Docker v Hyams (Shemara) (No 1)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE HARMAN,LORD JUSTICE DANCKWERTS |
| Judgment Date | 29 April 1969 |
| Judgment citation (vLex) | [1969] EWCA Civ J0429-3 |
| Court | Court of Appeal (Civil Division) |
| Date | 29 April 1969 |
[1969] EWCA Civ J0429-3
In The Supreme Court of Judicature
Court of Appeal.
(From: Mr. Justice Cross)
Lord Justice Harman
Lord Justice Danckwerts and
Lord Justice Edmund Davies
In the Matter of a Contract in Writing between Sir Bernard Docker and Harry Hyams dated 5th August 1968 as amended on 5th and 22nd August 1968
Mr. M. O'CONNELL STRANDERS, Q.C. and LORD LLOYD OF HAMPSTEAD (instructed by Messrs. Goodman, Derrick & Co.) appeared on behalf of the Appellant (Defendant).
Mr. R.L.A. GOFF, Q.C. and Mr. J.S. HOBHOUSE (instructed by Messrs, M.A. Jacobs & Sons) appeared on behalf of the Respondent (Plaintiff).
Despite the strenuous and sustained arguments of Mr. Stranders I think that in this case the judge reached the right conclusion and I would have been content to say that I adopted his judgment and leave the matter there, but in deference to the fact that there is a lot of money involved and we have had a long and complicated argument on facts not very usual, I had better, I think, state in my own words what my reasons are for agreeing with the learned judge.
The plaintiff, Sir Bernard Docker, is the owner of a large yacht called the "Shemara", of 833 tons burthen, and last year on the 5th August he entered into a written contract to sell the year to the defendant for £290,000, of which a deposit of £30,000 was paid on the signing of the contract. The contract made was an adaptation of a written form provided by the Royal Yachting Association for the sale of a secondhand yacht and, like all common forms, it works a little roughly in places. Clause 4 was in these terms as altered by letter at the same time as the contract was made The Purchaser shall be at liberty to haul up or place ashore or open up the yacht and her machinery for the purpose of inspection or survey forthwith…." There followed clause j: "After the completion of such inspection and/or survey, if any material defect or defects in the yacht or her machinery shall have been found, the Purchaser may give notice to the Vendor or the Brokers of his rejection of the yacht by indicating the nature of the defect or defects…".
Now that happened the purchaser did have a survey made. He on the 19 September served on the vendor a notice of his rejection of the yacht, and he indicated the nature of what he said the defects were. If he was right, they were very serious defects: they would cost £100,000 or thereabouts to remedy.
Now although that was called a notice of rejection it was not the end of the matter because clause 5 goes on: "On receipt of notification of such defect or defects, the Vendor shall forthwith indicate his willingness to make good….without delayor make a mutually agreed" offer. It then goes on to say that if neither of those things happens either party may cancel the contract. Clause 6 provides what happens in that event and I need not bother with that.
There then follows clause 7, which again was amended. It provided for the date when the completion should take place. I do not think I need read it.
Clause 8 is important in this respect, that the purchaser I think relies chiefly upon it for his view of the interpretation of the contract. It reads: "The Purchaser being at liberty to inspect the vessel and satisfy himself as to her condition all express or implied warranties or conditions statutory or otherwise as to quality or fitness for any purpose….are hereby excluded…." What that clause does is to say that there shall be no warranty under the Sale of Goods Act or otherwise of the fitness for the purpose of the subject-matter of the sale because (says the clause) of the liberty given by the contract to the purchaser to satisfy himself as to the condition of the yacht. That clearly is a reference to clause 4, which gives him, in the same words, liberty to open up the yacht and inspect her outside and in and thoroughly. He having been given that opportunity, it is not unfair that he should give up any rights which the statute or the common law might otherwise give him of relying on implied warranties.
