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||Neutral Citation Number:  EWCA Civ 794
||Case No: B2/2010/2056
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE LEEDS COUNTY COURT
TECHNOLOGY AND CONSTRUCTION COURT LIST
HIS HONOUR JUDGE COCKROFT
||Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE RIX
LORD JUSTICE LLOYD
MR JUSTICE LEWISON
|| (1) KEITH LOWE
(2) ANN LOWE
||- and -
||W MACHELL JOINERY LTD
Aidan Casey (instructed by Chadwick Lawrence) for the Appellants
Lisa Linklater (instructed by Lee & Priestley) for the Respondent
Hearing date: 6 April 2011
HTML VERSION OF JUDGMENT
Crown Copyright ©
See Costs Judgment:  EWCA Civ 798
Lord Justice Lloyd:
- In 2008 Mr and Mrs Lowe were converting a barn for residential use. They wanted to have an impressive staircase in it. They ordered from the Defendant a bespoke wooden staircase to be made of oak for a price of £16,000 plus VAT, payable before delivery. They paid the price on 4 June 2009 and delivery took place the next day. However, they took the view that what was delivered did not comply with the Defendant's obligations under the contract. They therefore rejected the goods by letter dated 12 June 2009. They had a different staircase supplied from another source. The Defendant's goods are still held by the Claimants awaiting collection by the Defendant.
- Mr and Mrs Lowe issued proceedings in July 2009 for the recovery of the price, and damages to be assessed. The case came to trial before His Honour Judge Cockcroft in the Technology and Construction Court list in Leeds, over 4 days in July 2010. In his judgment delivered on 2 August 2010 the judge held that the Claimants' original reasons for rejecting the goods were unjustified. However, shortly before the trial the Claimants had taken a further point, namely that if the Defendant's goods had been installed, there would have been a breach of the Building Regulations, and that this was another breach of contract justifying rejection.
- The judge held that the Building Regulations would not be complied with, and that the Defendant was for that reason in breach of contract, but he also held that this was not sufficient to justify rejection of the goods, essentially because the design could easily be modified, in one of a number of different ways, so as to avoid there being any breach of the Building Regulations. He also held that the Claimants were not entitled to any relief as a result of the Defendant's breach of contract. He dismissed the claim and he awarded costs against the Claimants on the indemnity basis.
- With permission to appeal granted by Sir Richard Buxton, the Claimants appeal against that order. The Defendant served a Respondent's Notice seeking to uphold the judgment on other grounds, including by asserting an implicit finding by the judge that the goods were of satisfactory quality. In an amendment to the Respondent's Notice proposed at a late stage (for which I would grant permission) it is said that he was wrong to find that there would be a breach of the Building Regulations.
- Part of the problem presented by this case can be attributed to the fact that there is no document setting out the terms of the contract. There was evidently a serious mismatch of assumptions on each side as to, for example, the way in which the goods would be delivered, and what would remain to be done on site in order to install the staircase. It is necessary to resort to inference and implication as to any terms of the contract other than the identification of the design, materials and (presumably) dimensions of the goods, and the price payable.
- The Claimants had visited the Defendant's premises in 2006, and Mr Machell in turn had come to see the barn at that time. In due course the Claimants ordered a quantity of goods from the Defendant, as listed in a fax from the Defendant dated 1 December 2008 giving quotations for five different items, including the staircase. The text of the fax as to the latter was "Staircase including both gallerys 'tom can do drawings'". The fax also showed a lozenge-shaped drawing as "shape on spindel". The papers include several drawings with manuscript dates in mid December 2008 showing the staircase in plan and elevations. It is likely that these were the drawings done by Mr Tom Mason, an employee of the Defendant. One of these drawings shows a 100mm sphere, whose significance I will explain later. It seems that this may have been generated automatically by the design software used by the Defendant. Mr Machell's evidence showed that he did not correctly understand its importance.
- What the Defendant was to supply, as is common ground and was shown on the drawings which I have mentioned, was the components for a staircase connecting the ground and first floors of the barn as converted. The first flight of six steps was to start with two steps on what was described as a bull-nose design. That flight led to a landing, from which two further flights, each of five steps, rose at 90 degrees to the first, in opposite directions. These led to landings or galleries, the materials for which were also to be supplied by the Defendant, including the balustrades. If one were to turn from either of these flights to move along the gallery in the opposite direction to that of the first flight of steps, the gallery led to a blank wall, part of the outside wall of the barn. If one were to turn in the opposite direction, one would then reach other parts of the first floor of the building.
- The balustrades of the flights of steps and those of the galleries had a newel post at each end and spindles to a particular design, all to be supplied by the Defendant. The design of the spindles had been chosen by the Claimants from samples in the Defendant's premises, with agreed modifications, including the application of the lozenge design. They were shown on the elevation drawings.
- If the spindles are placed side by side, all of them the same way up and at the same height (as they would be on the galleries, though not on the flights of stairs), the spaces between the spindles would be sufficient to allow a 100mm sphere to pass between two adjacent spindles at certain points. The significance of that feature arises under the Building Regulations. The design could have been modified with little trouble so as to avoid this position. However, as depicted on the December 2008 drawings the spindles were all the same way up, and it seems to me that, absent any other indication at the time, it must have been understood and agreed that the spindles would all be installed the same way up.
- I must explain the point under the Building Regulations in a little detail, so that the issue can be understood. The conversion of the barn to a residence had to comply with the Building Regulations issued under the Building Act 1984, and in particular with the relevant requirements of Schedule 1 to the Regulations. The terms of Schedule 1 are relatively general, but they are amplified in considerable detail by Approved Documents issued under section 6 of the 1984 Act. Under section 7 of that Act, a failure to comply with an Approved Document does not of itself render a person liable to civil or criminal proceedings but if in any such proceedings it is alleged that a person has contravened a provision of Building Regulations, a failure to comply with an Approved Document "may be relied upon as tending to establish liability". Thus, the terms of the Approved Documents have to be taken seriously. If the Building Regulations are not complied with in respect of a building, the building control officer may not approve the work done. That would lead to the possibility of criminal sanctions if the building were used, or to a notice by the local authority requiring the breach to be remedied, and to possible civil liability as well.
- The relevant part of Schedule 1 is Part K, of which paragraph 1 requires stairs, ladders and ramps to be so designed, constructed and installed as to be safe for people moving between different levels in or about the building. Paragraph 2, so far as relevant, requires that any stairs, ramps, floors and balconies be provided with barriers where it is necessary to protect people in or about the building from falling.
- The relevant Approved Document deals with K1 and separately with K2 and K3. As regards K1, the relevant passage is paragraphs 1.28 and 1.29:
"1.28 Flights and landings should be guarded at the sides (see Diagram 11):
a. in dwellings - where there is a drop of more than 600mm
1.29 Except on stairs in a building which is not likely to be used by children under 5 years the guarding to a flight should prevent children being held fast by the guarding. The construction should be such that:
a. a 100mm sphere cannot pass through any openings in the guarding; and
b. children will not readily be able to climb the guarding."
- By paragraph 1.30 the height of the guarding was to be a minimum of 900mm for internal guardings in single family dwellings, whereas in other buildings a height of 900mm would suffice for flights, but 1100mm is the minimum elsewhere.
- In the guidance to paragraphs K2 and K3, paragraph 3.3 is relevant. It supplements paragraph 3.1 which requires guarding to be provided where reasonably necessary for safety to guard the edges of any part of a floor or gallery.
"3.3 Where buildings are likely to be used by children under 5 years the guarding should prevent children being held fast by the guarding. The construction should be such that a 100mm sphere cannot pass through any opening on the guarding and so that children will not readily be able to climb it. Horizontal rails for such guarding should be avoided."
- On the basis that the 100mm sphere problem arises only on the balustrades to the galleries, not to the flights of steps, paragraph K1 is not relevant, but paragraph K2 is. The guidance given by the Approved Document in paragraph 3.3 is not complied with by the design of the balustrade with the spindles as chosen, designed and supplied. The height of the balustrade was to be 900mm, suitable for a dwelling house but not (on the galleries) for any other kind of building. In any event, it was common ground that the barn was to be used as a dwelling house. There must therefore have been a likelihood that at some time children under five years of age would use the building. They could have been excluded from the galleries by child-proof gates, but that was not part of the Claimants' plan or design.
- The principal issue on the appeal, as in the court below, turns on what were the terms of the contract. The starting point for that, in case of any dispute, should be the allegations in the pleadings. It was not in dispute that the contract was one for the sale of goods, to be made by the Defendant and delivered to the Claimant. It would be for the Claimant to see to its installation in the building. The Amended Particulars of Claim, settled by Counsel who did not appear at trial nor on the appeal, and served on 8 June 2010, alleged three express terms, of which the most important at trial was as to the form in which the goods would be delivered. This, and the other two express terms, were rejected by the trial judge and need not take up further time.
