Aswan Engineering Establishment Company (M/S) v Lupdine Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE LLOYD,LORD JUSTICE NICHOLLS,LORD JUSTICE FOX |
| Judgment Date | 16 July 1986 |
| Judgment citation (vLex) | [1986] EWCA Civ J0716-1 |
| Docket Number | 86/0671 |
| Court | Court of Appeal (Civil Division) |
| Date | 16 July 1986 |
[1986] EWCA Civ J0716-1
Lord Justice Fox
Lord Justice Lloyd
and
Lord Justice Nicholls
86/0671
1984 M. No. 2067
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT (MR JUSTICE NEILL)
Royal Courts of Justice,
MR RICHARD AIKENS, Q.C. (instructed by Ince & Co.) appeared on behalf of the Appellants.
MR A.W. STEVENSON and MR S. COLES (instructed by Kennedys) appeared on behalf of the Respondents.
The facts of this appeal are simple enough. But they have given rise to two difficult questions of law. The first, on which there is said to be no authority, is the meaning of merchantable quality, as now defined by Section 14(6) of the Sale of Goods Act, 1979. That question arises in third party proceedings between Lupdine Ltd., and Thurgar Bolle, the first and second defendants.
The second question concerns the scope of the manufacturer's duty in tort. That question arises between Thurgar Bolle and Aswan Engineering Establishment Co., the plaintiffs. As so often happens, the second question only arises because the plaintiffs' primary remedy is not available or rather, is unlikely to prove fruitful; for Lupdine, the intermediate seller, is now in liquidation.
Lupdine are (or were) manufacturers of a waterproofing compound known as "Lupguard". The plaintiffs are a construction company carrying on business in Kuwait. In June 1980 they bought a quantity of about 35,100 kilogrammes of Lupguard for shipment to Kuwait. The Lupguard was packed in plastic pails manufactured and supplied by Thurgar Bolle. Each pail held about 25 kilogrammes of Lupguard. The pails were stacked five or six high in 20 foot containers—702 pails per container. The first container was shipped on 13th July 1980. Four more containers were shipped on various days between 28th July and 19th September 1980. When the containers arrived, they were left standing on the quayside in full sunshine. As a result the temperature inside the containers reached 70° Centigrade or 158° Fahrenheit. It was as if the plastic pails had been put in an oven. Not surprisingly, perhaps, the plastic pails collapsed, and there was a total loss of the Lupguard. Thurgar Bolle say that some of the Lupguard could have been salvaged, but I was not persuaded that that would have been practicable.
The plaintiffs brought a claim against Lupdine. Lupdine brought in Thurgar Bolle as third parties. The plaintiffs then amended their claim so as to join Thurgar Bolle as second defendants. Neill J. held that the plaintiffs were entitled to succeed against Lupdine in contract. Damages were agreed at £118,811.40, but he dismissed Lupdine's claim against Thurgar Bolle. He held that the pails were of merchantable quality within the meaning of Section 14 (6) of the 1979 Act. He held further that there was no express or implied term that they were to be fit for the journey to Kuwait.
As for the plaintiffs' claim against Thurgar Bolle, Neill J. reviewed the recent cases on a manufacturer's liability in tort, including Anns v. Merton London Borough Council (1978) A.C. 728, and Junior Books Ltd. v. Veitchi & Co. Ltd. (1983) A.C. 520. He held that the plaintiffs had, in the words of Lord Roskill, failed to show "…the requisite degree of proximity so as to give rise to the relevant duty of care". Accordingly, he dismissed the plaintiffs' claim against Thurgar Bolle. It was unnecessary for him to consider whether, if Thurgar Bolle had been under a relevant duty of care, they were in breach of that duty.
