The Sheriff Principal, having resumed consideration of the appeal, allows same; recalls the interlocutor of the Sheriff of 26 February 2004; amends the findings in fact as follows:
ordains the defenders and respondents to pay to the pursuer and appellant the sum of NINE THOUSAND SIX HUNDRED AND FIFTY EIGHT POUNDS FORTY TWO PENCE (£9,658.42) STERLING with interest thereon at the rate of 8 per cent per annum from 10 July 2001 until payment; finds the defenders and respondents liable to the pursuer and appellant in the expenses of the cause save so far as previously decerned for; allows an account of expenses to be given in and remits the same when lodged to the Auditor of Court to tax and to report; certifies the appeal as suitable for the employment of junior counsel.
- The Sheriff concluded that, notwithstanding these defects, the vehicle was of satisfactory quality. The defects were easy to rectify. These defects would be covered by the Land Rover warranty. These repairs "would not affect the durability, longevity or value of the vehicle". On the basis that the vehicle was of satisfactory quality, she found that the defenders were not in material breach of contract and that the pursuer was not entitled to reject the vehicle. Accordingly the defenders were absolved from liability.
- It was common ground that the outcome of this case depended on whether, when the hire purchase agreement was entered into, the Range Rover was of "satisfactory quality" in terms of the Supply of Goods (Implied Terms) Act 1973 as amended. Sections 10(1), (2), (2A), (2B) and (2C) of that Act are in the following terms:
"S 10. Implied undertakings as to quality or fitness
(1) Except as provided by this section and section 11 below and subject to the provisions of any other enactment, ... there is no implied term as to the quality or fitness for any particular purpose of goods bailed or (in Scotland) hired under a hire-purchase agreement.
(2) Where the creditor bails or hires goods under a hire purchase agreement in the course of a business, there is an implied term that the goods supplied under the agreement are of satisfactory quality.
(2A) For the purposes of this Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances.
(2B) For the purposes of this Act, the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods--
(a) fitness for all the purposes for which goods of the kind in question are commonly supplied,
(b) appearance and finish,
(c) freedom from minor defects,
(d) safety, and
(e) durability.
(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 attention of the person to whom the goods are bailed or hired before the agreement is made,
(b) where that person examines the goods before the agreement is made, which that examination ought to reveal, ... ."
Section 12A of that Act provides as follows:
"12A. Remedies for breach of hire-purchase agreement as respects Scotland.
(1) Where in a hire-purchase agreement the creditor is in breach of any term of the agreement (express or implied), the person to whom the goods are hired shall be entitled--
(a) to claim damages, and
(b) if the breach is material, to reject any goods delivered under the agreement and treat it as repudiated.
(2) Where a hire-purchase agreement is a consumer contract, then, for the purposes of subsection (1) above, breach by the creditor of any term (express or implied)--
(a) as to the quality of the goods or their fitness for a purpose,
(b) if the goods are, or are to be, hired by description, that the goods will correspond with the description,
(c) if the goods are, or are to be, hired by reference to a sample, that the bulk will correspond with the sample in quality,
shall be deemed to be a material breach."
- There was a difference in approach between counsel for the pursuer and counsel for the defenders as to the proper construction of these statutory provisions. Counsel for the pursuer submitted that the court should take account of the Report by the Law Commission and the Scottish Law Commission on "Sale and Supply of Goods". Counsel for the defenders submitted that that Report was irrelevant.
Submissions for the appellant
- In that Report the Law Commissions recommended that the new definition of quality should specifically refer to appearance, finish and freedom from minor defects so that in appropriate cases the buyer is entitled to expect that the goods will be free from even minor imperfections.
"Thus dents, scratches, minor blemishes and dis-colourations, and small malfunctions will in appropriate cases be breaches of the implied terms as to quality, provided that they are not so trifling as to fall within the principle that matters which are quite negligible are not breaches of contract at all." (Paragraph 3.40.)
Counsel relied in particular on paragraph 3.43 of the Report, since the Sheriff had referred in her judgment to Millars of Falkirk Ltd v Turpie 1976 SLT (Notes) 66. The reference which the Commissions proposed to minor defects and to appearance and finish:
"should make it easier for a court faced with the facts of (for example) Millars of Falkirk v Turpie to reach a different conclusion from that which was reached in that case on the existing wording of section 14(6), although ... this cannot be absolutely guaranteed. In that case the buyer was left with no remedy at all for a leak in the power-assisted steering system of his new car. We do not think that in such a case the buyer should have to put up even with minor defects without a remedy ..."
