Parsons (H.) (Livestock) Ltd v Uttley Ingham & Company Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ORR,LORD JUSTICE SCARMAN |
| Judgment Date | 18 May 1977 |
| Judgment citation (vLex) | [1977] EWCA Civ J0518-1 |
| Docket Number | 1973 H. No. 223 |
| Court | Court of Appeal (Civil Division) |
| Date | 18 May 1977 |
[1977] EWCA Civ J0518-1
The Master of The Rolls (Lord Denning)
Lord Justice Orr and
Lord Justice Scarman
In The Supreme Court of Judicature
Court of Appeal
On Appeal from the High Court of Justice Queen's Bench Division
(Mr. Justice Swanwick)
THE HON. C. BATHURST (instructed by Messrs. Herbert, Oppenheimer, Nathan & Vandyk, Solicitors. London) appeared on behalf of the Plaintiffs (Respondents).
MR. M. DRAKE, Q.C., MR. D. HOGG and MR. N. DAVIDSON (instructed by Messrs. Elborne, Mitchell & Co., Solicitors, London) appeared on behalf of the Defendants (Appellants).
We are most grateful to Mr, Justice Swanwick for the admirable way in which he has summarised the evidence and given his judgment. It has saved the parties the expense of a transcript of the evidence and has greatly shortened the time of the appeal.
Parsons (Livestock) Ltd. have a fine herd of nearly 700 pigs at their farm in Derbyshire. They call it the Wayside Herd. They manage it most efficiently. They feed the pigs on special pig-nuts. They use about 10 tons a month of these pig-nuts. In order to store and handle these pig-nuts, Parsons bought in 1968 it a big hopper called a bulk-feed storage-hopper. They bought it from the makers, Uttloy Ingham & Co. Ltd., who are sheet-metal workers. Parsons paid £270 for it. It was a huge round metal bin 28 feet high and 8 feet 6 inches in diameter. It was cylindrical at the top and tapering down into a cone. It had a lid on the top with a ventilator in it. The pig-nuts go into the top and come out at the bottom.
The first hopper was so successful that in 1971 Parsons ordered a second one to be just the same as the first, It cost £275. The makers accepted the order in a letter of 23rd April, 1971 in these terms: "… We are very pleased to book your order for one Bulk Hopper exactly as supplied in 1968. Hopper fitted with ventilated top and complete with filler and breather pipes? … Ex Works Price £275.00. Carriage charges £15.00. We deliver in an upright position on your prepared concrete base and bolt down … tipping the Hopper off the back of the vehicle".
On 2nd-August, 1971, the makers delivered the hopper to the site. It was exactly the same as the first, but when the delivery man erected it in position he forgot to adjust the ventilator.He left it closed. It was fastened with a piece of tape which had "been put on so as to stop it rattling on the journey. No one noticed the mistake, because the ventilator was at the top of the hopper 28 feet above the ground. The delivery man went off. The pig farmers used the hopper. They put pig-nuts into it just as they did with the first hopper. On 12th August, 1971 they filled it with 9½" tons of pig-nuts. On 10th September, 8½ tons. On 1st October 8 tons.
At first all was well. But on 28th September a small number of the nuts appeared to be mouldy. The farmers did not think this would harm the pigs. So they went on feeding them. Parly in October more nuts turned mouldy. But still the farmers were not unduly concerned. As a rule, mouldy nuts do not harm pigs. On Saturday, 9th October, there was a bigger proportion of mouldy nuts: and some of the pigs wore showing signs of illness. About sows six of the twenty-one sows suckling litters wore very loose: and about seven or eight were not eating all their ration of nuts. Over JL the weekend the pig farmers became really concerned. They did not know the cause. They telephoned the suppliers of the nuts. They telephoned the veterinary surgeon. The suppliers of nuts came. The veterinary surgeon came. They stopped feeding the pigs with nuts from the hopper. They got some bagged food and fed them from the bags. They telephoned the makers. On Friday, 15th October, a representative of the makers came. He climbed up to the top of the hopper. He found the ventilator closed. Ho opened it. When he came down, he said to the pig farmers: "That appears to be your trouble".
It was indeed the trouble. After much evidence by experts, the Judge found that the closed ventilator was the cause. But the effects remained so as to affect the herd greatly. A largenumber of the pigs suffered an attack of E. coli, which is very A bad for pigs. It was "triggered" off by the eating of the mouldy nuts. The infection spread rapidly. 254 pigs died of a value of £10,000, They also lost sales and turnover resulting in big financial loss. The total claim is £20,000 or £30,000. The question is whether that damage is recoverable from the makers, or whether it is too remote.