- Three implied terms were alleged: satisfactory quality, under section 14(2) of the Sale of Goods Act 1979; fitness for purpose under section 14(3) of that Act; and in paragraph 5(c), "that the staircase would be constructed in accordance with and in such a way as to satisfy the relevant building regulations and British Standards". The Defendant was alleged to be in breach of the implied terms because the staircase was not of satisfactory quality or not fit for purpose or both, in several respects of which only one is relevant, namely that it does not comply with or satisfy paragraph 1.29 of Building Regulations Approved Document K. The breach was alleged to be a repudiatory breach of contract which had been accepted by the Claimant, and to have given the Claimants the right to reject the goods which they had exercised, by the letter dated 12 June 2009.
- In the Amended Defence, the implied term as to satisfactory quality under section 14(2) of the Act was admitted, whereas the implied term as to fitness for purpose was denied "no particular purpose being alleged", and the implied term alleged in paragraph 5(c) was denied, the particular point being made that compliance with the building regulations was the responsibility of the Claimants. As to the allegation of breach, breach of the Building Regulations was not admitted, and it was asserted that the staircase could be installed so as to comply with the Building Regulations, and if necessary further spindles provided to comply. Accordingly, breach of contract was denied, as was (alternatively) any fundamental breach or breach of condition giving an entitlement to reject the goods or to accept repudiation.
- The principal contest at trial was as to the alleged express term about the form in which the staircase was to be delivered. In his judgment, the judge stated that it was common ground that an oral contract for the design, manufacture and supply of the staircase was made on about 1 December 2008 for a price of £18,400. He considered the alleged express terms and rejected them. Then at paragraph 22 he considered whether there was any other basis to justify rejection of the goods. Of those advanced, he considered seriously only that concerning non-compliance with the Building Regulations. With the benefit of the report of a single joint expert he concluded that the staircase would not have been passed by the Building Control Officer if it had been installed as the Claimants and the Defendant envisaged. He pointed out that it was the Claimants' responsibility to obtain approval under the Building Regulations, but he then proceeded to ask whether that absolved the Defendant. In paragraph 33 the judge said this:
"It seems to me … that the Defendant ought not to have designed a staircase which could not obtain Building Regulations approval. However, even if I were wrong about that, the least which could reasonably be required of the Defendants was that they warned the Claimants of the significance of the 100 millimetre sphere on the drawings and of the need for the Claimant to obtain approval in particular for the spindle design before the parts were manufactured, or alternatively to satisfy the building inspector, if they could, that the premises would not be occupied or visited by children under 5."
- Then at paragraph 36 he said that, reluctantly, he concluded that the failure to supply a staircase that complied with Building Regulations put the Defendant in breach of contract. At paragraph 37 he went on to hold that this breach of contract did not justify rejection of the goods. He said that the spindle design could easily be modified to achieve compliance, using for example either the inversion of alternate spindles or the insertion of alternate plain spindles. Either of these would require the supply of additional spindles but he said that according to the evidence these could be machined in short order and supplied "at modest cost to be met by the Defendants".
- Having held that the Defendant was in breach of contract but that the Claimants were not entitled to reject the goods, he turned to consider whether they were entitled to any relief for the breach of contract. He rejected the claim to damages amounting to the whole price paid on the basis that there was no total failure of consideration, because the Claimants could at any time have mitigated their loss by accepting the Defendant's offer to modify the goods supplied so that they would comply with the Building Regulations. He said he had to conclude that a solution involving such a modification was not acceptable to the Claimants. At paragraph 41 he said that, if the Claimants were determined not to accept the staircase in any modified form, it could not be said that the Defendant's failure to deliver the complete package had occasioned the Claimants any loss. He dealt with two other aspects of the claim to damages, neither of which is now pursued. In relation to the claim for general damages for loss of amenity, he said this at paragraph 47:
"In the present case, the Defendants supplied a staircase which had it been assembled, exactly complied with the Claimants' requirements, but unbeknown to both parties, would have been unlawful, though easily capable of being modified. However, the Claimants will not accept a modified staircase. They cannot expect to receive general damages for having to put up with something they have no intention of putting up with."
- The judge did not identify the term of the contract which he regarded as having been broken by the Defendant in its failure to supply a staircase which complied with the Building Regulations. If it was one of the terms implied under section 14 of the 1979 Act, it is common ground that it was a condition, breach of which would entitle the purchaser to reject the goods, subject to certain other arguments relied on by the Respondent, to which I will come later. If it was a breach of the term alleged in paragraph 5(c) of the Particulars of Claim, then it might have been an intermediate term, breach of which might or might not justify rejection depending on its seriousness. The judge's conclusion that breach did not justify rejection suggests that he did not regard it as a breach of one of the section 14 implied terms. Nor was section 14 relied on in the concluding submissions of Counsel who appeared at the trial for the Claimants (who was not Mr Casey, who argued the appeal for them).
- Accordingly, the judge's stated conclusions suggest, although they do not make explicit, a decision that neither of the section 14 implied terms was broken, that the paragraph 5(c) implied term was part of the contract and was broken, but that it was not broken in such a way as to justify rejection or the acceptance of repudiation. The basis for regarding it in that way was that the problem under the Building Regulations could have been overcome by reasonable modifications to the design, with the supply of a modest number of additional elements by, and at the expense of, the Defendant.
- On the appeal Mr Casey for the Appellants contended that the judge, having found that the staircase as designed and supplied would not comply with the Building Regulations, and that this was a breach of contract on the part of the Defendant, was wrong to find that this did not entitle the Claimants to reject the goods supplied, and equally wrong to find that the Claimants would have been bound to accept modifications such as were necessary to enable the staircase to comply with the Building Regulations. He did not pursue a claim for damages other than for repayment of the price, nor did he separately challenge the judge's costs order.
- By the Respondent's Notice, Ms Linklater for the Respondent contended that the judge had found, implicitly, that the goods were of satisfactory quality, because they could easily be made to comply with the relevant Building Regulations. She argued that the same conclusion could be supported also on the basis that it was the Claimants' responsibility to ensure compliance with the Building Regulations, that this could be achieved by the use of a child-proof gate blocking off each gallery, that the Claimants had done that very thing when a temporary staircase was installed later in 2009, and that the judge had not accepted the Claimants' evidence that they would reject minor modifications to the staircase to make it compliant with the Building Regulations.
- Secondly, she sought to rely on the principle that, although normally acceptance of repudiation can be justified by reference to grounds discovered and advanced later, this is not the case if, supposing the true ground had been relied on at the time, the other party could have put the problem right, whereas it is too late to do so when the true ground is belatedly identified. Thirdly, by amendment (as mentioned already) she contended that the judge's finding of breach of the Building Regulations was wrong because of his reliance on paragraph 3.3, which does not provide guidance as to paragraph K1, the only paragraph relied on by the Claimants.
- I can dispose quickly of the second and third of these points under the Respondent's Notice, doing so on the assumption that the judge's reasoning and the Respondent's first point do not suffice to uphold the judge's order. No case was advanced at trial or in the pleadings to the effect that, if the ground under the Building Regulations had been advanced on 12 June 2009 as the basis for rejecting the goods, the Defendant could have done anything to put the problem right. If the Defendant is not correct in arguing (as the judge accepted) that the possibility of modifying the design meant that any breach was not a repudiation, or not a breach of condition, I do not see how the Defendant could have avoided the consequences of a rejection on 12 June 2009 by modifying the materials supplied with a view to installation according to a different design.
- The third point might be seen as relying on the fact that the Claimant only pleaded breach by reference to paragraph 1.29 of the Approved Document. However, the expert identified paragraph 3.3 as being relevant, and no objection was taken at trial to the point being argued in this way. No doubt this is because, if the point had been taken, an amendment must have been allowed. The subsidiary point is that paragraph K2 is directed at the risk of falling, rather than at the risk of children being held fast. That is so, but it requires there to be barriers or guardings, to protect against falling, and paragraph 3.3 prescribes features of the barriers, including satisfying the 100mm sphere test, for the protection of children. It is plain that paragraph 3.3 must be complied with, just as it is plain (on the judge's findings) that K2 is relevant rather than K1.
- It seems to me that the judge was clearly right to decide that installation of the staircase as supplied by the Defendant in the Claimants' barn, to be used as a dwelling-house, would result in a failure to comply with the Building Regulations. The balustrades on the galleries, as designed and supplied, would not be compatible with paragraph 3.3 of the Approved Document in relation to Part K, unless children under five were to be excluded from the galleries, for example by child-proof gates. He did not refer in terms to the distinction between the status of the Building Regulations themselves and that of the Approved Document, but in substance it seems to me that he was clearly right to hold that if the staircase were installed in the Claimants' barn as it had been designed and supplied, the Claimant would, at the very least, be likely not to obtain approval under the Building Regulations from the building control officer.
- Accordingly I return to the real issue, which is whether the judge's finding of breach of contract is consistent with his conclusion that the Claimants were not entitled to reject the goods.
