Draper (C E B) & Son Ltd v Edward Turner & Son Ltd
| Jurisdiction | England & Wales |
| Judge | The Master Of The Rolls,LORD JUSTICE DIPLOCK,THE MASTER OF THE ROLLS |
| Judgment Date | 09 July 1964 |
| Judgment citation (vLex) | [1964] EWCA Civ J0709-1 |
| Date | 09 July 1964 |
| Court | Court of Appeal |
[1964] EWCA Civ J0709-1
In The Supreme Court of Judicature
Court of Appeal
From Mr Justice Lyell
The Master of the Rolls
(Lord Denning)
Lord Justice Danckwerts and
Lord Justice Diplock
Mr R. A. Maccrindle, Q. C. and Mr J. S. Hobhouse (instructed by Messrs Waltons, Bright & Co.) appeared as Counsel for the Appellants, the 5th Party, Steel Bros. & Co. Limited.
Mr Gwyn Morris, Q. C. and Mr R. J. Collinson (instructed by Messrs Simpson, North, Harley & Co.) appeared as Counsel for the Respondents, the 4th Party, G. C. Dobell & Co. Limited.
In October 1961 in Shropshire many cows in a herd of attested British Friesians were poisoned by the food they ate. Three died and others were very ill. The cause was traced to some ground-nut cake which had been used in their mixed food. It had been contaminated with castor bean seed. The farmers (the plaintiffs) sued the merchants (the defendants), who in turn brought in their suppliers (the third parties), who in turn brought in their suppliers (the fourth parties). The Judge found that each supplier in that chain was liable. But now the fourth parties, Dobell & Co. Limited. seek to pass the liability on to the fifth parties, Steel Brothers & Co. Limited. I will call the fourth parties the "buyers" and the fifth parties the "sellers".
The ground-nut cake came from Burma. The sellers bought it on c.i.f. terms from Burmese suppliers in Rangoon. Then the sellers resold it to the buyers on c.i.f. terms. The contract between the sellers and the buyers was on the printed form No. 6 of the London Cattle Food Trade Association which is much use proceeding cakes and meals are imported on c.i.f. terms. It was dated 26th June, 1961. By this contract the sellers agreed to sell to the buyers 300 tons of Burma groundnut expeller cake at £30. 7s.6d. per ton gross delivered weight, cost, freight and insurance to Liverpool. Shipment to be made from a Burmese port per vessel "Warwickshire". The contract contained these express clauses:
"The Caster Seed Clause. The goods are warranted free from castor seed and/or castor seed husk, but should the analysis show a percentage of castor seed husk not exceeding.005 per cent, the buyers shall not be entitled to reject the goods, but shall accept them with the following allowances: 3/4 per cent, if not exceeding.001 per cent., 1 per cent, if not exceeding.002 per cent., and 1½ per cent, if not exceeding.005 per cent. Should the analysis show castor seed husk in excess of.005 per cent, buyers shall be entitled to reject theParcel, in which case the contract shall be null and void for such quantity rejected. The first analysis shall be made, without delay, from the sealed sample submitted to Messrs Salamon and Seaber and should such analysis show the goods free from castor seed and/or castor seed husk, such analysis shall be final…"
"Latent defect. The goods are not warranted free from defect, rendering same unmerchantable, which would not be apparent on reasonable examination, any statute or rule of law to the contrary notwithstanding".
The goods were shipped at Rangoon on 9th July, 1961. Bills of lading were issued on that day. They were taken up by the buyers, cash against documents, on or about 25th August, 1961, before the ship reached Liverpool.
There were several sub-sales before the goods reached England. In particular on 27th June, 1961, the buyers sold 200 tons to the third parties c.i.f. Liverpool. On 12th July, 1961, the third parties sold 12 tons to the defendants ex quay Liverpool.
About the end of August, 1961, the ship arrived at Liverpool. On 1st September, 1961, samples were taken from some of the bags. On 5th September, 1961, the third parties invoiced to the defendants 131 bags ex quay Liverpool. On 6th September, 1961, the analysts, Messrs Salamon and Seaber, gave this certificate of analysis of the samples: "In our opinion this sample is free from castor seed husk". In the light of after events, it is plain that the samples, though representative of the bulk of the bags, did not eliminate all risk. One or more of the bags, which were not sampled, must have contained some castor seed husk.