THE JUDGE'S FINDINGS
The Judge had before him the speeches in the House of Lords in Czarnikow v. Koufos (1969) 2 Appeal Cases 350 about remoteness of damage. That case draws a distinction between contract and tort. Remoteness in contract depends in what the parties "reasonably contemplated at the time of the contract": whereas in tort it depends on what could "reasonably be foreseen at the time of the breach". But the Judge did not think either of those tests was applicable. He based his decision on the implied term that the goods should be reasonably fit for the purpose under the implied condition of Section 14(1) of the Sale of Goods Act 1893 as it then was. He held that this was an "absolute warranty" and that, in case of a breach, the seller was liable for all the damage of which the breach was a cause. The Judge said significantly that "The plaintiffs do not have to prove that the toxicity or its results were foreseeable to either party … there is no need to have recourse to the question of the presumed contemplation".
But in case he was wrong on this point, and that, being a breach of contract, he ought to consider what was "reasonably contemplated at the time of the contract", the Judge went on to consider the facts in regard to it. He inquired whether the "damage that occurred through the outbreak of B. Coli was withinthe reasonable contemplation of the parties". After considering the evidence, he said: "… Although I sympathise with the Plaintiffs, who have no doubt suffered heavy loss as a result in fact' on my findings of a breach of contract, I would not consider that I would be justified in finding that in the Spring of 1971 at the time of the contract either a farmer in the position of the Plaintiffs or a hopper manufacturer in the position of the Defendants would reasonably have contemplated that there was either a very substantial degree of possibility or a real danger or serious possibility that the feeding of mouldy pig-nuts in the condition described by Mr. Parsons would cause illness in the pigs that ate them, even on an intensive farm such as that of the Plaintiffs".
Applying the speeches in Czaraikow v. Koufos, that finding would mean that the illness and death-of the pigs was too remote to be an admissible head of damage.
THE TERMS OF CONTRACT
The Judge derived his "absolute warranty" from Section 14(1) of the Sale of Goods Act, 189? about reasonable fitness for the purpose. I agree that the warranty in Section 14(1) is absolute in this sense: that if the goods are unfit owing to a latent defect, which could not be discovered by any amount of care, nevertheless the seller is liable. But I do not think this absoluteness means that the seller is liable for all consequences of a breach, however remote the consequences may be. He is only liable, as Section 53(2) says, for "the estimated loss directly and naturally resulting, in the ordinary course of events, from the breach of warranty". That Section is an attempted codification of the rule in Hadley v. Baxendale and should be so interpreted.
But I am not sure that Section 14(1) was really appropriatehere. The contract was divisible into two parts: (i) The sale of the hopper; (ii) The erection of it. Under the second part, the maker was under a duty to use reasonable care in erecting the hopper. But even so, here again the maker would not be liable for all consequences. He would only be liable for such damage "as may fairly and reasonably be considered as arising naturally, i.e., according to the usual course of things, from the breach" - see Hadley v. Baxendale (1854) 9 Exchequer 341. That is virtually the same as Section 53(2).
On either view, therefore, the maker is not liable for all the consequences: but only for such damage as is not too remote in law. So I turn to examine the Judge's findings of fact in regard to it.
THE. JUDGE'S FINDINGS OF FACT
As I read the Judge's findings of fact, he was of opinion that the makers of the hopper could reasonably contemplate these consequences: (i) that the ventilator would remain closed whilst the hopper was in use; (ii) that the pig-nuts stored in it would become mouldy for want of proper ventilation; (iii) that the pig-nuts would be fed to the pigs in a mouldy condition; (iv) that the makers would not reasonably contemplate that there was a serious possibility that the mouldy nuts would cause the pigs to become ill. There may have been a slight possibility, but not a serious possibility. It was so slight that the pig farmers (who fed the nuts to the pigs knowing that they were mouldy) did not themselves feel any concern about feeding the mouldy nuts to the pigs.
By making those findings, the Judge has presented us with a nice problem of remoteness of damage. Mr. Drake, Q.C. submitted that the last finding (iv) means that the pig farmersshould fail. The action is in breach of contract. It has, he says, been held by the House of Lords that a contract-breaker is only liable for the consequences which he may reasonably contempls as a serious possibility, and not for those which he can only foresee as a slight possibility.
THE LAW AS TO REMOTFNESS
Remoteness of damage is beyond doubt a question of law....
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