However the concluding sentence of paragraph 3.42 of that Report is as follows:
"All the Act can do is indicate that the existence of minor defects is a relevant factor in determining whether or not the goods match the required standard of quality."
- The Sheriff had misdirected herself (at paragraph 248 of her judgment) when she said that she had to look at the legislation which was enacted, not at what lay behind it. There had been a change in the legislation: from "merchantable quality" to "satisfactory quality". Reference was made to Rogers v Parish (Scarborough) Ltd [1987] QB 933 at page 944 per Mustill LJ and to the decision of Sheriff Principal MacLeod in Thain v Anniesland Trade Centre 1997 SLT (Sh Ct) 102. Mustill LJ had drawn attention to factors which the court required to consider by reference to the earlier legislation, i.e. the Sale of Goods Act 1976, section 14(6). In assessing the purpose for which "goods of that kind" are commonly bought regard should be had to the appropriate degree of comfort, ease of handling and reliability and the buyer's pride in the outward and inward appearance. In the case of a Range Rover which was sold as new, deficiencies which might be acceptable in a second-hand vehicle were not to be expected in one purchased as new.
- In Thain the court had to consider the concept of "merchantable quality" as opposed to "satisfactory quality". The amendment changed not only the concept but specified aspects of quality to which the court was required to have regard. The Sheriff Principal in Thain found the earlier cases of little assistance. It was apparent from the Sheriff's judgment that she had not applied the statutory test in assessing whether the quality of the Range Rover was satisfactory or not. The facts relating to the condition of the vehicle were not in material dispute. The Sheriff had asked herself the wrong question. At paragraph 330 of her note she commented that Shields were bending over backwards to resolve the pursuer's complaints but she considered that the pursuer "was acting in a totally unreasonable manner in rejecting Shields' attempts to resolve all alleged defects in the vehicle". In the following paragraph she made it clear that she considered the pursuer's attitude to be "totally unreasonable". That explained finding in fact 24 in which the Sheriff found that the pursuer acted totally unreasonably in refusing to accept Shields offers to remedy any alleged defects. She also found that he had acted in a totally unreasonable manner in refusing to accept the defenders' attempts to have matters rectified. In paragraph 345 of her note she said that she did not regard the pursuer as a reasonable person and rejected his assertion that the vehicle was not of satisfactory quality. That had been the wrong approach.
- Quality would be satisfactory if the goods met the standard which a reasonable person would regard as satisfactory taking into account relevant factors. The Sheriff required to place herself in the position of a reasonable person and assess whether that person would accept the quality of the vehicle as satisfactory taking account of the relevant circumstances. The Sheriff had assessed the pursuer as unreasonable and, having concluded that he was not acting reasonably, had asked herself the wrong question. The proper test was an objective one. The Law Commissions (at 3.25) had said that the question which the definition asked was not whether the reasonable person would find the goods acceptable; it was an objective comparison of the state of the goods with the standard which a reasonable person would find acceptable. Accordingly the Sheriff had misdirected herself in law. She had failed to compare the defective car supplied to the pursuer with what a reasonable person would expect of that car having regard to its description, price and the other relevant circumstances. She should have categorised the car as a prestige car at the top of the range. While noise from the transmission may be acceptable in a second-hand car it was not to be expected of a new car. Its appearance and finish required to be of the standard of such a car. If it was not of satisfactory quality there had been a breach of contract which entitled the pursuer to reject the car.
- Sections 10(2A) and (2B) had to be read together. The Sheriff had considered section 10(2A) in isolation. In order to assess satisfactory quality the various factors in 10(2B) had to be taken into account. But in order to assess the quality of the goods in terms of section 10(2B) it was necessary to identify what was to be expected of such goods in the market place. Factors relevant to the quality of the goods, such as appearance and finish or freedom from minor defects, would vary between an expensive new car and a high mileage older car. Neither in the findings in fact nor in her note did the Sheriff identify the type of goods whose quality was being assessed. This was a new Thirtieth Anniversary model Range Rover 4.6 LE automatic. A high price had been paid for it. The Sheriff was required to assess whether the quality of the car which had been hired by the pursuer was satisfactory for a car of that type. The Sheriff (at paragraph 338 of her note) had observed that since the vehicle in question was resold the owner had not returned it for rectification of any defects. That had reinforced her view that the pursuer was complaining without justification that the vehicle was defective and of unsatisfactory quality. However the vehicle had been kept for two years and then sold at auction to the highest bidder, Shields. It had been sold by Shields for very much less the second time. The Sheriff had failed to compare like with like. There would not have been any warranty when it was resold. It would not have been serviced regularly. The only repair which had been carried out in the meantime was to deal with the problem in the transmission. By relying on these circumstances the Sheriff was in error.