There is now an appeal to this Court. The plaintiffs' appeal against the Judge's decision in favour of Thurgar Bolle on the second question, namely, the scope of the manufacturer's duty in tort. Their case has been presented by Mr Aikens and presented, if I may say so, with his usual skill. He accepts that if this were a case of what he called "pure economic loss", then the plaintiffs could not recover the damages from Thurgar Bolle. The decision in Muirhead v. Industrial Tank Specialities Ltd. (1985) 3 W.L.R. 993 precludes that argument so far as this Court is concerned, though Mr Aikens reserves the point in case this matter should go to the House of Lords. But this is not, says Mr Aikens, a case of pure economic loss. The plaintiffs have suffered physical damage to their goods, namely the Lupguard which they have lost, by reason of the negligence of Thurgar Bolle in manufacturing the pails. That brings the case within the ordinary principles established in Donoghue v. Stephenson.
In addition to representing the plaintiffs, Mr Aikens is also instructed on behalf of the liquidator of Lupdine Ltd. to pursue Lupdine's appeal against Thurgar Bolle. It is, of course, unusual for the same solicitors and counsel to be appearing for both plaintiff and defendant. But no doubt the liquidator has been advised that the Judge's decision in favour of the plaintiffs against Lupdine is unappealable. In those circumstances, the plaintiffs and the liquidator of Lupdine have a common interest in securing the maximum recovery from Thurgar Bolle. Mr Stevenson, for Thurgar Bolle, did not suggest any reason why Mr Aikens should not appear for both parties, and I see no objection myself.
It is convenient to take Lupdine's appeal first. As already mentioned, Neill J. found that the pails were of merchantable quality. There was therefore no breach of the condition to be implied by virtue of Section 14 (2) of the 1979 Act. He also found, inferentially, that no particular purpose was made known to Thurgar Bolle so as to attract the condition to be implied by virtue of Section 14 (3) of the Act. Mr Aikens attacked both findings.
I take first the Judge's finding that the pails were merchantable. As to the cause of failure, experts were instructed on both sides. Shortly before the trial, the experts were able to reach agreement on all important issues of primary fact. They incorporated their agreement into a joint memorandum which was put before the Court. In particular they agreed that the pails were bound to fail at 60° C (140° F) when stacked five or six high with a load of 25 kg. per pail, so that the lid of the lowest pail was bearing a weight of 100 or 125 kg. However the pails would not have failed if the temperature had been 52° C (122° F) or below. Nor would they have failed, even at 70° C if the rows had been separated horizontally with wooden battens (a method of stuffing containers which became known as the "eggbox" method), so that the weight of each row of pails was taken, not by the row below, but directly by the floor of the container through vertical supports. There was no agreement as to whether the pails would have survived 70° C. and if so, for how long, if stacked two, three or four rows high without horizontal separation and vertical supports. But one of the experts gave evidence—on which Mr Aikens relied—that a stack of three would have been in trouble, and even a stack of two if left long enough. There was evidence that pails had been used for export to other parts of the world without mishap.
On those primary facts, the Judge stated his conclusion as follows:
"It was nevertheless necessary for the V20 pails to be merchantable as heavy duty pails suitable for export. Having heard and read the expert evidence, however, I am satisfied that these pails were merchantable within the meaning ascribed to that term by Section 14 (6) of the 1979 Act. They were very strong pails and they were nearly able to withstand the high temperature of the Gulf".
That conclusion would have been unassailable on the law as it stood before the Supply of Goods (Implied Terms) Act, 1973. As I shall hope to show in a moment, the law had developed to a point where the dividing line, and overlap such as it was, between Sections 14 (1) and 14 (2) of the Sale of Goods Act, 1893, and the meaning to be attached to the words "merchantable quality" in the latter subsection, then undefined, had become tolerably clear. But Mr Aikens submits that that state of affairs has been changed by the definition of "merchantable quality" introduced by the 1973 Act, and now contained in Section 14 (6) of the 1979 Act. That subsection provides:
"goods of any kind are of merchantable quality within the meaning of subsection (2) above if they are as fit for the purpose or purposes for which goods of that kind are commonly bought as it is reasonable to expect having regard to any description applied to them, the price (if relevant) and all the other relevant circumstances".
It is not possible to appreciate the change which that definition is said to have brought about without first looking at the law as it stood before the 1973 Act. But if I may anticipate Mr Aiken's argument, he submits that the reference in the third line to "the purpose or purposes" (in the plural) as distinct from "a purpose" (in the singular) has brought about a fundamental shift in the relationship between the old Section 14 (1) and Section 14 (2), by very largely extending the scope of Section 14 (2) at the expense of Section 14 (1). Mr Aiken concedes that unless he is right on his construction of Section 14 (6), then his argument on Section 14 (2) must fail.