On 18th October, 1961, the defendants invoiced twelve bags to the plaintiffs. The plaintiffs started using it on 20th or 21st October, 1961. Four days later the cows were taken ill. The plaintiffs made a claim and it was passed downthe chain till it readied the fourth parties (the buyers) and the fifth parties (the sellers).
The buyers rested their case on the express warranty that the goods were free from castor seed and/or caster seed husk: and on the implied conditions of the Sale of Goods Act: and on the implied warranty under Section 2(2) of the Fertilisers & Feeding Stuffs Act, 1926. As the case developed it appeared that the buyers would be in difficulty in relying on the express warranty: because the analysis showed the sample to be free from castor seed husk: and under the castor seed clause the analyst's certificate was final. They would also be in difficulty in relying on the implied condition as to fitness for the purpose, because it could be said that they did not rely on the seller's skill or judgment. They were in difficulty also in relying on the implied condition as to merchantability, because it might be excluded under the 'latent defect clause. So the buyers put most reliance on Section 2(2) of the 1926 Act, which says this; "On the sale for use as food for cattle or poultry of an article included in the first and second schedules to this Act there shall be implied, notwithstanding any contract or notice to the contrary, a warranty by the seller that the article is suitable to be used as such, and does not, except as otherwise expressly stated in the statutory statement, contain any ingredient included in the third schedule to this Act". This ground nut cake is an article within the first schedule and it did contain an ingredient included in the third schedule.
If, therefore, the sale by the sellers to the buyers was a "sale" within this section, it is clear that the sellers were under a statutory warranty of suitability which overrides the provisions of the contract: for the statutory warranty under Section 2(2) is implied "notwithstanding any contract or notice to the contrary". The important question for our decision is whether the sale here was a "sale" within that section. The Judge has held that it was. I venture to disagree with him.
It seems to me that the Fertilisers and Feeding Stuffs Acts, 1926, applies only to sales which take places "within the United Kingdom and not to those which take place elsewhere. This is in accord with the general rule that an Act of Parliament only applies to transactions within the United Kingdom and not to transactions outside. And when I say the "sale" must take place within the United Kingdom, I mean the sale itself and not the contract for sale. I know that often times a contract for sale is spoken of as a sale. But the word "sale" properly connotes the transfer of the absolute or general property in a thing for a price in money, see Benjamin on Sale, 2nd Edition (1873) page 1, quoted in Kirkness v. Hudson. 1955 Appeal Cases, p. 695, at pp. 708,719. In this Act of 1926 I think that "sale" is used in its proper sense to denote the transfer of property in the goods. The sale takes place at the time when the property passes from the seller to the buyer: and it takes place at the place where the goods are at that time. This 1926 Act only applies to sales in which the goods are in the United Kingdom and in which the property passes to the buyer here.
On this interpretation the provisions of the Act fit together as a harmonious whole. The seller, when the goods are in this country, can well be required to furnish to the purchaser the statutory statement of ingredients in accordance with Section 1 of the Act: but he could not be expected to do so were the goods in some overseas country like Burma. The provisions as to sampling and analysing are well applicable when the goods are in this country, but quite impossible when they are elsewhere. Criminal liability is, of course, confined to acts done in this country and not outside. Section 5, in particular, deals with the very point of goods coming into this country on board ship: and requires the seller to keep a register of the goods which, are delivered or consigned direct from a ship or a quay to a purchaser. That obviously contemplates a seller who is here and goods which have arrived here. It does not apply beforethe goods have arrived.
Once it is held that the 1926 Act applies only to sales in which the property passes in this country, then it is very rarely that it will apply to a c.i.f. contract, like the present, where the goods are shipped at a port overseas for delivery here. The property in the goods passes to the buyer on transfer of the bill of lading, and it passes in most cases before the ship arrives in this country. Such a sale is not within the 1926 Act because it takes place outside this country. The only time where the Act would attach would be when the property passes to the buyer after the ship arrives here.
In this case the property in the goods passed from the sellers to the buyers by transfer of the bill of lading, long before the ship arrived at Liverpool. It follows that Section 2(2) does not apply to it. There is no statutory warranty of suitability. The sellers are entitled to rely on the castor seed clause and the latent defect clause.
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