- In Rogers v Parish, supra at page 944 Mustill LJ had said:
"What is the appropriate degree and what relative weight is to be attached to one characteristic of the car rather than another will depend on the market at which the car is aimed.
To identify the relevant expectation one must look at the factors listed in the sub-section. The first is the description applied to the goods. In the present case the vehicle was sold as new. Deficiencies which might be acceptable in a second-hand vehicle were not to be expected in one purchased as new. Next the description of the vehicle as a "Range Rover" would conjure up a particular set of expectations, not the same as those relating to an ordinary saloon car, as to the balance between performance, handling, comfort and resilience. The factor of price was also significant. At more than £14,000 this vehicle was, if not at the top end of the scale, well above the level of the ordinary family saloon. The buyer was entitled to value for his money.
With these factors in mind, can it be said that the Range Rover as delivered was as fit for the purpose as the buyer could reasonably expect?"
- A similar approach was adopted in Thain, supra at page 106. In that case the court had asked the question:
"Can the car be of satisfactory quality by meeting the standard that a reasonable person would regard as satisfactory?"
The court in arriving at an answer to that question took account of the price and all other relevant circumstances, including the stated condition of the vehicle. There had been evidence before the Sheriff that such a vehicle when only a few weeks old with a very low mileage could be expected to have either nothing wrong with it or nothing of any substance wrong with it. So far as the Range Rover in this case is concerned, bearing in mind the sum paid for it, the misalignment of the glove box and the partially defective paint work on the roof were indicative of unsatisfactory appearance and finish. The Sheriff had said that these defects were easy to rectify and would not effect the durability, longevity or value of the vehicle. But the defective paint work must have been present on delivery. The car was not free from minor defects. Initially excessive tyre wear was caused by the misalignment of the wheels. It may have been that the steering geometry was incorrect. The wheels required to be balanced. So far as durability was concerned there was a road speed related noise from the transmission/drive system caused by a fault in the front differential. The differential required to be replaced. The Sheriff had expressed an opinion that that defect was easily remedied and would not cause any long term problems if rectified. But there was evidence before her that it was not normal for any new vehicle to suffer from a problem of that kind. That was a fault which must have been present on delivery. There was evidence to the effect that, if that fault were not to be remedied, the bearing would continue to deteriorate and would fail, leading to extensive transmission damage.
- The Sheriff had disregarded material evidence. She had disregarded the evidence of Mr Bathgate in relation to the unsatisfactory pedal position. The defenders had arranged for an engineer to assess the quality of the vehicle. That engineer had said that it was not satisfactory in that respect. The engineer agreed with the evidence of the pursuer to the effect that there were defects.
- The Sheriff had misdirected herself in law by assessing the quality of the vehicle at the wrong point in time. While she had found that there were defects in the car, she had failed to compare the defective car as delivered with what a reasonable person would expect of such a car at the time of delivery. Instead she had compared the defective car once repaired with what a reasonable person would expect. She had erred in her approach to the assessment of the test of satisfactory quality. In finding in fact 23 she had found that the vehicle supplied to the pursuer was of satisfactory quality and that any defects were easy to rectify and would be covered by the warranty. The pursuer would not have to incur any cost in relation to these repairs, which would not affect the durability, longevity or value of the vehicle. At paragraph 343 she said that she had found that there were a number of defects, which she described as minor, of which the pursuer was aware when he took delivery. She found that the other faults either had been rectified or could easily have been rectified and were minor defects which would not affect the safety and durability of the vehicle. It was clear that the assessment of satisfactory quality required to be made as at the time of delivery or supply of the goods: see Lee v York Coach & Marine 1977 RTR 35 per Stephenson LJ at page 42 and per Bridge LJ at page 43. As Bridge LJ put it:
"If a car is bought in circumstances in which the buyer is entitled to expect under the implied statutory conditions that he or she will get a roadworthy car, and the car as delivered is clearly unroadworthy, it is no answer for the seller to say, "but it would only cost a relatively small amount to carry out the repairs to render it roadworthy"."