- At this stage it is necessary to refer to section 14 of the 1979 Act. The parts of the section relevant to this case are as follows:
"(1) Except as provided by this section and section 15 below and subject to any other enactment, there is no implied term 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 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
(2C) The term implied by subsection (2) above does not extend to any matter making the quality of goods unsatisfactory—
(a) which is specifically drawn to the buyer's attention before the contract is made,
(3) Where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known—
(a) to the seller,
any particular purpose for which the goods are being bought, there is an implied term 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 skill or judgment of the seller ….
(6) As regards England and Wales and Northern Ireland, the terms implied by subsections (2) and (3) above are conditions."
- Subsection (1) is not consistent with the implication of the term alleged in paragraph 5(c) of the Particulars of Claim, unless that term is not "about the quality or fitness for any particular purpose of" the goods supplied. That would only be the case if non-compliance with the Building Regulations was not within the scope of either of the statutory implied terms.
- It is accepted that subsection (2) applied to the contract. The dispute is as to its effect. If the Defendant had warned the Claimants about the risk of non-compliance with the Building Regulations, subsection (2C) might have been relevant. Since there was no such warning, it is not.
- It is not agreed that section 14(3) applies, the Defendant contending that no particular purpose was made known by the Claimants to the Defendant. However, the Claimants did make it clear to the Defendant that the goods to be supplied were to be installed and used as the staircase in the barn as converted to residential use. That was the purpose for which the goods were being bought. It seems to me that the term specified in subsection (3) was to be implied, unless it was a case in which the Claimants did not rely, or in which it was unreasonable for them to rely, on the skill and judgment of the Defendant as seller. The judge's comment, that the Defendant should at the very least have warned the Claimants of the need to ensure that the building control officer would accept the particular design, clearly supports the proposition that the Claimants did rely, and were reasonable in relying, on the Defendant in this respect. Accordingly, I would hold that the terms implied by each of subsections (2) and (3) applied to this contract.
- Thus, the staircase as supplied by the Defendant had to be fit for the purpose of being installed in a building to be used as a residence, and for use as such. That arises from section 14(3) and also from section 14(2) taken with subsection (2B)(a). It also had to be of satisfactory quality, as it would be if it met 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. For this purpose, fitness for purpose comes in again as mentioned under subsection (2B)(a), as does safety under subsection (2B)(d).
- Ms Linklater argued that the judge found, implicitly, that the staircase was of satisfactory quality. He certainly did not say so in terms. He held that, as designed and delivered, it would not comply with the Building Regulations, but that it could easily be modified, in minor ways, so as to make it comply. If it had to be modified, in order that it should be of satisfactory quality, then as delivered it was not of satisfactory quality.
- Perhaps because the judge had not been invited by Counsel then acting for the Claimants to consider the section 14 implied terms as such, he did not do so in his judgment. It is therefore for us to consider the effect of his finding of breach of the Building Regulations in relation to the section 14 implied terms.
- Considering the point, to start with, in general terms, rather than by reference to the particular facts of the case, if the purpose for which the goods are to be used (having been made known, if necessary, to the seller under section 14(3)) is one for which compliance with the Building Regulations is or may be essential, fitness of the goods for their purpose must surely include the compliance of the goods, when installed and used, with the Building Regulations.
- It seems to me to follow from this that the implied term alleged in paragraph 5(c) of the Particulars of Claim is excluded by section 14(1) of the 1979 Act. It would also fail the tests of necessity for the implication of terms, since the section 14 implied terms would adequately cover the point. Accordingly, if and insofar as the judge based his decision on the breach being of the paragraph 5(c) implied term, and on that breach not being of a condition, it seems to me that he was wrong. He is not to be blamed for that, since he does not appear to have been addressed on this, at any rate by Counsel then appearing for the Claimants.
- No other relevant term was alleged. In particular there was no allegation of an implied duty to warn the Claimants about the risk of non-compliance with the Building Regulations, which would have justified the judge's reference to such a duty in his paragraph 33, quoted at paragraph  above. The case cannot therefore be decided on that basis.
- In the end it seems to me that it does not matter whether one has regard to subsection (2) or (3), because the point which arises is the same under each, as to whether the staircase as supplied is fit for the intended purpose of being installed and used as a staircase in a dwelling, either directly or as an aspect of satisfactory quality. The possibility of it being modified so as to comply is irrelevant at this stage. The judge said at paragraph 47 that, as delivered, it would, if and when installed, have complied exactly with the Claimants' requirements, though its use would have been unlawful. From that it must follow that, leaving aside the issue of compliance with the Building Regulations, the Defendant had fully complied with its obligations under the contract. (It is irrelevant for this purpose that certain components remained to be supplied.)
- The dilemma which results from this position is that the Claimants had got exactly what they wanted and had contracted for, but they could not lawfully use it for the purpose for which, to the knowledge of the Defendant, they had ordered it.
- A point in some ways similar to this arose in Bramhill v Edwards  EWCA Civ 403,  2 Lloyd's Rep 653. In that case the goods supplied were a second hand motor-home, imported from North America. The vehicle was 102 inches wide, which exceeded the maximum permitted by regulation 8 of the Road Vehicles (Construction and Use) Regulations 1986, which provided that the overall width of a vehicle of that kind must not exceed the equivalent of 100 inches. The purchasers contended that the seller was in breach of section 14(2) because, they said, the vehicle could not be insured and it could not lawfully be driven on the roads in the UK. The evidence accepted by the judge, however, showed that there was no problem in practice about obtaining insurance, and that the authorities turned a blind eye to the minor excess over the prescribed maximum width, which was common in relation to vehicles imported from North America, so that there was in reality no risk of prosecution.
- Apart from those factors, it seems to me that the court is likely to have held that the non-compliance with the statutory maximum width rendered the vehicle unfit for the purpose for which it was bought, and therefore not of satisfactory quality. The judge would have held that the seller was in breach on that basis, but for his also having held that the purchasers had examined the vehicle and ought to have noticed the defect. It is clear from the terms of the judgment of Auld LJ in Bramhill v Edwards that but for the finding that there was no real risk of prosecution, he would have held that the purchaser had shown that the vehicle was not of satisfactory quality because of the illegality of using it.
- That case was not cited to us as such, though it was mentioned in footnotes to passages which were cited to us from Benjamin on Sale of Goods, 8th edition. It seems to me only to confirm the conclusion to which I would have come without its help, and I have therefore not thought it necessary to invite Counsel to make specific submissions about the case.
- In any event, the real point of defence for the Respondent, consistently with the line taken by the judge, was that the non-compliance with the Building Regulations of the goods as originally ordered and supplied did not matter, because it was easy to modify the design and the goods supplied so as to make the goods comply with the Building Regulations.
- That approach faces a number of problems. One is that the Claimants could only have been required to accept the modified goods if their supply would be in accordance with the contract. If so, then it would have been a due and proper performance of the contract for the Defendant to have supplied the modified goods in the first place, even though that would not have given the Claimants exactly what they had required and ordered. Another is to see on what basis the Defendant could have been required to make the modifications and to supply any additional components that would be necessary.
- Mr Casey submitted that, under the previous law in the Sale of Goods Act 1893, with its requirement of "merchantable quality", goods were held to be not of merchantable quality even though they could be made merchantable for a trifling cost: see Jackson v Rotax Motor and Cycle Co  2 KB 937 (dented and scratched motor horns). He also showed us that section 15A of the 1979 Act now qualifies that proposition, but not in relation to consumer purchases:
"15A Modification of remedies for breach of condition in non-consumer cases
(1) Where in the case of a contract of sale—
(a) the buyer would, apart from this subsection, have the right to reject goods by reason of a breach on the part of the seller of a term implied by section 13, 14 or 15 above, but
(b) the breach is so slight that it would be unreasonable for him to reject them,
then, if the buyer does not deal as consumer, the breach is not to be treated as a breach of condition but may be treated as a breach of warranty.
(2) This section applies unless a contrary intention appears in, or is to be implied from, the contract.
(3) It is for the seller to show that a breach fell within subsection (1)(b) above."
- So, he argued, where as here the purchaser does deal as consumer, the fact that the problem could be remedied at modest cost is of no avail to the seller, if the buyer has chosen to reject the goods. (If it is contended that the buyer did not deal as consumer, it is for the seller to show this: see section 61(5A) of the 1979 Act. No such issue was raised in this case.)
- Ms Linklater submitted that reasonableness is an element in each of subsections 14(2) and (3), as is apparent from the text. Section 14(2A) refers to the standard which the reasonable person would find satisfactory, and the obligation in section 14(3) is of reasonable fitness for the purpose. Accordingly, she argued, the reasonableness, or lack of it, of the purchaser's attitude is relevant to the court's decision whether or not there has been a breach. However, on the basis that the goods, supplied in exact conformity with the contract, could not lawfully be used for their intended purpose, known to the seller, it does not seem to me that they were reasonably fit for the purpose, nor that a reasonable buyer would find them satisfactory.
