defect under the warranty of normal use.

Remedies, damages and overall outcome

Having concluded that Auto B2B breached its statutory warranty of normal use, the court turned to remedies under the Consumer Protection Act. The statute permits a range of remedies when a merchant fails to honour its obligations, including execution in kind, reduction of the consumer’s obligation, and various forms of contract termination or nullity, along with compensatory and, where appropriate, punitive damages. Mr. Jacinto sought annulment of the sale and a refund of the full purchase price. The court found that the defect was sufficiently important to justify nullity: the vehicle had become unusable within weeks, the recommended repair cost was approximately half the purchase price, and the buyer had retained the vehicle and was able to return it to the dealer. On these facts, the sale was annulled and Auto B2B was ordered to reimburse the $10,700 purchase price. The court then considered additional monetary consequences. It allowed the buyer’s claim for $633 spent on brake and disc work carried out before the breakdown, treating this as a useful expense that fairness required the dealer to reimburse, particularly given that Auto B2B could not lawfully ignore the underlying defect in the vehicle. For consequential losses following the breakdown, the court evaluated claims for towing charges ($609), rental car expenses ($2,695.95) and Uber transportation ($193). Applying the principles that the consumer may only recover losses that are the immediate and direct consequence of the merchant’s breach and that the consumer must mitigate his damages, the court awarded a global amount of $1,200 for all towing, rental and transport costs rather than the full sums claimed. In total, Auto B2B was condemned to pay $12,533 to Mr. Jacinto, representing the reimbursed purchase price, the brake repair costs and the allowed consequential expenses. Statutory interest at the legal rate and the additional indemnity under the Civil Code were granted from 11 July 2022, the date on which Auto B2B, after receiving the formal demand, clearly indicated its refusal to honour the warranty. The judgment further ordered the dealer to pay $217 in court fees corresponding to the filing costs in small claims. The net effect is that the successful party, Mr. Jacinto, obtained annulment of the sale and a monetary award totalling $12,533 in principal plus $217 in costs, for an aggregate of $12,750, with additional interest and indemnity whose exact amount cannot be determined from the judgment alone.