Executive Summary: Key Legal and Evidentiary Issues

• Whether rust under a used 2006 Toyota Highlander amounted to a serious latent defect existing at the time of sale was the central question.
   
• Evidence from body technician Bruno Pelletier, uncontradicted by any expert for the dealer, established major corrosion of the rear upper crossmember dating back several years.
   
• Section 53 of the Consumer Protection Act prevented the dealer, as a merchant, from pleading ignorance of the defect.
   
• An auction condition report noting no frame damage was found terse and unpersuasive, and it contained no photos of the vehicle's underside.
   
• Rescission was neither sought nor possible, so the court assessed damages against a five-year expected period of use and deducted the $550 salvage price.
   
• Lacking proof of the exact costs or any breakdown of the $3,508.25 claimed in other damages, the buyer received a discretionary award of $1,500 under section 272 of the Consumer Protection Act.
   

Facts of the case

Stéphanie Dion bought a used 2006 Toyota Highlander from 9076-7567 Québec inc., operating as Carrefour 40-640 Toyota, on September 16, 2022. At the time of sale, the vehicle had 240,733 km on the odometer, and the price was $11,491.75, taxes included. Dion was looking for a second family vehicle and had dealt with the dealership for a long time; Carrefour had advertised this particular vehicle online. During a test drive, a noise was noticed at the rear and water was collecting in one of the lights, and the salesperson told her the repairs would be made before she took possession.

From September 2022 to October 2023, Dion drove the vehicle and had it maintained at a Nicoletti-banner garage, and she filed invoices totalling more than $5,000 in maintenance and repair costs. Near the end of October 2023, a noise was heard near the rear wheels, and the garage recorded rust on the underside in a written inspection dated October 30, 2023. Seeking a second written opinion, she obtained an inspection report from Bruno Pelletier, a body technician employed by Atelier de Carrosserie Houle. His report identified major corrosion of the rear upper crossmember (the subframe), a component essential to the rear wheels, which he testified dated back several years; he had rarely seen a vehicle in that condition. In his view, the vehicle was too dangerous to drive and could lose its rear wheels at any moment. Pelletier also filed 46 photographs and a preliminary repair estimate of $15,181.34, concluding the vehicle was a total loss.

Settlement discussions with Carrefour were unsuccessful. Dion had the vehicle towed to Carrefour's place of business at her own expense, where it remained from November 21 to December 6, 2023, giving Carrefour an opportunity to examine it. With no agreement reached, she sold the vehicle to a recycler for parts for $550. Her claim sought $15,000, made up of the full purchase price of $11,491.75 and $3,508.25 in various damages. Carrefour denied that the defect existed at the time of sale, arguing instead that the vehicle had been poorly parked or stored and that humidity had affected it normally during the 13 months Dion owned it. It also maintained that she could not recover the full price after 13 months of use and that this use had to be factored into any damages.

Policy and legislative provisions at issue

The sale was governed by the Consumer Protection Act (CQLR c. P-40.1), and both that statute and the Civil Code of Québec protect buyers against latent defects. Section 53 of the Act gives a consumer who contracted with a merchant a direct recourse against the merchant or manufacturer for a latent defect, unless the consumer could have detected it through an ordinary examination, and provides that neither the merchant nor the manufacturer may plead ignorance of the defect. Under article 1729 C.C.Q., as described by the court, a consumer benefits from a presumption that a defect existed at the time of sale where the property malfunctions or deteriorates prematurely compared with identical or similar property; this presumption establishes the defect, its existence before the sale, and the causal link to the malfunction or deterioration. To rely on it, the consumer must first show that the defect is serious, meaning it significantly reduces the property's usefulness to the point that they would not have bought it or paid as much, and that it was neither apparent nor known at the time of sale. Sections 37 and 38 of the Act, cited by the court, support the buyer's expectation of normal use for a reasonable period given the vehicle's age and condition, while section 272 grounds a consumer's entitlement to damages. Articles 2803 and 2804 C.C.Q. set the civil burden of proof on a balance of probabilities.

Reasoning and analysis

Applying the balance of probabilities, the court found that Dion proved the vehicle had a serious, non-apparent latent defect when she bought it. Pelletier's report and testimony established that corrosion affecting fundamental parts existed at the time of sale and left the vehicle without value 13 months after purchase. Carrefour filed no expert evidence to counter that opinion, and its representative, Martin Bilodeau, could not give opinion evidence to rebut Pelletier's independent expertise. Although Bilodeau insisted the vehicle was in good condition and had been mechanically inspected, no Carrefour witness who had observed the vehicle at the time of sale was heard, and the salesperson did not testify. The court found the auction condition report, which stated there was no frame damage, terse and unpersuasive; it contained no photos of the underside, and neither did Carrefour's listing photos. As a merchant, Carrefour could not plead ignorance of the defect, and the evidence showed Dion could not have detected the corrosion when she bought the vehicle. Uncontradicted evidence also established that the salesperson had undertaken during the test drive to fix the source of the rear noise. Buying from a well-established dealership, Dion was entitled to expect a proper inspection before the sale and normal use of the vehicle for a reasonable period given its age and condition.

Dion did not seek annulment of the sale, and restoring the parties to their former positions was impossible because she had already sold the vehicle to a recycler. Even so, the court held she was entitled to damages because the defect considerably shortened the vehicle's normal useful life. Taking into account her 13 months and 8,267 km of use, the court exercised its discretion and found she could have expected at least five years of normal use but for the defect. Citing use for a period of nearly one year [the decision elsewhere states 13 months of use], it awarded a refund of $9,193.40, representing 80% of the $11,491.75 price, and deducted the $550 resale price, leaving $8,643.40. Carrefour's argument that the vehicle was worth more than $550 at resale failed, as the court found Dion was not reasonably in a position to obtain more for a vehicle the inspection report had declared a total loss. Turning to the $3,508.25 claimed for other damages, which Dion tied to her family's safety, towing and evaluation costs, and lost work time, the court held she was entitled to damages under section 272 of the Act and found it evident that the defects had caused her significant trouble. No proof of the exact towing and inspection costs was filed, however, and no breakdown explained the total claimed, so the court assessed those damages at $1,500 in its discretion.

Ruling and overall outcome

Stéphanie Dion's claim was granted in part, and 9076-7567 Québec inc. (Carrefour 40-640 Toyota) was ordered to pay her $10,143.40. Interest at the legal rate and the additional indemnity under article 1619 C.C.Q. run on that sum from April 5, 2024, the date Carrefour received the formal demand letter. Carrefour must also pay Dion's legal costs of $230. Although she recovered less than the $15,000 she sought, Dion prevailed on liability and obtained a partial award.