R & B. Customs Brokers Company Ltd v United Dominions Trust Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE DILLON,LORD JUSTICE NEILL |
| Judgment Date | 21 December 1987 |
| Judgment citation (vLex) | [1987] EWCA Civ J1221-8 |
| Docket Number | 87/1320 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 December 1987 |
and
[1987] EWCA Civ J1221-8
Lord Justice Dillon
Lord Justice Neill
87/1320
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE MAYOR'S AND CITY OF LONDON COURT
(HIS HONOUR JUDGE McDONNELL)
Royal Courts of Justice
MR TIMOTHY SCOTT, instructed by Messrs Judge & Priestley (Bromley), appeared for the Appellants (Third Parties).
MR BERNARD O'SULLIVAN, instructed by Messrs Sechiari Clarke & Mitchell (Barnet), appeared for the First Respondents (Defendants).
MR MARTIN FARBER, instructed by Messrs Santers, appeared for the Second Respondents (Plaintiffs).
The third party in these proceedings, Saunders Abbott (1980) Ltd., a motor dealer, appeals, with the support of the defendants, United Dominions Trust Ltd., a finance company, against a decision of His Honour Judge McDonnell in the Mayor's and City of London Court given on 31st March 1987 whereby he awarded the plaintiffs, R & B Customs Brokers Ltd. ("the company"), judgment against the defendants and awarded the defendants a corresponding judgment against the third party.
The matter concerns a Colt Shogun hard top four wheel drive motor vehicle ("the car") which was sold to the company in 1984, but proved, as the judge found and the finding is not disputed, to be not reasonably fit for the purpose for which it was sold, viz. the purpose of ordinary use upon the roads in England. The appeal raises questions as to the terms to be implied in a contract of sale under section 14 of the Sale of Goods Act 1979 and also questions of some general importance in relation to the Unfair Contract Terms Act 1977 ("the 1977 Act").
The events in question happened in 1984. The company had by then, it seems, been in business for some five or six years. It was a private company whose only directors and shareholders were a Mr Roy Bell and his wife. Its business was that of shipping brokers and freight forwarding agents. It owned a Volvo car and in September 1984 Mr Bell was minded to exchange the Volvo for another vehicle. He saw the car offered for sale second-hand at the third party's showrooms. The third party had taken the car into stock on 18th September, cleaned it up and put it out for resale. The third party did not know, and had no reason for knowing, that the car suffered from the serious defect which later became apparent.
Mr Bell saw the car on 20th and 21st September and decided that the company should buy it, and hand in the Volvo in part exchange. In his evidence he said that the four wheel drive vehicle would be more appropriate to his needs. The intention was that the car would be bought for personal and company use. The third party's cash price for the car was £10,295, but they were prepared to allow £5,645 as a turn-in price on the Volvo. That left a balance of £4,650 to be raised. That balance Mr Bell wanted to raise for the company by a hire-purchase or credit sale arrangement. His evidence was that the car was the second or third vehicle acquired on credit terms.
The third party had a long-standing trading relationship with the defendants where credit sales were required. The third party carried stocks of the defendants' forms. The upshot was the usual triangular relationship: the third party sold the car to the defendants, who entered into their standard form of conditional sale agreement with the company.
So far as dates are concerned, Mr Bell saw the car, as I have mentioned, on 20th and 21st September, and on the 21st he was allowed to take it away. He left the Volvo and the agreed turn-in price for the Volvo was treated as a deposit in relation to the car. He and his wife signed on behalf of the company a credit application form for the defendants and the defendants' form of conditional sale agreement. It is likely that these forms were signed on 21st September. They were sent by the third party to the defendants, and in due course the defendants countersigned the form of conditional sale agreement and returned the buyers' part to the third party for handing to Mr Bell for the company. The defendants did not however actually countersign the documents until 3rd November 1984, which happens to have been a Saturday. The reason for that delay is not known. It is clear that the defendants would only have signed the documents after they had in their hands the parts signed on behalf of the company.
The 3rd November 1984 has accordingly been taken throughout these proceedings as the date of the contract by the third party to sell the car to the defendants, and the date also when a binding contract came into existence between the defendants and the company for the conditional sale of the car by the defendants to the company. There was indeed a late attempt by the company in the court below to argue that some form of contract had been made on or a few days after 21st September, but the judge refused to allow such a case to be made, since it was a new departure which had never been pleaded. It seems to me that, pleading apart, the contract must only have become binding when the defendants signed their part of the conditional sale agreement; the form of agreement incorporates statutory notices, and, even if there had been informal agreement to a transaction being entered into, it was always intended that written forms of contract should be signed and exchanged. The monthly hire payments or instalments under the conditional of sale agreement only became payable a month after the date of the contract, and the first instalment was in fact paid on 4th December 1984.
In the meantime, between 21st September and 3rd November 1984 certain things had happened. In the first place, on 10th October 1984 Mr Bell had written on behalf of the company to the third party; he commented about certain alterations he desired for fitting his radio in the car and for connecting an electric facilty from the tow bar and he ended: "I await your advice of booking for you to provide the above." More importantly, though the weather at 21st September and for two or three weeks afterwards had been very fine, the second half of October was very wet and Mr Bell then found that the roof of the car leaked. The result was that the car was taken into the third party's repair shop on 5th November 1984, to change over the radio and to attend to a water leak in the roof. Mr Bell's evidence was clear that when the car was taken in on the 5th, Mr Wyeth, the third party's salesman, promised to have the leak detected and fixed. There is no evidence one way or the other to indicate whether the taking in of the car on the 5th was booked in advance; it appears, however, to have been entirely fortuitous that it happened two days after the defendants had, on 3rd November, signed the forms of contract.
Unfortunately, the third party failed to cure the leak. Though the car was sent back several times, and was at one stage sent to specialist subcontractors, the leak, so far from being cured, got worse. The resulting condition was very unpleasant. The upholstery became sodden with water, mouldy and evil-smelling. By February 1985 Mr Bell rejected the car and asked for his money back. On the facts there is, in my judgment, no doubt that because of the roof leak the car was, as the judge found, at all material times unfit for the purpose for which it was sold of ordinary use upon the roads in England.
There is no basis for any suggestion that the third party acted negligently or in bad faith and no such claim has been made. The company puts its claim in contract, and so necessarily makes it against the defendants, with whom alone it had a contract. The defendants naturally claim indemnity against the third party.
The company relies on section 14 of the Sale of Goods Act 1979, which in its form relevant to this contract, having regard to its date, provides so far as material as follows:
"14.-(1) Except as provided by this section…and subject to any other enactment, there is no implied condition or warranty about the quality or fitness for any particular purpose of goods supplied under a contract of sale.
"(2) Where the seller sells goods in the course of a business, there is an implied condition that the goods supplied under the contract are of merchantable quality, except that there is no such condition—
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(a) as regards defects specifically drawn to the buyer's attention before the contract is made; or
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(b) if the buyer examines the goods before the contract is made, as regards defects which that examination ought to reveal.
"(3) Where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known to the seller any particular purpose for which the goods are being bought, there is an implied condition that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the seller's skill or judgment.
"(4)…
"(5) The preceding provisions of this section apply to a sale by a person who in the course of a business is acting as agent for another as they apply to a sale by a principal in the course of a business, except where that other is not selling in the course of a business and either the buyer knows that fact or reasonable steps are taken to bring it to the notice of the buyer before the contract is made.
"(6)…
"(7) In the application of subsection (3) above to an agreement for the sale of goods under which the purchase price or...
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