Granges Aluminium A.B. (Trading as Korrugal) v The Cleveland Bridge & Engineering Company Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE LLOYD,LORD JUSTICE BELDAM |
| Judgment Date | 11 May 1990 |
| Judgment citation (vLex) | [1990] EWCA Civ J0511-3 |
| Docket Number | 90/0418 |
| Court | Court of Appeal (Civil Division) |
| Date | 11 May 1990 |
[1990] EWCA Civ J0511-3
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
Royal Courts of Justice
Lord Justice Lloyd
Lord Justice Beldam
90/0418
In The Matter of the Arbitration Acts 1950–1979
And In The Matter of an Arbitration
MR P.A. TWIGG Q.C. and MR H.W.A. PALMER, instructed by Messrs McKenna & Co., appeared for the Appellant (Plaintiff).
MR J. BLACKBURN Q.C. and MR R.J.C. WILMOT-SMITH, instructed by Messrs A.P. Powell (Darlington), appeared for the Respondent (Defendant).
This is an appeal from a judgment of Mr Justice Steyn given on 14th March 1990, whereby he refused to order an arbitrator to state further reasons for his interim award pursuant to section 1(5)(b) of the Arbitration Act 1979. The claim arises out of a contract for the purchase by the claimants, Cleveland Bridge and Engineering Company Limited, of a large quantity of aluminium cladding sheets required for the construction of ten new berths and associated buildings on the Um Qasr River in south- east Iraq. The contract was dated 15th May 1981. It contained a clause in the following terms:
"The goods shall be packaged and protected in such a manner as to permit prolonged storage at the site."
For convenience I shall refer to that clause as "the warranty".
The goods were packed in a thousand or so crates. They arrived at the end of 1982. They were stored in the open over a very wide area. For reasons which do not matter, the claimants were not able to make use of the sheets until June 1986. They were then found to be very seriously damaged. Some of the crates were estimated to contain up to 10 gallons of water.
The claimants commenced proceedings against the respondents, Granges Aluminium A.B., in the High Court before His Honour John Davis Q.C. as Official Referee. But, by an agreement in writing dated 19th October 1989, the parties agreed to a stay of those proceedings and appointed the Right Hon. Sir John May as arbitrator. They asked him for a reasoned award. By the same agreement, they consented to an appeal from the arbitrator's award to the High Court on any question of law arising out of the award.
The hearing took place over 17 days in November and December 1989. There was much complex scientific evidence and many difficult issues of fact and law for the arbitrator to determine. The respondents' final submissions were reduced to writing and occupy some 40 pages of typescript. In the end the arbitrator found that the cause of the damage was the degradation of the polythene wrapping in which the sheets were packed, resulting in an influx of rainwater. The cause of the degradation of the polythene was largely, if not entirely, the high ambient temperature in which the goods were stored in the open in Iraq. On those findings of fact the arbitrator held that the goods were not packaged and protected in such a manner as to permit prolonged storage, and that the respondents were therefore in breach of the warranty. He assessed the damages at £1.46 million and held that the net figure recoverable by the claimants was £938,860.
At the hearing of the appeal, which will no doubt take place in due course, there will be an important question of law arising out of the award as to the true construction of the warranty. It is, as I understand it, common ground that the arbitrator's reasons were fully adequate to enable that question to be answered by the court. But the respondents submit that there is a further question of law arising out of the award, for which the reasons are not stated by the arbitrator in sufficient detail. Hence the application under section 1(5)(b).
Before coming to the further question of law which was said to arise I should recall that the principles on which the discretion under section 1(5)(b) are exercised have been considered in a number of recent cases, at first instance and in the Court of Appeal, and in particular in the decision of this court in Universal Petroleum Company Limited v. Handels Und Transport GmbH [1987] 1 W.L.R. 1178 and in the more recent decision of Mr Justice Hirst in Kansa General Insurance Company Limited v. Bishopsgate Insurance Plc [1988] 1 Lloyds Reports 503.
There is no need for me to re-state those principles in my own words. This is not the case for that. It is sufficient to repeat the warning which Lord Justice Kerr gave in the former case, that the jurisdiction to order further or more detailed reasons under section 1(5)(b) should be exercised as sparingly as possible. Otherwise there is an obvious risk that the beneficent purpose underlying the 1979 Arbitration Act will be defeated. This is so even where, as here, the parties have consented in advance to an appeal on questions of law.
Against that background I then turn to the further question of law for which the arbitrator's reasons are said to be insufficient. It depends on the application of the principles stated by the House of Lords in Lambert v. Lewis [1982] A.C. 225. That was the case which concerned a defective towing hitch. The defendant, a farmer, continued to use the towing hitch on his Land Rover, although he knew it was broken. There was an accident. The farmer was found liable to the plaintiffs in negligence and under the Fatal Accidents Act. It was held by the House of Lords that the farmer could not recover an indemnity from the retailers who supplied and fitted the towing hitch for breach of warranty implied under section 14(1) of the Sale of Goods Act. Lord Diplock expressly approved the dictum of Lord Justice Winn in Hadley v. Droitwich Construction Co. Ltd [1986] 1 W.L.R. 37 at 43 as follows:
"…in a case where A has been held liable to X, a stranger, for negligent failure to take a certain precaution, he may recover over from someone with whom he has a contract only if by that contract the other contracting party has warranted that he need not—there is no necessity—take the very precaution for the failure to take which he has been held liable in law to [X]."
There is no doubt that the respondents relied on the decision of the House of Lords in Lambert v. Lewis before the arbitrator. We were permitted to see the respondents' final submissions in writing without objection. There is a reference to Lambert v. Lewis in two places, at page 26 and at page 27. There is no reference to Lambert v. Lewis anywhere in the arbitrator's reasons.
How, then, does Mr Twigg for the respondents seek to rely on Lambert v. Lewis for the purposes of this application? In two ways. In the first place it appears that in May of 1983 the claimants received a visit from an engineer employed by the respondents. He told the claimants that they ought to cover the crates with tarpaulins. But the claimants said that that would be quite impossible, having regard to their bulk. Mr Twigg wishes to argue, on the strength of Lambert v. Lewis, that any damage which the aluminium sheets may have suffered was not due to any breach of warranty by the respondents, but was due to the failure of the claimants to cover the crates after receiving that warning from the respondents' engineer. He submits that that raises a question of law or of mixed fact and law.
The arbitrator made a finding in the following...
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