- She also sought to rely on provisions in Part 5A of the Act, comprising sections 48A to 48F, which were inserted into the 1979 Act in 2002 in order to implement Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees. It seems to me that this reliance is misplaced. I do not need to go into the full detail of these provisions. They afford a consumer a right which is additional to that given by the common law, namely to require the seller to repair or replace the goods, or in certain circumstances to require the seller to reduce the purchase price of the goods to the buyer by an appropriate amount, or to rescind the contract with regard to the goods in question, if the goods do not conform to the contract. If there is a breach of a term implied by section 14, they do not so conform. In such a case, "repair" means to bring the goods into conformity with the contract: see section 61(1).
- Ms Linklater rightly points out that the Claimants could have required the Defendant to remedy the problem, but her argument that the Claimants were not entitled to reject the goods, even if one or both of the section 14 implied terms was broken, is not correct. Section 48D deals with the relationship between the new statutory remedies and other remedies. If the buyer requires the seller to repair or replace the goods, then he may not reject the goods without having allowed a reasonable time for the repair or replacement to be done. If, however, the buyer does not seek to use the new remedies, there is nothing in these provisions which affects the exercise of the common law right to reject the goods and to terminate the contract for breach of condition.
- There was some reference to mitigation of loss in the submissions, and also in the judge's judgment. Mitigation can be relevant in a case of this kind, if the Claimant asserts a claim for consequential damages. It is not relevant to the basic question whether the buyer can reject the goods for breach of condition or not.
- It seems to me that the judge's observation at paragraph 47 that the goods as supplied were exactly as the Claimants had required carries the logical consequence that, by that delivery, the contract was performed correctly, leaving aside the fact that some items remained yet to be supplied, and also leaving aside the consequences of non-compliance with the Building Regulations. It follows that if the Defendant had supplied something different, it would not have complied with the contract in terms of design and specification. The Defendant could not have required the Claimants to accept a different design. The Claimants could perhaps have required the Defendant to modify the goods so as to overcome the non-compliance, but only by relying on section 48B. The supply of goods to a different design, complying with the Building Regulations, would have been outside the scope of the contract, and the Claimants could not have been forced to accept them.
- I sympathise with Judge Cockcroft. He was faced in Mr Lowe with a Claimant who quickly took an intransigent position and who reacted in a way which the judge, understandably, found unattractive and precipitate ("indecent haste") to the situation following delivery of the goods in June 2009. The proceedings were conducted in a manner altogether disproportionate to the sums at stake, and with a great deal of time and attention being devoted in the course of the four days of the hearing to a point on which the Claimants failed entirely, involving as the judge thought "theatrical overreaction" on the Claimants' part, and "petulance bordering on childishness", and reliance on at least one document the authenticity of which the judge thought doubtful. On the other points which arose for decision, and which have been the subject of the appeal, it seems plain that the judge had less assistance than he was entitled to expect from Counsel then acting for the Claimants. In those circumstances it is understandable that the judge did not direct his mind to the points which have turned out to be central on the appeal, and that he was heavily influenced by his view of the merits of the Claimants' position.
- Nevertheless, for the reasons which I have given above, I would hold that he was right to conclude that the Defendant was in breach of contract because the staircase as designed and supplied would not have complied with the Building Regulations when installed, but wrong to hold that this did not entitle the Claimants to reject the goods, as they did (albeit for other and bad reasons) in June 2009. On that basis the Claimants are entitled to be repaid the price which they had already paid. They do not now claim any other remedy for the breach of contract. I would therefore reject the points relied on in the Respondent's Notice, and allow the appeal.
- Since writing what I have set out above, I have had the benefit of reading in draft the judgments of Rix LJ and Lewison J. Rix LJ would dismiss the appeal on the basis that it is not open to the Claimants to rely now on the statutory implied terms, despite having pleaded a case that they applied and were broken, because their case at trial was not presented on that basis.
- We have a transcript of their then Counsel's closing submissions from which it can be seen that Counsel did not then make submissions to the judge by reference to those implied terms, but rather (as regards implied terms) to the paragraph 5(c) term. We do not have a transcript of any other part of the trial. It has not been suggested that there was any express abandonment of reliance on the statutory implied terms. I would respectfully disagree with Rix LJ's comment at paragraph  below that the case based on the statutory implied terms was abandoned. In my view that would require either an express statement to that effect or at the very least conduct of the trial which was incompatible with reliance on the statutory implied terms. Not to have mentioned them is not sufficient for that. Without a transcript of the hearing, and without the written material put before the judge before and at the trial (other than the pleadings which we do have, but in which the point is taken), I cannot conclude that there was any such incompatible conduct of the trial.
- As is apparent from the judgments of Rix LJ and Lewison J, the question whether a party should be allowed to raise on appeal an argument not relied on below has arisen for consideration in this court, and in higher courts, with some frequency. Jones v MBNA, mentioned by Rix LJ, has been cited extensively even though it is not itself reported. It is to be found on the bailii website (www.bailii.org) at  EWCA Civ 514, and a search of that website shows that it has been referred to directly in eight subsequent decisions in the Court of Appeal, including Crane v Sky In-home Ltd  EWCA Civ 978, mentioned by Rix LJ, and Broad v Mullarkey,  EWCA Civ 2, mentioned by Lewison J. In Broad v Mullarkey, as Lewison J says, a point which was open on the pleadings had been expressly disavowed by Counsel in his opening at the trial, and it was not allowed to be revived on appeal. In that case, at paragraph 49, I said this:
"A party who seeks to advance a different case, in circumstances such as this, bears a heavy burden as regards showing that the case could not have been conducted differently, in any material respect, as regards the evidence."
- By contrast, in Slack & Partners Ltd v Slack  EWCA Civ 204 the point sought to be raised on appeal had been taken in the pleadings and was abandoned at trial only in Counsel's final submissions, so that it could not be said that this affected the evidence that the other party called at the trial, and the heavy burden of which I had spoken in the earlier case was discharged. Accordingly, I concluded that it was proper to allow the point to be taken on appeal, and the other members of the court agreed.
- Broad v Mullarkey and Slack & Partners Ltd v Slack were rather different both from each other and from the present case in many respects, but it seems to me that they do exemplify neatly both the correct principle and the different ways in which it may apply, according to how the proceedings were conducted below.
- None of these cases was cited to us in the course of the argument on this present appeal, nor (so far as I can recall, having consulted my notes) did Ms Linklater take the point that the arguments on which Mr Casey sought to rely were not open to him. However, there is no doubt as to the principle, and there would have been no dispute as to that. The dispute is as to its application to the facts of this case.
- For myself, like Lewison J, I consider that the determining factor in the present case is that the allegation of breach of contract relying on the statutory implied terms, on the basis of unfitness for purpose and unsatisfactory quality, was on the pleadings before the trial, having been introduced by a fairly late amendment. It was therefore open to the Defendant to take whatever points it wanted to, by way of pleading and of evidence, in order to put itself in the best position to defeat these contentions, either as to whether the terms were to be implied or as to whether, if implied, they had been broken. As I have mentioned, the implication of the section 14(2) term was admitted but that of the section 14(3) term was denied, on the basis that no particular purpose had been made known. Non-compliance with the Building Regulations was denied, and the Defendant also relied on it being the Claimants' responsibility to see to compliance with the Building Regulations; in effect that put in issue the Claimants' reliance on the Defendant as regards compliance of the design with the Building Regulations.
- The Defendant could also have alleged that the Claimants did not deal as consumers (the onus being on the Defendant in this respect under the Act). The Defendant could have taken issue as to the terms of the contract more generally. It could have taken the point that, if the rejection in June 2009 had been expressly based on the Building Regulations point, it could have been put right by the Defendant consistently with the contract. None of these points was taken in the Amended Defence.
- It may be that Counsel then acting for the Claimants did not open the case by reference to the statutory implied terms, but it does not seem to me that we can proceed on the basis that he abandoned that part of the case, only recently introduced by amendment, or that his conduct of the case was in any way incompatible with reliance on those implied terms. Accordingly it was for the parties to adduce whatever evidence they wished to have before the court in order to deal with the pleaded issues.
- For those reasons I agree with Lewison J that this is not an example of an appellant seeking to raise before the appellate court a case which was not before the court below. It is not a new case, in this sense.
- There could still be an argument as to whether the Claimants satisfied the burden on them of proving their case based on the statutory implied terms. It is one thing to say that the Defendant was on proper notice of the issues on which it needed to call evidence. So were the Claimants, of course, but it does not follow that they did adduce all the evidence that they needed to make good their case. I agree with Rix LJ that, if making good their case based on the statutory implied terms would require a further trial at first instance, that would be entirely unacceptable. The reason would be that they had failed to prove their case adequately, or to obtain from the judge the findings of fact necessary for them to show that they had made good their case. However, two central issues were raised before the judge: first, whether the design was such that there would be a failure to comply with the Building Regulations when the staircase and galleries, as supplied, were installed in the barn conversion and secondly, whether it made any difference that the duty to comply lay on the Claimants. The judge addressed both of these points at paragraphs 28 to 33. It seems to me that his findings at paragraph 33, albeit not articulated by reference to the statutory implied terms, show that he decided both those issues in favour of the Claimants. It is on the basis of those findings that Mr Casey put forward his argument based on the statutory implied terms.