After that I think I need only refer to clause 13, which says this: "If any dispute difference or question arise between the parties hereto relating to the rights duties or obligations of either party hereunder including (without prejudice to the generality hereof) any dispute difference or question whether the Vendor has in fact properly and satisfactorily rectified all defects under clause 5 and clause 7 hereof the same shall be referred to arbitration…."; and so forth. That on the face of it is a general submission to arbitration of all questions between the parties arising out of the contract. It then goes on expressly to include questions about the satisfactoryremedying of defects but it does not mention expressly (and this is relied on I think by the purchaser) the question whether there can be arbitration on whether such defects existed or no. It is said that that is left out because it was not a matter on which arbitration was possible—"Because", says the purchaser (and this is his case) "provided I find defects either myself or by my competent advisers and there is no bad faith in the matter I am entitled to serve notice of rejection and the rest follows either the vendor must remedy the defects or he must pay me compensation therefore or I may call this bargain off the question whether there are defects or no defects is for me, and for me alone, and therefore the arbitration clause despite its generality does not refer to that very matter because that is not an arbitrable matter, it is a matter within my own finding, within my own choice: if I or my advisers find defects, then the rest will follow and no arbitration can make any difference".
Now in fact the purchaser started an action on the 29th November to enforce that view of the contract. There was thereupon a motion by the vendor to stay the action on the ground that the matter ought to go to arbitration and he did in fact cause an arbitrator to be appointed. On the 31st December Mr. Justice Plowman stayed the action, but he did not stay it outright, he stayed it upon terms: the terms: were that the vendor should take out an originating summons forthwith raising this question of law between the parties, which was framed with the aid of the judge — "Whether upon the true construction of the abovementioned contract a document dated the 19th September, 1968….purporting to be a notice under clause 5 of the contract was capable of being a valid notice for the purposes of the said clause whether or not the defects therein alleged to exist and to be material did in fact exist or were material defects".
It is acknowledged before us that of course the notice would be a good notice if it was conceded that there were defects; but the purchaser goes further and says that it doesnot matter whether there were or not, and in consequence the real question before the judge and before us is whether the notice was a good notice, or capable of being a good notice, even though no defects were found — or no material defects; and that is the battle between the parties.
The learned judge concludes his judgment in these words: "I cannot bring myself to think that the first sentence of clause 5 could have been worded as it was if the purchaser or his surveyor was to be the sole judge of whether or not there were any material defects in the yacht or her machinery". Now that is the nub of the whole matter. Does clause 5 provide for defects that have a real existence or does it provide also for defects the existence of which resides only in the eye of the purchaser or his surveyor? The words are "shall have been found". The purchaser says that does not mean "shall have been discovered" but "shall have been adjudged to exist", or "shall in the opinion of the purchaser or his agent exist", and therefore it does not matter whether the arbitrator or the tribunal should find there were in fact no such defects: that is not the question: the question is whether the purchaser honestly considered this, that or the other to be a defect. The purchaser seeks to fortify that by the words "satisfy himself as to her condition" in clause 8. He says: "Unless I am satisfied I may serve notice of rejection. It is not somebody else who has got to be satisfied: it is me. I am not satisfied: I serve notice. I think such and such is a defect; I honestly so think; and that gives me a right to reject".
The vendor's answer to that is: That really makes nonsense of clause 5, because clause 5 does not mean that a notice of rejection is a final matter; it is not like a contract "subject to survey", where the purchaser may simply say "I do not approve" and the matter is at an end, like an ordinary contract for the sale of real estate "subject to contract". It is that giving of the notice gives an opportunity to the vendor still to preserve his rights, either by doing the work to put the defects right oroffering an agreed sum in compensation; and, says the vendor, how can that be if there is in fact no defect to put right and no compensation therefore, to pay? The word "found, therefore, says he, must have an objective reality in this case and not be a merely subjective matter, as in the authorities which have been cited, Mr. Justice Cross did not ded with any authorities, and I think he was well justified because this is after all in the end a mere matter of construction. But authorities were cited before us and I think perhaps in deference to the argument of counsel I ought just shortly to deal with them.
The first is the case of Repetto v. Friary Steamship Co. (17 Times Law Reports, 265). That was a decision at first instance of Mr. Justice Mathew, after an argument by most distinguished counsel on each side. The...
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