Pine Valley Enterprises Inc. (“PVE”) contracted with Earthco Soil Mixtures Inc. (“Earthco”) for the supply of topsoil for use in a project. After reviewing dated test results for “R Topsoil,” it placed an order for 3,678 cubic yards of “Screened topsoil with extra Organics added.” The contract included exclusion provisions that allowed PVE to test the soil prior to shipment, and that, if PVE waives its right to testing, Earthco is not responsible for the “quality” of the material.
PVE waived its right to test the soil. After delivery, testing revealed that the topsoil significantly differed from the earlier test results. PVE was forced to remove the topsoil and then sought compensation from Earthco, which in turn disclaimed responsibility because PVE had waived its right to test the soil before shipment. PVE brought an action against Earthco for damages.
The trial judge found that the contract was for a “sale by description” within the meaning of the Sale of Goods Act, R.S.O. 1990, c. S.1. He held that the topsoil delivered did not correspond to the description in the contract, contrary to s. 14 of the Sale of Goods Act. The trial judge also found, however, that the parties had expressly agreed to absolve Earthco of liability for variations in soil composition that amount of discrepancies in the description of the goods, as permitted by s. 53 of the SGA. Therefore, he dismissed PVE’s action.
The Court of Appeal agreed with the trial judge that the contract was for a “sale by description” and that there was a discrepancy between the description of the goods in the contract and the goods delivered. However, the Court of Appeal held that the trial judge erred in using the factual matrix of the contract to determine that the exclusion clauses ousted s. 14 of the Sale of Goods Act. The Court of Appeal unanimously allowed PVE’s appeal.
Sale of goods - Sale of goods — Sale by description — Implied condition as to description — Goods described with reference to quality — Whether statements as to quality can form part of an item’s description Appeals — Courts — Standard of review — Contractual interpretation — Standard of appellate review applicable to trial judge’s interpretation of exclusion clauses — Did the trial judge err in law by relying on the factual matrix of the contract to interpret the exclusion clauses? — Did the Court of Appeal err in reviewing the trial judge’s decision on a standard of correctness?
(Ontario) (Civil) (By Leave)
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