- The same view was expressed in Rogers v Parish, supra by Mustill LJ at page 944 where he expressly said that the question of merchantability falls to be judged at the moment of delivery. The opinion of Sir Edward Eveleigh at page 947 in that case was to the same effect. He said that the fact that the plaintiff was entitled to have remedial work done under the warranty did not make it fit for its purpose at the time of delivery. Professor McBryde in his book on Contract, second edition, at paragraph 20-127 wrote:
"In contracts to which the Sale of Goods Act 1979 applies, a material breach by the seller gives the buyer statutory rights which prevent the operation of the concept of "remedial breach"."
The concept of a remediable breach is that, where a party is in material breach of contract, he should be given a chance to remedy that breach before the contract is rescinded.
- The Sheriff appeared to have approached the issue of satisfactory quality by having undue regard to the existence of a warranty. Since the issue to which she required to apply her mind was whether the car was of satisfactory quality at the time of delivery, the existence of a warranty was not a material consideration in assessing its quality at that time. In paragraph 346 of her note she made it clear that she had no doubt that the goods supplied were of satisfactory quality. She pointed out that, if the submissions on behalf of the pursuer were correct, there would be no point in having car warranties. The car could be returned if the purchaser discovered any minor faults. She considered that the issue was whether the breach was material. She detected no material breach. She appeared to think that any defect which could be remedied under warranty would not be a minor fault. A warranty could not affect the statutory rights of a hirer under the hire purchase agreement in this case. See Clause 9. These were not minor faults. Mustill LJ in Rogers v Parish at page 944 had said that the existence of a warranty does not indicate that the buyer is expecting or ought reasonably to expect a vehicle of a lower standard than that which he would have been entitled to expect without that warranty.
- The Sheriff had accepted that there were the defects in the car which she had found but she had erred in law in her assessment of the materiality of those defects. At paragraph 346 of her note she commented that counsel for the pursuer, in making his submissions, had failed to have regard to the terms of section 12A(2)(b) of the 1973 Act which entitled the purchaser to reject goods if the breach was material. Section 12A(2)(b) did not apply in this case. She should have referred to section 12A(1)(b) which provides that a person to whom goods are hired in terms of a hire purchase agreement is entitled, if the breach is material, to reject the goods and treat the agreement as repudiated. That sub-section required to be read along with section 12A(2)(a) which provides that breach of an express or implied term as to the quality of the goods or their fitness for purpose is deemed to be a material breach. Having regard to these statutory provisions the Sheriff erred in law in failing to find that the breaches of contract were material in this case. She should have considered whether the defects listed by her fell within the terms of section 10(2B)(c) (freedom from minor defects). She had confused the distinction between major and minor defects and had concluded that any defect which was easily rectifiable was a minor defect, which would not amount to a material breach. She had failed to assess whether the defects affected the durability of the vehicle. On the evidence the transmission defect was major. If it had not been attended to promptly there would have been extensive transmission damage. The vehicle could not have been used safely for any length of time without its transmission being repaired. So far as the transmission fault was concerned, Shields were prepared to investigate the defect but had not indicated that they were prepared to remedy it. The Sheriff had accepted that repairs required to be carried out to remedy the defects which she had found were present in the vehicle at the time when it was delivered. The Sheriff was required in terms of the sub-section to consider whether the car was free from minor defects, which plainly it was not on any objective assessment of its condition. If the vehicle was not free from minor defects, the court required to consider whether, as a result, the vehicle was not of satisfactory quality. That would be evident if the defects were not minor, as was the case at least in respect of the defect in the transmission. That was a jury question. It was not relevant to that question that repairs could be carried out under warranty.