- With respect, it seems to me that the issues which Rix LJ raises at paragraphs  to  below are concluded by the judge's findings that there would be a breach of the Building Regulations, that the Defendant was in breach of contract and that, at the very least, it was under a duty to warn the Claimants about the risk of non-compliance with the Building Regulations if the balustrades were installed on the galleries in accordance with the stipulated design. Nor, for example, is it a sufficient answer to the claim that the goods were not of satisfactory quality, because of the non-compliance with the Building Regulations, to say that they were generally of satisfactory quality. No doubt they were well made using good materials, and in proper accordance with the stipulated design, but the problem lay with the design itself, not the quality of construction.
- If the Defendant had been aware of the problem as regards the Building Regulations (as the judge considered it should have been) it would have been faced with a dilemma once it had accepted the Claimants' order: if it did construct the goods according to the Claimants' stipulated design, it would leave the Claimants with the problem of compliance with the Building Regulations, whereas if it did anything else it would not have complied with its contract with the Claimants. That situation could have been resolved by the Defendant pointing out the Building Regulations problem to the Claimants, before accepting the order or at any rate before the design was finalised. That would have left the Claimants with the choice as to whether to take the risk and proceed with the order, or to try to sort out the problem with the building control officer before committing themselves to the design as a matter of contract, or agreeing on a design which did not pose the problem. That is the context for the judge's comment at paragraph 33 that the Defendant should have warned the Claimants of the problem, to which Mr Machell should have been alerted by the 100mm sphere shown on the drawings.
- As I have mentioned, the question whether the Claimants were or were not dealing as consumers is one on which the onus lay on the Defendant, and which would have had to have been pleaded if it was to be taken: see paragraph  above. The Defendant did not choose to take that line in response to the Claimants' amended pleading. Accordingly, in my judgment, the point mentioned by Rix LJ at paragraph  below was not open to the Defendant, and the points mentioned at paragraph  below are not valid, for the reasons given at paragraph  above.
- I share with Rix LJ, and with other judges who have considered the matter including Sir Richard Buxton, the view that the case has already taken up a disproportionate amount of the resources of the courts and of the parties. I would agree that it is unsatisfactory that the case was not argued at trial on what appears to be the correct legal basis, being one which was open on the pleadings. That the Claimants should succeed on a point not expressly argued at trial may well have significant consequences as regards the order that should be made on the appeal as regards costs here and below. Nevertheless, for the reasons which I have given, and in agreement with Lewison J, it seems to me that it is open to the Claimants to rely on the statutory implied terms on the appeal, and that the judge did in fact address and make findings on the necessary issues. I therefore remain of the view which I had originally reached and I would allow the appeal.
Mr Justice Lewison
- It is an unenviable position for a visitor to this court to be faced with two powerful judgments leading to opposite conclusions. But that is the position in which I find myself. At the conclusion of the hearing I was in favour of allowing the appeal, for the reasons given by Lord Justice Lloyd. Sight of Lord Justice Rix's draft judgment has caused me to think again. In the end, it seems to me that the question boils down to whether Mr and Mrs Lowe are entitled to argue their case on appeal in the way that Mr Casey presented it to us. If they are, then in my judgment Lord Justice Lloyd's analysis remains compelling.
- Lord Justice Rix has referred to case-law on the question when an appeal court will allow new points to be taken on appeal. But what is a new point?
- The formal statements of case or pleadings presented to the court are still of fundamental importance in civil litigation. As Lord Phillips of Worth Matravers MR said in Loveridge v Healey  EWCA Civ 173  C.P. Rep. 30 (§ 23):
"It is on the basis of the pleadings that the parties decide what evidence they will need to place before the court and what preparations are necessary before the trial. Where one party advances a case that is inconsistent with his pleadings, it often happens that the other party takes no point on this. Where the departure from the pleadings causes no prejudice, or where for some other reason it is obvious that the court, if asked, will give permission to amend the pleading, the other party may be sensible to take no pleading point. Where, however, departure from a pleading will cause prejudice, it is in the interests of justice that the other party should be entitled to insist that this is not permitted unless the pleading is appropriately amended. That then introduces, in its proper context, the issue of whether or not the party in question should be permitted to advance a case which has not hitherto been pleaded."
- The importance of the pleadings survives on any appeal from the trial judge. Thus in Paramount Export Ltd (in Liquidation) v New Zealand Meat Board  UKPC 45 (referred to in Crane t/a Indigital Satelite Services v Sky In-home Limited) the Privy Council said of a point that was pleaded but not argued below:
"Their Lordships consider that the plaintiffs cannot complain of being misled about the evidence they would need to adduce at the trial. On the pleadings, the whole question of contractual liability and the construction of the agreement was in issue. It would have been open to the Meat Board, without any amendment of the pleadings, to put before Heron J the argument upon which it now relies."
- Thus in the result the respondents lost on a pleaded point which had not been argued before the second appeal to the Privy Council. In Jones v MNBA International Bank Ltd (to which Lord Justice Rix has also referred) Peter Gibson LJ said of the new points that were sought to be taken on appeal:
"Mr Reynold [counsel for the Appellant] concedes that neither point was argued below and that it represents to some extent a departure from Mr Jones' pleaded case."
- He also said that the new point directly contradicted an explicit concession that had been made at trial.
- It is true that in some cases an appeal court has refused permission to an appellant to advance a case on appeal that was not presented to the trial court, even though mentioned in the pleadings. That happened, for example, in Mullarkey v Broad  EWCA Civ 2 where the case advanced to the trial judge (me, as it happens) was firmly based on fraud alone; and the Court of Appeal (with the leading judgment being given by Lord Justice Lloyd, as it happens) refused to allow an appeal to be argued on a different basis, even though the new argument had been foreshadowed in the witness statement which stood as the statement of case. But that was a case where the narrow basis of the case had been made crystal clear in counsel's opening address, with the result that the course of the evidence might well have been affected; and where, moreover, the defendant was a litigant in person.
- In the present case the two statutory implied conditions were expressly pleaded in paragraph 5 of the Amended Particulars of Claim. It was also pleaded in paragraph 7 that the staircase was "not of satisfactory quality and/or not fit for purpose" for a number of reasons, including the reason that the staircase did not comply with building regulations. That plea would (or at least should) have determined the course of the evidence, because it was not until counsel's final address that the case was put more narrowly. The case sought to be advanced on appeal does not go outside the ambit of the pleadings at trial. In my judgment, in respectful and diffident disagreement with Lord Justice Rix, Mr Casey was entitled to argue the appeal in the way that he did. We must do the best that we can on the basis of the judge's findings of fact, without speculating on what further evidence or arguments might have been raised before him. Having reached that conclusion, I agree with the analysis of Lord Justice Lloyd. I too would allow the appeal.
Lord Justice Rix
- I am grateful to Lord Justice Lloyd for setting out the material in this case. I do not disagree in theory with the conclusions to which he has felt himself able to come, as a matter of sale of goods law, on the basis of inferences of fact which he has considered he has been entitled to arrive at on this appeal. I do, however, regard the opening up by the appellants of a new case on appeal, in the light of the history of this litigation, as inconsistent with the principles of this court, and to be ultimately unfortunate and unjust. In particular in small-scale litigation of this kind, I would regard the revisiting on appeal of the basis on which the parties have conducted a trial as capable of turning the potential benefits of impartial adjudication which the state provides to litigants who have been unable to settle their disputes into a real curse.
- It is a long-standing and fundamental principle of this court that a new point of law which was not presented to the court of trial may be raised on appeal, but normally only where there is no possibility of any injustice occurring by reason of the fact that, if it had been raised at trial, it might have affected the conduct and in particular the evidence or its evaluation in those proceedings: see Pittalis v. Grant  QB 605 (CA) at 611C/F, citing earlier authority. Chief among such earlier authority is The Tasmania (1890) 15 App Cas 223 where Lord Herschell said this (at 225):
"My Lords, I think that a point such as this, not taken at the trial, and presented for the first time in the Court of Appeal, ought to be most jealously scrutinised. The conduct of a cause at the trial is governed by, and the questions asked of the witnesses are directed to, the points then suggested. And it is obvious that no care is exercised in the elucidation of facts not material to them.
It appears to me that under these circumstances a Court of Appeal ought only to decide in favour of an appellant on a ground there put forward for the first time, if it be satisfied beyond doubt, first, that it has before it all the facts bearing upon the new contention, as completely as would have been the case if the controversy had arisen at the trial; and next, that no satisfactory explanation had been afforded them when in the witness box."