The starting point of the development of the modern law as to merchantable quality is often taken to be the case of Gardiner v. Gray 4 Campbell 144, where Lord Ellenborough said:
"He cannot without a warranty insist that it shall be of any particular quality or fitness, but the intention of both parties must be taken to be, that it...
To continue reading
Request your trial
-
James Elliott Construction Ltd v Irish Asphalt Ltd
...2 IR 162; Marleasing SA v La Comercial Internacional de Alimentacion SA (C-106/89) [1990] ECR 3135; Aswan Engineering Co v Lupdine Ltd [1987] 1 All ER 135; Christopher Hill Ltd v Ashington Piggeries [1972] 1 AC 441; Rogers v Parish Ltd [1987] QB 933; Cavalier Marketing (Australia) Pty Ltd v......
-
Provimi France S.A.S. v Stour Bay Company Ltd
...of a general purpose may not do. 325 This last point is reflected in the judgment of Lloyd LJ in Aswan Engineering Co. v Lupdine Ltd. [1987] 1 WLR 1. The case concerned plastic pails used to hold a liquid waterproofing compound for shipment to Kuwait, which melted when left stacked in on t......
-
I v DPP. ; M v DPP. ; H v DPP
...unlawful violence towards another, should constitute the offence of affray (see: R v Shivpuri [1987] AC 1, 21B and M/S Aswan Engineering Establishment Co v Lupdine Ltd [1987] 1 WLR 1, 14E). 23 In its Report the Law Commission discussed the elements of the statutory offence of affray which i......
-
Bacardi-Martini Beverages Ltd v Thomas Hardy Packaging Ltd
...of this nature. The interesting discussion and difference of opinion between Lloyd LJ and Nicholls LJ (as they were) in M/S Aswan Engineering Est. Co. v. Lupdine Ltd. [1987] 1 WLR 1 does not help to resolve these, particularly when it preceded Murphy and occurred when the star of Junior Boo......
-
MISDESCRIPTION AND MISREPRESENTATION LIABILITY ARISING OUT OF ART AUCTIONS IN NEW ZEALAND.
...'in the course of a business': see the Consumer Rights Act 2015, s. 100(5). (51) M/S Aswan Engineering Establishment Co v. Lupdine Ltd [ 1987] 1 W.L.R. 1 (52) The buyer was a dealer who had more expertise than the dealer who sold the work, in terms of the purported artist's output. It was n......
-
Amending sale of goods legislation in England and the Commonwealth Caribbean
...relevant circumstances...." This definition appears in s. 14(6) of the 1979 Act. Aswan Engineering Establishment Co. v Lupdine Ltd. [1987] 1 W.L.R. 1 (C.A.); Cf. Rogers v Parish (Scarborough) Ltd. [1987] Q.B. 933 (C.A.) (departing from the usual position). The Consumers' Association conside......
-
The new consumer guarantee law and the reasons for replacing the regime of statutory implied terms in consumer transactions.
...quality under the Sale of Goods Act 1979 (UK) c 54 by the England and Wales Court of Appeal in Aswan Engineering v Lupdine Ltd [1987] 1 All ER 135. (99) F M B Reynolds, 'Terms as to Description and Quality Implied by the Sale of Goods Act' in Michael G Bridge (ed), Benjamin's Sale of Goods ......
-
THE SALE OF GOODS (AMENDMENT) ACT 1996: SATISFACTORY QUALITY, AN UNDIVIDED SHARE IN A BULK AND OTHER AMENDMENTS
...v William Lillico & Sons Ltd[1969] 2 AC 31, BS Brown & Son Ltd v Craiks Ltd[1970] 1 WLR 752. 39 Supra n 15 at paras 3.35 and 3.36. 40 [1987] 1 WLR 1. 41 A seller may be able to escape this conclusion by describing the goods in such a way as to exclude any common purpose for which they are u......