- So far as the inability of the pursuer to pivot his foot between the accelerator and the brake was concerned, that was either a defect or was a relevant circumstance which required to be taken into account. The Sheriff had misconstrued the evidence. Regulation 35 (referred to above) had no bearing on that matter. That Regulation had been adopted as best practice by manufacturers in the United Kingdom but had not been adopted in the European Union. In any event the Regulation had nothing to do with the ability of a driver to pivot between pedals. The Sheriff had been wrong to conclude that the vehicle did comply with Regulation 35. Non-compliance with that Regulation had not been raised until two years after the car had been rejected. The pursuer had given evidence that he had had to lift his foot off the accelerator in order to apply the brake, which in his view was dangerous. There was evidence from Mr Johnstone that pivoting was a sloppy way to drive and that it was good practice to lift the foot off the accelerator and put it on the brake. But there had been evidence from other witnesses that it was the norm to be able to pivot from one pedal to the other. The inability of the pursuer to pivot his foot from one pedal to the other demonstrated that the car was not fit for all the purposes for which such a vehicle was commonly supplied. That was an aspect of quality which the court should have taken into account. The pursuer had not test driven the vehicle but he had complained about the pedal position fairly early in this dispute. There was evidence that the pedals were not positioned as would have been expected in such a vehicle. The Sheriff should have found that pivoting was the norm in vehicle of this kind and that the Range Rover was not fit for the purposes for which Range Rovers are normally supplied. The Sheriff's findings in fact should be amended accordingly. The appeal should be allowed.
Submissions for the respondents
- It was for the pursuer to demonstrate that the appeal should be allowed. The decision of the Sheriff turned on its facts and circumstances. It was a case in which the Sheriff had a discretion to exercise, having seen and heard the witnesses. An appeal court would only be justified in interfering with the decision which the Sheriff had reached if it was satisfied that that decision was not one which she was entitled to reach taking account of the relevant circumstances. An appeal court may not be in a position to reach a satisfactory conclusion on the basis of the printed evidence alone. In this case the Sheriff had commented adversely on the credibility of the pursuer. The case of Millars of Falkirk v Turpie, supra approved the views expressed by Lord Thankerton in Thomas v Thomas 1947 SC (HL) 45 at page 68 to the effect that where a question of fact has been tried by a judge and there is no question of misdirection, the appellate court ought not to come to a different conclusion on the basis of the printed evidence unless the advantage which the trial judge had had of seeing and hearing the witnesses could not sufficiently explain or justify that judge's decision. The pursuer had claimed that the position of the pedals in the vehicle had made the car dangerous to drive. An offer had been made to replace the pedal housing with one more suitable for him by letter from Shields dated 30 March 2001 but the pursuer had continued to drive the vehicle between March and June, covering some 4,000 miles in that time. The Sheriff had made many comments on the credibility of the pursuer and his lack of reasonableness.
- The appropriate test was whether the goods met "the standard that a reasonable person would regard as satisfactory taking account of the goods, the price (if relevant) and all other relevant factors". The Sheriff had applied that test correctly. Section 10(2B) of the Act listed characteristics which might be taken into account when applying the test set out in section 10(2A). All the circumstances required to be considered. These circumstances included ease of rectification, the existence of a warranty and the low cost of repair. The mere fact that a defect was found would not necessarily lead to the conclusion that the vehicle was not of satisfactory quality. A latent defect in a tyre, for example, would not mean that the car was not satisfactory. It was not necessary to consider what the Law Commissions had thought prior to the passing of the amending legislation when interpreting the statutory provisions. The Sheriff had been correct to regard it as her task to construe the legislation as enacted. There was no ambiguity in the statutory provisions. As enacted the court was required to take account of all relevant circumstances. That had been the approach in Millars of Falkirk also. The Sheriff had duly considered all the defects which she found to have existed and had applied the correct statutory test to the facts which she found to be established. Her conclusion was that a reasonable person would have found the vehicle in question to be satisfactory "standing my findings as to defects". See paragraphs 345-346. Her references to the reasonable man demonstrated that the correct test had been applied. The fact that she found that the pursuer had acted unreasonably was immaterial in that respect. Section 12A of the Act set out remedies but a remedy would only be available if there was a material breach. There required to be a material breach if the goods were to be held to be not of satisfactory quality. The Act did not require each defect to be considered. It required an answer to the question whether the goods were of satisfactory quality or not. The Sheriff was entitled to have regard to the cost of the car but there was no requirement that the goods be categorised as counsel for the pursuer had submitted. In Millars of Falkirk the court had considered whether the defects were minor and easily curable or curable at little cost. Account was taken of the fact that the garage involved was willing to carry out remedial work. The glove box could have been fixed within five to ten minutes. The pursuer in his evidence at one point had said that he thought that the paint work was satisfactory. Only one witness had said that two small areas of paint required attention. They could have been dealt with very easily. The transmission noise could also have been dealt with without difficulty. It was easily rectifiable and at no great cost. That consideration formed part of the relevant circumstances which the Sheriff required to take into account.
