In the British Columbia Supreme Court case of Gabriel v. Watterworth, decided in April, 2012, Mr. Gabriel sued to force compliance with the terms of the contract, while Mr. Watterworth sought to get out of the deal. Both parties agreed when they struck the deal that the car was worth about $20,000. So was Mr. Watterworth’s 3.5 acres of land that he agreed to sign over in exchange for the Studebaker. The problem was that while the vehicle was probably worth no more than $20,000 at the time of trial, the land value had increased to about $95,000.
Mr. Watterworth was driving in the country with his lover at the time, Ms. Flynn. They spotted the Studebaker on Mr. Gabriel’s property and stopped to find out more about it. Ms. Flynn liked how it looked. Most of the interior and chrome trim was missing, but Mr. Gabriel indicated he had all the necessary pieces to make the car whole. He told them it was a 1961 Hawk although the supercharger was not the right one for a 1961 Studebaker; but that nevertheless it was a very rare car. The parties decided to swap land for car. Mr. Watterworth wanted to fix up the car to give to Ms. Flynn as a gift.
A few days later Mr. Watterworth received the car, and purportedly the missing pieces. He took it to a collision shop to find out the cost of making it roadworthy. He was informed that some parts were missing and others were broken. He also learned that one of the two front hoods that came with the car and the trunk lid were from a 1958 Studebaker Golden Hawk, and the other front hood was of 1961 vintage, but had been modified. Mr. Watterworth elected to do nothing about these problems. In March, 2003, Mr. Gabriel contacted Mr. Watterworth since he wanted the land transferred to his name in compliance with the deal. They met and signed a contract that had been prepared when they had met previously, stating that Mr. Watterworth agreed to trade his described property for a 1961 Studebaker Hawk, indicating the serial number.
Mr. Watterworth’s evidence was that his signed the contract after he knew of the problems with the car and was unsatisfied with it, because he hoped that Mr. Gabriel would follow through and supply all the parts needed to complete the car.
Between 2002 and 2009 Mr. Gabriel paid all the taxes on the property. Mr. Watterworth had been sending him the bills. In 2008 Mr. Gabriel demanded that Mr. Watterworth transfer the land. At first Mr. Watterworth used an excuse that there was a title issue with the land. Then he simply refused to transfer it. He finally shipped the car back to Mr. Gabriel.
Some time after the contract was signed but before the car was returned to Mr. Gabriel, Mr. Watterworth learned that the car had two different VINs (for a US and a Canadian manufactured Studebaker), and a second serial number, this one from a 1958 Golden Hawk. Mr. Watterworth also learned that in 1961 Studebaker did not produce a car with a supercharged engine. It appeared clear that the vehicle was made from at least the two Studebakers, one 1958 and another 1961.
Mr. Gabriel sued Mr. Watterworth, demanding that the contract be completed with the land transfered to him. According to Mr. Gabriel, he could not be held liable for any promises outside of the terms of the 2003 contract. He delivered a 1961 Studebaker Hawk to Mr. Watterworth, with all available parts.
Mr. Watterworth claimed rescission of the contract. He was promised a complete 1961 Studebaker Hawk but instead received an amalgam of two cars, so Mr. Gabriel fundamentally breached the contract, and Mr. Watterworth entered the deal under a mistake. He believed that Mr. Gabriel had or could source the parts to make a whole 1961 vehicle.
Justice Rogers stated that the contract was part written and part oral, since there was nothing in the written document stating that there could be no other terms, representations or warrantees. Most written contracts have clauses stating that the written terms are all of the terms unless there is something else in writing changing them. This contract did not have such wording so the judge was able to determine the full extent of the deal through evidence of conversations and not just the written document. He found that the contract was to deliver a complete 1961 Studebaker Hawk, albeit one with a 1958 supercharged engine from another car.
The judge found that Mr. Gabriel fundamentally breached the contract and that Mr. Watterworth was entitled to rescission. Mr. Watterworth was ordered to pay Mr. Gabriel the money he had paid for the land taxes plus interest on the payments, and Mr. Gabriel was ordered to pay costs of the proceeding to Mr. Watterworth.
Counsel for Mr. Gabriel indicated that his client did not instruct him to appeal, a costly process. But the decision is problematic:
- Both parties stated the car was worth $20,000, and so was the land, so wasn’t Mr. Watterworth getting what he bargained for?
- The judges stated that if the car would have been in Mr. Watterworth’s possession at the time of trial, he would have ordered the car valued and ordered Mr. Watterworth to pay Mr. Gabriel for it, on the theory that Mr. Watterworth wanted it. Should the fact of returning the car before trial change the whole outcome?
- When the deal was struck, Mr. Watterworth knew that it was not a complete 1961 Studebaker, since he knew that Studebaker did not use a supercharged engine that year. He had the car in his possession, with parts, when he signed the contract. Would a reasonable person sign a contract without all the parts, knowing that the car was not a complete 1961 model, unless he wanted it, as is?
- Why did Mr. Watterworth do nothing for eight months, until Mr. Gabriel demanded the land, and why did he keep sending Mr. Gabriel the tax bills if he had concerns?
- At the time of trial Ms. Flynn was no longer Mr. Watterworth’s lover and thus Mr. Watterworth no longer had any use for the car, an intended gift for Ms. Flynn.
- At the time of trial there was another important change; the value of the land had increased substantially.
Alvin Starkman received his Masters in Social Anthropology in 1978. After teaching for a few years he attended Osgoode Hall Law School, thereafter embarking upon a successful career as a litigator until 2004. Alvin, a good-standing member of the Law Society of Upper Canada, now resides with his wife Arlene in Oaxaca, Mexico, where he writes, leads small group tours to the villages, markets, ruins and other sights, is a consultant to documentary film production companies, and operates Casa Machaya Oaxaca Bed & Breakfast.