- More recently in the era of the CPR, in Crane t/a Indigital Satelite Services v. Sky In-home Limited  EWCA Civ 978, this jurisprudence and its principles were revisited at  –  in the judgment of Arden LJ. Among the authorities she referred to was Jones v. MBNA (CA, 30 June 2000, unreported) where May LJ said this:
"52. Civil trials are conducted on the basis that the court decides the factual and legal issues which the parties bring before the court. Normally each party should bring before the court the whole relevant case that he wishes to advance. He may choose to confine his claim or defence to some only of the theoretical ways in which the case may be put. If he does so, the court will decide the issues which are raised and normally will not decide issues which are not raised. Normally a party cannot raise in subsequent proceedings claims or issues which could and should have been raised in the first proceedings. Equally a party cannot, in my judgment, normally seek to appeal a trial judge's decision on the basis that a claim, which could have been brought before the trial judge, but was not, would have succeeded if it had been so brought. The justice of this as a general principle is, in my view, obvious. It is not merely a matter of efficiency, expediency and cost, but of substantial justice. Parties to litigation are entitled to know where they stand. The parties are entitled, and the court requires, to know what the issues are. Upon this depends a variety of decisions, including, by the parties, what evidence to call, how much effort and money it is appropriate to invest in the case, and generally how to conduct the case; and, by the court, what case management and administrative decisions and directions to make and give, and the substantive decisions in the case itself. Litigation should be resolved once and for all, and it is not, generally speaking, just if a party who successfully contested a case advanced on one basis should be expected to face on appeal, not a challenge to the original decision, but a new case advanced on a different basis. There may be exceptional cases in which the court would not apply the general principle which I have expressed. But in my view this is not such a case."
- This court may often, in dealing with issues on appeal which had previously been debated at trial, have been required and prepared to draw inferences where the findings of a trial judge are incomplete. However, it has generally resisted doing so where a new issue of law is raised in this court which, if it had been raised below, might have affected the evidence or conduct of the trial.
- My Lords have referred in their judgments to other jurisprudence, viz Loveridge & Loveridge v. Healey  EWCA Civ 173,  CP Rep 30, New Zealand Meat Board v. Paramount Export Ltd  UKPC 45 (26 July 2004), Mullarkey v. Broad  EWCA Civ 2 (21 January 2009), and Slack and Partners Ltd v. Slack  Civ 204 (17 February 2010).
- As for Loveridge, the question there, on appeal from a summary judgment, was whether the defendant should have been given the chance to amend his pleadings to put in issue that an admission he had made was not true, so that the court therefore lacked jurisdiction to order possession. This court decided that the case had to be remitted to the trial judge for him to decide if the pleadings should be amended. I do not think it is relevant to the present appeal.
- In New Zealand Meat Board a new point of construction (previously treated as uncontested) was raised on appeal, albeit a pure point of law. Lord Hoffmann said:
". It therefore appears to their Lordships that despite the fact that the true construction of the contract was not argued before the judge, the plaintiffs could not have complained of prejudice if the point had been taken in the Court of Appeal. It was a question of law on which no further evidence could have been called. The position is the same before their Lordships' Board …  … If there were any possibility that the outcome could have been affected if the point had been taken earlier, that of course would have been an entirely different matter."
That is not this case.
- Mullarkey v. Broad, as it seems to me, is entirely in line with the circumstances of the instant case: see especially at paras 29 and 49. The limited basis of argument was there made clear in opening. Here we do not have a transcript (or skeletons) of the opening: but there is nothing whatsoever before us to suggest the Lowes ever relied at trial on their pleaded case on the Sale of Goods Act. None of the material before us, such as the transcript of final speeches or the judge's judgment, would make any sense if they had. It seems to me that it is for the Lowes, as appellants, to demonstrate that the way in which they invited the judge to deal with their case at trial left it open for them to advance on appeal an alternative basis premised on the statutory implied terms.
- Finally in Slack v. Slack a liquidator claimant was allowed to withdraw a concession that a 6 year limitation period applied to his claim, which therefore had to fail. The sole point on appeal was whether that concession could be withdrawn. It was a pure point of law as to the proper categorisation of the claim. It was common ground at appeal that the concession was wrongly made. The only substantial argument against the withdrawal of the concession was that the defendant might have advanced at trial a (pleaded) alternative case of laches, had the concession not been made. However this court said that no laches defence, if deployed, would have been of the slightest assistance.
- In sum, I cannot see that there is anything in these additional authorities to make the existence of the statutory implied terms on the pleadings to be of the slightest assistance to the Lowes in circumstances where there is no indication that they were ever relied on at trial, and every indication that they were not.
- How does the principle of The Tasmania apply in the present case, where Ms Lisa Linklater on behalf of the respondent, albeit without invoking such jurisprudence expressly, has certainly submitted that it would not be just to conduct the appeal on a basis which was not investigated at trial?
- This litigation lies between two individual claimants, Mr and Mrs Lowe, here the appellants, and a company which specialises in bespoke joinery, W Machell Joinery Ltd, here the respondent ("Machell"). It is possible to regard this as a dispute between consumers and a commercial outfit: but Mr Lowe, who began this litigation as sole claimant (Mrs Lowe was joined subsequently) appears to be experienced in what he describes in his amended particulars of claim as a "redevelopment" of the property; and in his reply, dated August 2009, he stated that he was "developing the property to rent out"; while Machell is described in its defence as a "family business" (established for 50 years). In its fifty years it appears to have got along without contract forms or conditions of trade, for the only contractual document in existence is a handwritten sheet of paper, signed by Mr Machell ("Bill"), dated 1 December 2008, listing various items of joinery, including the staircase currently in dispute, which the Lowes had ordered for a total of some £61,000. The staircase is simply described as "Stair Case including both Gallerys "Tom can do drawings" £16,000.00". There was also VAT at 15%. The document included a diamond shape with the remark "Shape on spindle". That clearly refers to a diamond shaped cut-out in the spindle of the staircase. A consideration of the documents in the case as a whole would suggest that Mr Lowe's paperwork, albeit once the dispute arose vituperative in tone, was in all other respects much more business-like in a legalistic sense of that term than Machell's. As Mr Machell was to say in his letter of 15 June 2009, once the dispute arose, and he was forced to reply to Mr Lowe's broadsides:
"I would like to take this opportunity to remind you that any problems you may feel you have with any of the products I have supplied will be addressed and where necessary put right. I find that talking either face to face or by phone more productive than letter-writing as finer details can be discussed there and then, giving quicker and more effective solutions. I look forward to hearing from you soon to resolve the problem or problems. I am nearly always available."
- That was Mr Machell's reply to Mr Lowe's letter of 12 June 2009 in which Mr Lowe had rejected the staircase on the basis that it had been delivered in parts, unassembled. Mr Lowe seems to have objected to assembling it at his own expense and responsibility. The judge was subsequently to find that this reason for rejection failed. It was the Lowes' responsibility to assemble and install the staircase. A major part of the trial was taken up with the Lowes' attempt to support their rejection of the staircase on the basis that the contract had been to install as well as to supply the staircase, alternatively to supply a staircase "which would allow for its immediate installation", but that case was rejected utterly. As the judge found: "the Defendants make staircases, they do not instal[l] them… So the Defendants were not in breach by delivering and leaving the staircase parts in the form that they did" (at paras 20/21 of the judgment below).
- The judge continued:
"22. Are there any other arguments which would justify rejection of the goods? There were some feeble complaints about variation in the colour of the wood and an alleged failure to conform to British Standard in the way that the risers were butt-jointed to the back of the treads. However, these arguments were not advanced at trial with any conviction for the good reason that Mr Nicholson [the single joint expert] dismisses both in his report. I do not, therefore, propose to address them further.
23. An argument belatedly raised concerning the application of the Building Regulations 2000, as amended, does, however, merit close attention…"
- The judge then considered this complaint in detail and concluded "that the failure to supply a staircase that complied with building regulations put the Defendants in breach of contract" (at para 36), albeit not one that justified rejection (at para 37).
- There was discussion during the appeal as to which pleaded term of the contract the judge was there referring to. The judge does not identify the term in question explicitly. It is therefore necessary at this point to consider both the pleadings and the submissions at trial before the judge carefully: because the essence of this appeal on behalf of the Lowes is that the judge had erred because he had failed to understand one of the most basic principles of sale of goods law, that rejection of goods for breach of an implied condition under the Sale of Goods Act needs no other justification than the breach itself.
- The original particulars of claim were endorsed on Mr Lowe's claim form which was issued on 2 July 2009, within some two weeks of Mr Machell's conciliatory reply. The particulars merely stated:
"The Defendant has failed to build a staircase and has failed even to supply the goods despite numinous (sc numerous) request."
It was only on 8 June 2010, within two months of trial, that amended particulars of claim were served. These pleaded certain express terms (and numerous breaches of them), none of which remain in any way relevant, but also pleaded the following implied terms:
"5. There were implied terms of the contract:
(a) That the staircase would be of satisfactory quality, taking into account the matters set out in section 14(2)(b) Sale of Goods Act 1979 (as amended) ("the Act") and
(b) Pursuant to section 14(3) of the Act that the staircase would be fit for purpose; and/or
(c) That the staircase would be constructed in accordance with and in such a way as to satisfy the relevant building regulations and British Standards."
