Jewson Ltd v Boyhan
| Jurisdiction | England & Wales |
| Judge | Clarke,Sedley L JJ,Cresswell J |
| Judgment Date | 28 July 2003 |
| Date | 28 July 2003 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal (Civil Division)
Clarke and Sedley L JJ and Cresswell J.
Anthony de Garr Robinson (instructed by the Wilkes Partnership) for the appellant.
Bryan McGuire (instructed by Bell Lax Litigation) for the respondent.
The following cases were referred to in the judgments:
Britvic Soft Drinks Ltd v Messer UK LtdUNK [2002] 1 Ll Rep 20.
Christopher Hill Ltd v Ashington Piggeries LtdELR [1972] AC 441.
Slater v Finning LtdELR [1997] AC 473.
Sale of goods — Implied terms — Satisfactory quality — Particular purpose for which goods were being bought — Reasonably fit for purpose — Unreasonable for buyer to rely on skill or judgment of seller — Electric heating boilers adversely affected energy ratings of flats — Partial reliance by buyer on seller's skill and knowledge — Sale of Goods Act 1979, s. 14(2), (3).
This was an appeal by the claimant (“Jewsons”) from the deputy judge's decision, on a trial of preliminary issues, that Jewsons was in breach of terms implied by s. 14(2) and (3) of the Sale of Goods Act 1979, as amended, into a contract for the sale of 12 electric boilers by Jewsons to the defendant (“K”).
K bought a property in 1997 with permission to convert it into 13 flats. To provide heating and hot water in the flats K bought 12 electric boilers from Jewsons. The flats had been energy rated using the Standard Assessment Procedure (“SAP”) in 1997 when an application had been made for Building Regulation consent for conversion works. After the installation of the electric boilers the SAP ratings were recalculated. The boilers had not been submitted to the Building Research Establishment for testing for SAP purposes and so the default codes applicable to electric panel radiators had to be used instead. The result was that much lower SAP ratings were obtained for the flats than previously. When Jewsons sued K for the price of goods sold and delivered K sought to set off a counterclaim for damages for breach of the contract to supply the boilers. K's case was that potential purchasers of the flats were put off by the new, low SAP ratings, and that he suffered financial loss as a result. Jewsons' case was that the failure of the project was not caused by the installation of the boilers but by entirely independent factors.
Preliminary issues were ordered and the judge held that the boilers were not of satisfactory quality within s. 14(2) of the 1979 Act and that Jewsons were in breach of the term implied by s. 14(3). Jewsons appealed.
Held, allowing the appeal:
1. Under the statutory scheme set out in s. 14 it was the function of s. 14(3), not s. 14(2), to impose a particular obligation tailored to the particular circumstances of the case. This was not a case in which it was said that there was anything unsatisfactory about the intrinsic qualities of the boilers. What had been held to be unsatisfactory about them was their impact on the SAP ratings for the flats, which depended upon a number of factors which related to the particular characteristics of the flats as well as the boilers. In those circumstances, it would be a startling result if Jewsons were liable for breach of the implied terms in s. 14(2) and not of the implied terms in s. 14(3).
2. The judge held that K made clear to Jewsons that he was buying the boilers for installation in flats which were being converted for resale. This was a case of partial reliance on the seller's skill and judgment, namely reliance by K only that the boilers were fit for their purpose as boilers. While K made it clear to Jewsons that he wanted to buy the boilers in order to install them in flats for sale, he gave them no or insufficient information upon which they could form a view as to the effect which the boilers would or might have on the flats' SAP ratings. The question whether they were suitable for installation in flats with the particular characteristics of those flats was a matter for K and his advisers. It was also not reasonable for K to rely on the skill and judgment of Jewsons in that respect. K could not reasonably have thought that Jewsons realised that he was relying on their skill and judgment in that respect. Therefore Jewsons were not in breach of the implied term in s. 14(3) of the 1979 Act. (Christopher Hill Ltd v Ashington Piggeries LtdELR [1972] AC 441 considered.)