- The report which the defenders had obtained in connection with the pedal layout was not such a relevant circumstance. The Sheriff had expressed reservations about the content of that report. She had regard to the evidence of a number of witnesses when reaching a conclusion about the pedal positions. Mr Bathgate's views had been at variance with the evidence of other witnesses. He had said that the photographs which had been taken were not photographs of the pedals which he had examined.
- So far as Regulation 35 was concerned, compliance with that Regulation was regarded as best practice by all the technical witnesses. It was not mandatory to comply with Regulation 35. Non-compliance did not amount to a defect in the spacing of the pedals. If the vehicle complied or did not comply with best practice, that would be relevant to the consideration of the pursuer's claim that the pedals were positioned dangerously. It was not clear why the pedal positioning was said to be defective. That contention was in any event based on the flawed findings of Mr Bathgate. Mr Robertson, when driving the vehicle, had not found it to be dangerous. There was no satisfactory explanation for the pursuer's failure to accept the offer by Shields to replace the pedal housing nor of why he drove the vehicle for several thousand miles over a period of 21/2 months in a condition which he considered to be dangerous.
- So far as the submission that the quality of the vehicle had been assessed at the wrong point in time was concerned, it was clear from her findings and her note that the Sheriff had no doubt that the vehicle was of satisfactory quality. In assessing that issue she was entitled to have regard to the defects which she found to have been present at the time of delivery. She had to assess the materiality of these defects. She was entitled to have regard to the existence of the warranty. The presence of minor defects did not mean that the goods were not of satisfactory quality for that reason alone. The transmission noise, the defects in the paint work and the inability to pivot were not mentioned in the letter of 30 March 2001. The Sheriff was entitled to consider that the pursuer had been unreasonable in refusing to accept the offer by Shields to remedy any defects. Her decision should be allowed to stand. The appeal should be refused.
Decision
- In terms of the Supply of Goods (Implied Terms) Act 1973, where a hire-purchase agreement is a consumer contract, a material breach by the creditor of an express or implied term of contract as to the quality of the goods or their fitness for a purpose entitles the person to whom the goods are hired to claim damages and reject the goods delivered under the agreement and treat the agreement as repudiated. (See section 12A) In terms of section 10(2) of the Act, where a creditor hires goods under a hire purchase agreement, there is an implied term that the goods hired are of satisfactory quality. They will be of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of goods, the price (if relevant) and all the other relevant circumstances. That test is objective. The perspective is that of a reasonable person, not that of the particular person to whom the goods are hired. Quality includes the state and condition of the goods. Aspects of quality include fitness for all the purposes for which goods of that kind are commonly supplied, appearance and finish, freedom from minor defects, safety and durability.
- In determining whether the goods are of satisfactory quality, cases decided under earlier legislation interpreting the phrase "merchantable quality" are at best of limited value. The 1973 Act was intended to change and did change the approach of the law, and of the courts, to decisions as to whether or not there was a breach of contract and, if so, whether that breach was material. It changed the basis for breach of contract to the concept of "satisfactory quality" and to some extent defined what that phrase means. It appears to have strengthened the position of the buyer or hirer of goods relative to that of the seller or owner. The decision in Millars of Falkirk, supra may well have been different had that case been decided now. Courts are required to construe the terms of the Act as it now is and apply the law to the facts of the particular case. In the context of this case I do not consider the Act in its present form to be ambiguous. It may be difficult to apply to the facts. But I do not find it necessary to consider what the Law Commissions had in mind when proposing reform.
- Whether or not goods are of satisfactory quality is to be determined at the time of delivery. See Rogers v Parish, supra at pages 944 and 947. Defects which become apparent subsequent to delivery may be shown to have been present on delivery. They may, for example, affect durability. But durability is not to be assessed by reference to the length of time the goods in fact remain durable after delivery. The question is whether goods in the state in which they were delivered met the standard which a reasonable person would regard as satisfactory for such goods. In the present case the court was required to have regard to the nature of the goods sold and their price, amongst other things, when assessing whether the goods would be so regarded. In this case the vehicle was bought new. It was a top of the range version of an expensive, quality car. Minor defects would be likely to render such a vehicle less likely to meet the required standard than they would if the vehicle had been bought second hand or much more cheaply.