- Thus the Lowes came to rely on the statutory implied terms of satisfactory quality and fitness for purpose, as well as a tailor-made implied term relating to building regulations (the para 5(c) implied term). (That implied term had been foreshadowed in a "reply" served by Mr Lowe in August 2009, where he complained that the staircase spindles did not meet building regulations.) Numerous breaches of the terms of satisfactory quality and fitness for purpose were pleaded, all of which have become irrelevant save for the breach pleaded at para 7(iii) of the amended particulars, that
"The staircase does not comply with current building regulations. Specifically the spindles do [not] comply/satisfy paragraph 1.29 of Building regulations Approved Document K – Stairs, ladders and ramps."
That was the sole breach found by the judge (albeit in terms not of paragraph 1.29 of K1, but of paragraph 3.3 of K2). It was as such a breach of the para 5(c) implied term. But what of the statutory implied terms? The judge did not say that he found the staircase to be of unsatisfactory quality or unfit for its purpose. Why was that, or did he just fail to consider that possibility?
- The reason was that the Lowes did not advance any case under the statutory implied terms at trial. It is not simply that such points were live but quietly dropped in final speeches. I have seen no evidence from the Lowes which makes such a case (apart from the pleading cited above). When Mr Nicholson, the single joint expert was instructed, it was in terms that the complaint (for presently relevant purposes) was "Mr Lowe believes that the balustrade does not conform to building regulations, following advice he has received". There is no suggestion in Mr Nicholson's report that the staircase was not of satisfactory quality. On the contrary, in his conclusion he stated that the quality of the staircase supplied was "generally satisfactory". It may have been for that reason, but I do not know, that in the submissions before the judge, counsel who was then representing the Lowes (not Mr Aidan Casey who appeared for them on this appeal), made no submission to the judge premised on the Sale of Goods Act implied terms. We have a transcript of his closing submissions from which it is clear that what he there introduces as "my second point" is described entirely in terms of "Regulation K" (at page 5). He there put it in terms of illegality: "there is without doubt a breach of the contract where one must imply into the contract a term that what is provided will not be illegal". Moreover, when he turned to the question of rejection and/or damages, he nowhere submitted reliance on a statutory condition in the light of which all question of the significance of the breach, the possibility of mitigating it, and so forth would have been entirely irrelevant. On the contrary, he made his submissions in terms of the importance of the breach (and, hopelessly, in terms of an allegation of intransigence on the part of Mr Machell) in a way which was wholly inconsistent with any reliance on a statutory implied condition. As the Lowes' counsel came at one point to submit: "The question is what is reasonable for the claimant to do": which elicited the judicial remark, "Exactly and it is time somebody started being reasonable" (at page 16).
- There is a further indication of the implied term which the judge was finding had been breached, and that is in his brief written remarks on the form refusing the Lowes permission to appeal. He there said:
"The issue was whether the breach of contract (failure to design spindles to a staircase in conformity with Building Reg. Approved Doct K), justified rejection of the goods. With modest modification to the design the spindles would have been compliant. No prospect of successfully appealing the decision that in the circumstances rejection was disproportionate and unreasonable."
Similarly, during submissions as to costs, the judge referred to the Lowes seizing "the only point available to you which is that I have found that there was a breach in that the staircase was not Part K Building Regulations compliant".
- These additional documents and references fortify the conclusion to which I had come on a reading of the judge's judgment, to the effect that the only pleaded term of which the judge was finding a breach was the para 5(c) implied term. That is the conclusion to which Lloyd LJ also comes (at paras 22/23 above). However, I would not with respect accept the formula at Lloyd LJ's para 23 that the judge's judgment suggest "a decision that neither of the section 14 implied terms was broken". It was rather that neither of the section 14 implied terms was relied upon. They were pleaded but not relied upon. One might in such circumstances say that they were abandoned, but whether or not that is the right way to look at it, the fact is, to my mind, that no reliance was placed at trial on either statutory implied term.
- The question is whether what had been pleaded but not relied upon at trial can now be resurrected on appeal.
- The trial took four days. A great number of issues were deployed. Apart from the issue over the building regulations, which had some considerable complexity of its own, large parts of the trial were taken up with a consideration of the original basis of rejection; with various alleged breaches of express terms; and with issues of rejection and damages. The judge dealt with all these issues, some at greater length than others. He came to his conclusions on each, in some respects in favour of the Lowes. Ultimately, however, the Lowes failed, for on the case which they presented they could prove neither a right to reject nor damages.
- If, however, the Lowes are to have an appeal, then, for its part, Machell, as respondent, has criticisms of certain elements of the judge's judgment, and has served a respondent's notice. Thus, there is concern as to the finding of non-compliance with the building regulations, seeing that Approved Document K is guidance, not law; and it is also said that implicit in the judge's judgment, albeit not express, or at any event justifiable is a finding which ought to have been made to the effect that any potential breach of the building regulations could have been avoided or remedied either in accordance with the contract as made or at any event within the time required for its performance.
- The difficulties with this appeal were well and prophetically highlighted by Sir Richard Buxton when he dealt with (and granted) the Lowes' application for permission to appeal on paper. He said (inter alia):
"The principal question concerns the rejection of the goods. Some potentially difficult issues arise, on which the judge does not seem to have received much assistance at the trial. The judge found that the reasons given at the time of rejection were unfounded [judgment §§ 16-23]. I did not understand that part of the judgment to be challenged, nor could it be. He then found [§35] that the failure to comply with the Building Regs was a breach of contract and, it must be assumed though he did not say so, a breach of condition. If it was a breach of condition the appellants were arguably entitled to reject the goods however lacking in good sense that step was. That ability is in principle not reduced by the judge's finding [§35] that by the time the Building Regs point arose the appellants had already purported to reject the goods, on inadequate grounds. That a rejection on wrong grounds can be validated by the existence of good grounds not then relied on is established in principle by a long series of cases, most recently Glencore Grain v Lebanese OIC  2 Lloyd's Rep 386 and South Caribbean v Transfigura  1 Lloyd's Rep 128 -. That again is, however, subject to the qualification [Glencore at p395] that the subsequent reason cannot be relied on if that reason, if relied on at the right time, "could have been put right". That verbal statement at first sight attracts the judge's (commonsense) view that the breach could have been rectified with reasonable co-operation. It may, however, not be right to take that view in respect of regulatory as opposed to simply physical fitness. I am afraid that that sort of point cannot be resolved at the application stage …
This appeal raises difficult issues, the resolution of which will cost far more than anything that either party is likely to obtain from it. I add my voice to that of the judge in urging the parties to seek an accommodation."
- Sir Richard Buxton there said that "it must be assumed though [the judge] did not say so" that the breach found by the judge is a breach of condition. However, Sir Richard presumably did not know that breach of condition was never advanced at trial, nor is it easy to see why Sir Richard was prepared to assume that a breach of condition was involved. For the rest, his analysis demonstrates the difficulties which would arise if a breach of condition is once assumed, but none of which have been considered in the judge's judgment, since breach of condition was not relied on.
- In these circumstances it cannot be just to condemn these parties, and in particular the respondent Machell, which has emerged from a four day trial which was not of its choosing having succeeded on the only case put forward by the Lowes, to undergo the further complexities which permitting the Lowes to resurrect a case of breach of the statutory implied terms would involve, including a further hearing at the trial court which the ancillary issues identified by Sir Richard would then necessitate, were such a case to be found prima facie to carry cogent weight.
- But does the resurrected case of breach of the implied terms of satisfactory quality or fitness for purpose carry weight? In my judgment it is perfectly possible to see the argument, fit for trial, that it does. I may allow that the argument may appear to have considerable weight: but that is for trial, not for an appeal, unless the new point is unanswerable without need for any further findings of fact and without the possibility that the original trial would have been conducted differently if a different case had then been presented.
- In my judgment the new case does not have that quality. What is striking about this dispute is the unusual fact that while Machell was responsible for supplying the staircase, the Lowes were responsible for meeting the building regulations. Even the Lowes' counsel went no further than to submit to the judge (page 6D of transcript of closing submissions) that responsibility for the building regulations was "shared". In these circumstances, I do not accept that it can be said that a spindle design selected by the Lowes (which was their evidence), rather than by Machell, inevitably involved a breach of either Sale of Goods Act implied terms (even if that is a feasible solution). That is to assert the inevitability of making the seller responsible for a matter for which the buyer was ultimately responsible. As the judge said: "Ultimately, it was the Claimants' responsibility to ensure that the barn was refurbished in accordance with building regulations" (at para 28). Moreover, the judge also found that the Lowes were in a position to seek confirmation from Building Control, with the assistance of some drawings and a sample spindle, in advance of the delivery of the staircase, that the staircase, if assembled, would be in conformity with building regulations (ibid). The judge nevertheless considered that Machell should have warned the Lowes about the problem of the 100 millimetre sphere gap and its relevance for the regulations (at para 33). In saying that, the judge was not dealing with the statutory implied terms. But it might be said that for the purposes of section 14(2C)(a) ("The term implied by subsection (2) above does not extend to any matter making the quality of goods unsatisfactory – (a) which is specifically drawn to the buyer's attention before the contract is made"), any such warning would on any view have absolved the seller. Perhaps so: but that, however, is not to assert the necessity of finding, as some form of corollary, that anything within the buyer's responsibility was something for which the seller also impliedly accepted responsibility under his contract.