3. That analysis also led clearly to the conclusion that there was no breach of the term as to satisfactory quality implied by s. 14(2) of the 1979 Act. The function of s. 14(2), by contrast with s. 14(3), was to establish a general standard of quality which goods were required to reach. It was not designed to ensure that goods were fit for a particular purpose made known to the seller. That was the function of s. 14(3). The question in most cases under s. 14(2) would be whether the goods were intrinsically satisfactory and fit for all purposes for which goods of the kind in question were supplied. The boilers satisfied that criterion because they were satisfactory as boilers. There was nothing wrong with the quality of the boilers as such and a reasonable man would so conclude. Once it was held that it was not reasonable of K to rely upon the skill or judgment of Jewsons with regard to the potential impact of the boilers on the flats' SAP ratings, it was clear that the reasonable man would not conclude that the boilers were not of satisfactory quality. It followed that there was no breach of the term implied by section 14(2) of the 1979 Act.
Clarke LJ:
1. This appeal arises out of an undated order stamped on 2 October 2002 which was made by Mr David Foskett QC, sitting as a Deputy High Court Judge, after the determination of a number of preliminary issues which he resolved in two judgments, dated 2 August and 2 September 2002 respectively. The appeal is brought pursuant to permission granted by the judge.
2. The appeal is essentially brought in order to challenge the decision of the judge that the appellant was in breach of terms implied by section 14(2) and (3) of the Sale of Goods Act 1979, as amended, into a contract for the sale of 12 boilers by the appellant (“Jewsons”) to the original defendant, Mr Kelly. Mr Kelly has unfortunately died since the trial and, by agreement and pursuant to an order of the court, the respondent to the appeal is the personal representative of his estate.
3. I take the background facts largely from the judgment of the judge who has set them out with great care. The vast majority of his findings of fact and most of his answers to the questions posed by the preliminary issues are accepted by the parties. It is not therefore necessary for me to set out the facts in anything like the detail which the judge did.
4. Mr Kelly was an entrepreneur who from time to time engaged in property development. In October 1997 he acquired or agreed to acquire York House, which was a former convent school building, from Mr Dunn, who had obtained planning permission to convert it into 13 self-contained flats. Mr Kelly originally intended to convert it into a children's home but local opposition was too strong. He therefore decided to convert the property into 13 flats. He borrowed £200,000 from Mr Dunn with interest at the rate of 15% per annum payable monthly and a further £220,000 from a Mr Sanders with interest of a fixed sum of £40,000 repayable when flat no 1 was sold.
5. Mr Dunn had intended to let the flats, whereas Mr Kelly decided to sell them. The difference is significant in the context of the issues raised by the appeal because Mr Dunn had intended to keep the existing central oil-fired boiler, which would heat all the flats, whereas Mr Kelly did not think that that was feasible in the context of individually owned flats and wanted a system with an individual boiler in each flat. He rejected 13 separate oil tanks for each flat. As to solid fuel such as coal, Mr Kelly said in evidence that the installation of fireplaces and back boilers was not really practicable. He asked rhetorically: “would you like to carry coal up in a bucket?”
6. That left gas and electricity. Mr Kelly initially considered incorporating individual gas-fired boilers into each flat. There was a gas supply to one of the flats but his inquiries of the gas providers in the area revealed that it would cost £34,000 to extend the gas supply to the all individual flats and that there was a six month waiting list before they could start. He concluded that it would probably have been a year before they could (as he put it) have done the job. As the judge found, Mr Kelly was not prepared either to pay £34,000 or to wait, so he needed to consider what other options were available to him. So far as I can see, the only alternative source of heating was electricity.
7. In the event, in circumstances to which I shall return, Mr Kelly bought 12 electric boilers from the Bideford branch of Jewsons, the well-known firm of builders” merchants. He did not buy 13 boilers because (as already stated) there was already a gas supply to the thirteenth flat. We were told that the total cost of the boilers was about £7,500 exclusive of VAT, so that they cost about £625 plus VAT each. Mr Kelly also bought a considerable amount of other materials from Jewsons. It is Jewsons” case that he did not pay for all the materials which he bought and they commenced these proceedings in order to recover the shortfall, which they say is £53,322.43. So far as I am aware, that sum is not in dispute but Mr Kelly seeks to set off his counterclaim for damages for breach of the contract to supply the boilers.
8. There have been two trials of preliminary issues relevant to the counterclaim. The first came before His Honour Judge Playford QC. On 20 December 2000 he held that Jewsons” standard terms and conditions applied to the sale. He further held that clauses 8.9 and...
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