Jewson Ltd. v Boyhan, Court of Appeal - Civil Division, July 28, 2003, [2004] 1 LLR 505,[2004] 1 Lloyd's Rep 505,[2003] EWCA Civ 1030

Resolution Date:July 28, 2003
Issuing Organization:Civil Division
Actores:Jewson Ltd. v Boyhan
 
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Case No: A2/2002/1966Neutral Citation No [2003] EWCA Civ 1030IN THE SUPREME COURT OF JUDICATURECOURT OF APPEAL (CIVIL DIVISION)ON APPEAL FROM THE HIGH COURT OF JUSTICEQUEEN'S BENCH DIVISIONMr David Foskett QCRoyal Courts of JusticeStrand, London, WC2A 2LLMonday 28 July 2003Before :LORD JUSTICE CLARKELORD JUSTICE SEDLEYand MR JUSTICE CRESSWELL- - - - - - - - - - - - - - - - - - - - -Between :- - - - - - - - - - - - - - - - - - - - -(Transcript of the Handed Down Judgment ofSmith Bernal Wordwave Limited, 190 Fleet StreetLondon EC4A 2AGTel No: 020 7421 4040, Fax No: 020 7831 8838Official Shorthand Writers to the Court)- - - - - - - - - - - - - - - - - - - - -Anthony de Garr Robinson (instructed by the Wilkes Partnership) for the AppellantBryan McGuire (instructed by Bell Lax Litigation) for the Respondent- - - - - - - - - - - - - - - - - - - - -JudgmentAs Approved by the CourtCrown Copyright ©Lord Justice Clarke : Introduction1. 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.Background Facts3. 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 a 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.Preliminary Issues 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 8.11 of the terms and conditions were unreasonable but that clauses 8.7 and 8.10 were reasonable. Neither party appealed against any of his decisions.9. Clauses 8.7 and 8.10 are in these terms:``8.7 The Customer is deemed to be fully conversant with the nature and performance of the goods including any harmful or hazardous effects resulting from their usage and shall not be reliant in any way upon the advice, skill or judgment of the Company. The Company's employees or agents are not authorised to make any representations concerning the goods other than those confirmed by the Company in writing....8.10 The Company shall not be liable for any consequential loss or indirect loss suffered by the Customer or any third party in relation to this contract (except personal injury directly attributable to the negligence of the Company) and the Customer shall hold the Company fully and effectively indemnified against such losses whether arising from breach of a duty in contract or loss in any way including losses arising from the Company's negligence.''10. The second trial came before Mr Foskett (``the judge'') in accordance with directions which had been given by Her Honour Judge Kirkham. He was asked to consider a number of particular questions or issues as follows:``1. What, if anything, Mr Kelly told Jewsons about his intentions for the property?2. What, if any, representations Jewsons made to Mr Kelly with regard to Amptec Electric Boilers (``the electric boilers''). What, if any, representations were binding upon Jewsons having regard to clause 8.7 of the Jewsons' terms and conditions? Were such representations as are binding upon Jewsons negligent?3. What representations, if any, did the Amptec representative make to Mr Kelly with regard to the boilers, were they made on behalf of Jewsons and were such representations negligent?4. Did Mr Kelly rely upon any assurances and representations (in so far as they are binding upon Jewsons) made by Jewsons and/or the Amptec representative? Was he entitled so to rely having regard to clause 8.7 of Jewsons' terms and conditions?5. Were any findings of fact made by the judge on 20 December 2000 in relation to 1-4 above and if so what were they?6. What would constitute satisfactory SAP ratings for the flats?7. Did Jewsons breach section 14(2) and 14(3) of the Sale of Goods Act 1979?8. Should the manufacturers of new electric boilers submit them to the BRE for testing and coding?9. Did the fact that the electric boilers were not coded cause SAP ratings not to be satisfactory within the meaning of point 6 above?10. Does the SAP rating of electric boilers having (sic) any, and if so what, impact on lending by commercial lenders?11. What type of loss is recoverable in relation to any breaches of contract and/or misrepresentation found, having regard to clause 8.10 of Jewsons' terms and conditions?''11. The judge answered each of those questions and, as already stated, held that Jewsons were in breach of the terms implied by section 14(2) and (3) of the Sale of Goods Act 1979, as amended. In this appeal Jewsons accept most of the answers given by the judge to the questions but argue that he was wrong to hold that they were in breach of either of the implied terms. They also say, contrary to the judge's conclusion in his second judgment, that, if they would otherwise be in breach of the term implied by section 14(3), they are protected by the terms of clause 8.7 quoted above.12. Before considering, so far as it is necessary to do so, the facts found by the judge, it seems appropriate to set out the terms of the Sale of Goods Act 1979 (``the 1979 Act'').The 1979 Act13. As amended by various provisions of the Sale and Supply of Goods Act 1994 (``the 1994 Act''), with effect from 3 January 1995 section 14(2) and (3) of the 1979 Act provide as follows:``(2) Where the seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality. (2A) For the purposes of this Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances.(2B) For the purposes of this Act, the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods -(a) fitness for all the purposes for which goods of the kind in question are commonly supplied,(b) appearance and finish,(c) freedom from minor defects,(d) safety, and(e) durability...

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