- Nor in such circumstances do I think it inevitable that there was a breach of satisfactory quality for the purposes of section 14(2B)(a)'s "fitness for the purposes for which goods of the kind in question are commonly supplied". In the first place, that consideration only arises "in appropriate cases" (see the introduction to subsection (2B)), which begs the question. Secondly, the application of the section 14(2) implied term requires consideration of "all the relevant circumstances", a particularly difficult test to set for an appeal court where the issue has not been put to the trial judge. Thirdly, Mr Nicholson's evidence was not that the staircase was unfit to pass the building regulations, but that "Building Control should not refuse approval of the design because of the wording "Where buildings are likely to be used by children under 5", if Mr Lowe says that this will not be the case." Moreover, Mr Nicholson concluded that "the quality of the staircase supplied, and its conformity to Building Regulations, is generally satisfactory", while adding "There may be areas which require some minor changes, but there can be a resolution … without any major alteration …". Since the problem of the spindles only arose on the galleries, and the galleries led to no rooms, but were ornamental in running along the inside of the barn's flank walls, it would have been possible, for instance, to have closed off the galleries with the use of temporary children gates (if there was any question of children under 5). The issue is one for still greater debate if any question arises of a "particular purpose" and of whether "the buyer does not rely, or that it is unreasonable for him to rely" on any relevant "skill or judgment of the seller", for the purposes of section 14(3).
- In circumstances where it is common knowledge that approval of a building inspector for the purposes of the building regulations is so often a matter of negotiation and/or modification, and where paragraph 3.3 of Approved Document K is not a rule of law but merely guidance, I do not consider that it can simply be asserted that a seller of a staircase is inevitably in breach of a statutory implied condition on delivery, where the buyer is responsible for installation and compliance with building regulations, just because the possibility arises that some minor modification might or even would be needed to achieve approval, and where, as the judge found, such minor modification could not sensibly be refused (see his comment, at his para 39, about "petulance bordering on childishness"). I emphasise again: that the Lowes' new case on appeal might nevertheless be the correct solution, and I am not saying that it could not be. But I do respectfully suggest that it is not an inevitable result, and must depend on evidence at trial. After all, the test of satisfactory quality is meeting "the standard that a reasonable person would regard as satisfactory, taking account of … all the other relevant circumstances" (section 14(2A)). The judge, without addressing the statutory term of satisfactory quality, found that the Lowes' reaction to the staircase delivered to them, as expressed at trial, was unreasonable in the extreme, and referred to "this theatrical overreaction in an increasingly desperate attempt to justify rejection" (at para 39). Of course, the buyer's own reaction to the goods delivered to him is not the test of the statutory objective "reasonable person": but the judge's expression of his view that the buyer was totally unreasonable in his reaction is not a bad guide to how the judge might have dealt with the statutory standard, if he had been asked to consider it. It does not seem to me to be impossible to think that a staircase which might need some only minor and entirely acceptable modification was a staircase which met a standard that "a reasonable person would regard as satisfactory".
- The matter does not end there, because such questions raise the fundamental issue of what exactly was the contract made between the parties. It was an oral contract, recorded in Mr Machell's manuscript itemisation of the price referred to above. As such, there remains much uncertainty about it. Was the design of the staircase set in stone, and if so, was that at the choice of the buyers, who selected the spindle, or at the discretion of the seller? Inasmuch as there was any discretion, was it to be exercised for the purposes of compliance as might be necessary with building regulations and the demands of the building inspector, which might require some give and take? Or were the parties' rights to be fixed immutably upon delivery? Ms Linklater, on behalf of Machell, raised such questions on this appeal. They did not have to be ironed out at trial.
- Other issues arise, as indicated by Sir Richard Buxton. It is not clear when any final delivery date for the staircase arose. If the final delivery date had not come and gone at the time of the staircase's delivery and rejection, then it might have been possible for Machell to have modified the staircase, if that was within a design discretion afforded them by the contract, in time for a further delivery in conformity with the contract, and/or for the parties to have discussed means by which a building inspector might have been satisfied. On that hypothesis, Mr Lowe's outright rejection of the staircase for an incoherent reason would have prevented Machell and the Lowes from putting the matter right. At the very least, in the situation where the seller was the supplier but the buyer was the installer, there would be a serious argument that each owed a duty to the other to co-operate in obtaining any necessary permission or approval.
- It is of course possible to cite strict cases under the old Act such as Jackson v. Rotax Motor and Cycle Co Ltd  2 KB 937 (not in fact an authority relied on by the Lowes). Of perhaps greater relevance, however, is a case such as Cammell Laird & Co v. Manganese Bronze and Brass Co Ltd  AC 831 (cited by neither party), the famous case where the seller supplied propellers for ships under construction for the buyers. Unaccountably, two propellers worked satisfactorily but two created an excessive noise and so were not approved by the classification society under whose rules the ships were being built. It was held that the propellers were of merchantable quality, but that ultimately the seller took the risk of the propellers' unsuitability under the statutory implied condition of fitness for purpose, because the contract was found to involve the seller with a discretion beyond the design and specification agreed within the contract. Sensibly, the parties put the propellers to the test (without prejudice to their rights). An interesting question might have arisen if the buyer had prevented the propellers from being fitted and put to the test. In the present case the question of whether the contract involved a specification by the Lowes, or left a discretion to Machell, has never been bottomed out.
- If new issues are to be debated on appeal, there is potentially no limit to the scope of dispute. On this appeal, Mr Casey on behalf of the Lowes has raised as an explanation for the judge's decision on the question of rejection the possibility that the judge was (silently but incorrectly) applying the modification to be found in section 15A of the Sale of Goods Act in cases of breach of statutory conditions in non-consumer cases. Section 15A provides that where a breach is so slight that it would be unreasonable for the buyer to reject, then, if the buyer does not deal as a consumer, the breach is not to be treated as a breach of warranty. Mr Casey submits:
"It may be that this is what the judge had in mind when he posed the question at  "…does the failure of the staircase to comply in the respect explained with the building regulations, justify rejection?" However, it is respectfully submitted that he erred in posing that question. It formed no part of the respondent's pleaded case that the appellants did not deal as consumers. Nor was that alleged at trial. Under s61(5A) SOGA the burden would have been on the respondent, had it wished to rely on s15A, to (plead and) prove that the appellants did not deal as consumers."
- However, as explained above, the judge was undoubtedly not thinking of section 15A, but of whether breach of the para 5(c) implied term was bad enough to justify rejection, and was doing so in circumstances where the Lowes were not relying on the Sale of Goods Act implied conditions at all. Of course, if the Sale of Goods Act had been properly in play, then it might have (or might not have) occurred to Machell's legal advisers to rely on section 15A and to show that the Lowes were not dealing as consumers. After all, Mr Lowe said that he was redeveloping the barn in order to let it out for rent.
- As it was, Mr Casey's reference to section 15A led Ms Linklater to consider the provisions of sections 48A/F and to submit that they perform a similar function to section 15A in non-consumer cases. There is no end to litigation if matters proceed in this way.
- This case, however important and serious it is for the parties, which I recognise, is laying claim to resources which are out of all proportion to what it is reasonable for the parties, or the public interest, to devote to it. It is of course vital for the state to provide an impartial forum for the litigation of disputes. But litigation must still be recognised, especially in this class of case, as a battle-ground (not a refuge) of last resort, which is capable of causing great hardship for the parties involved, and from which the parties find it harder and harder to escape. The dangers and vices of litigation are multiplied and magnified enormously if the parties are allowed to believe that issues not raised at trial may be raised on appeal. That could only be done on the basis, as Mr Casey submitted, and in my judgment had to submit, that the answer to the new question is inevitable. In my judgment the answer in this case is not inevitable. If Sir Richard Buxton had known that the statutory conditions had not been invoked at trial, I do not believe, in the light of what he said, that he would have given permission to appeal.
- The difficulty of giving effect to the overriding objective of justice in such cases is formidable (see Sykes v. Packham t/a Bathroom Specialist  EWCA Civ 608 at ). It is made immeasurably more difficult if an unsuccessful litigant is permitted to start again with new issues (or to resurrect old but defunct issues) on appeal, in circumstances where the new issue is not a pure point of law which could be safely and justly considered without fear that it could have affected the trial.
- The parties in this case have had a four day trial, a careful and balanced judgment, and a result which, on the basis of the evidence, issues and arguments deployed, was undoubtedly fair and reflected the merits of the case. On the basis of the arguments addressed to the judge, it cannot be said by the appellants that he erred. I recognise that once other issues are raised, then, depending on how matters might then have proceeded, a different result may, or may not, have been brought forth. But in the affairs of men, the pursuit of perfection may destroy the good. I would dismiss this appeal.
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