- The fact that this vehicle was sold and hired with a warranty does not, in my opinion affect nor detract from the rights of the hirer of it, if it proved not to be of satisfactory quality. The existence of a warranty does not require the hirer to put up with faults which, individually or in combination, would result in a reasonable person concluding that the goods were not of the required standard. Such a warranty does not have the effect of varying the rights of the buyer or hirer either at common law or in terms of the 1973 Act. See the Unfair Contract Terms Act 1977, section 21.
- The Act as amended makes no provision for the concept of a remediable breach of contract, i.e. no provision is made for the party in breach of contract being given an opportunity to remedy the breach. See McBryde on Contract at paragraph 20-127. The Act does not confer a right on such a party to be given that opportunity. While the concept of remediable breach may have its proper place in relation to other contracts, I am of opinion that it forms no part of the statutory code applicable to the sale of goods, at least in the absence of an express condition in the contract to the contrary effect. The fact that a defect may be easily and quickly corrected and at no great cost may be a factor which should be taken into account. The existence of a warranty is a less relevant consideration and may be irrelevant. If a major component in a motor vehicle is defective on delivery so that the vehicle cannot be driven, or cannot be driven safely, the fact that the component will be replaced at no cost under warranty would not make the vehicle of satisfactory quality. The Act specifically mentions "freedom from minor defects" as an aspect of quality. The Act envisages that the presence of minor defects may amount to material breach of contract. Clearly the nature of some goods may be such that freedom from all defects however minor is not attainable. Some defects may be so minimal that they can and should be ignored. In other cases the defects may all be minor but it could not be said that the goods with these defects are of satisfactory quality. In the end of the day, if the court adopts a proper approach to the determination of the questions whether the goods were of satisfactory quality and whether there was a material breach of contract, the issue is essentially a jury question, to be determined on the facts of the particular case. That is a matter for decision by the court of first instance, balancing all the relevant factors. It involves the exercise of a discretion.
- The function of an appellate court will usually be to scrutinise the approach of the court below to determine whether the law has been interpreted and applied correctly. If it has, the appellate court will be unlikely to interfere with the decision of the court below in so far as it reached its decision on the facts. The exercise of that court's discretion will be interfered with if it was plainly wrong or unjust, if material considerations have been overlooked or irrelevant considerations taken into account or if the evidence has been misunderstood. The reason for the reluctance of appeal courts to interfere in other circumstances is that the judge at first instance has had the advantage of seeing and hearing the witnesses. That judge is best able to assess which evidence to prefer on contentious issues and what weight to attach to different factors when balancing the matters relevant to the decisions which that court is required to take. No amount of reading a transcript of the evidence can put an appeal court in the same position.
- The Sheriff found that the vehicle as delivered had a number of defects. These are referred to in findings in fact 6 (scratch on the lid of the ashtray and missing navigation disc), 7 (vibration due to a fault in the balancing of the wheels and steering pull), 9 (ashtray lid and pedal positioning), 10 and 11 (pedal positioning), 18 (glove box misaligned; part of the paint work on the roof poorly finished), 19 (road speed related noise from the transmission/drive system resulting in the later replacement of the front differential), 20 and 21 (incorrect wheel balancing causing excessive wear on the tyres). The Sheriff commented more fully on these defects in paragraphs 332 to 343 of her note.
- The Range Rover was delivered on 9 March 2001. The pursuer rejected it on 30 March by letter. The Sheriff expressly found that his rejection was valid and that that rejection was not invalidated by the pursuer continuing to drive the vehicle and making payments in terms of the hire purchase agreement. (Finding in fact 12) At paragraph 329 of her note the Sheriff comments she could not understand why the pursuer continued to drive the vehicle after rejecting it. In finding in fact 13 she finds that:
"The defenders finally accepted that the pursuer was rejecting the vehicle and uplifted it in early June 2001."
But in finding in fact 17 she finds that:
"By letter dated 7 June 2001 the defenders refused to accept the pursuer's attempts to reject the vehicle due to his continued use of the vehicle and Shields offer to rectify any defects."
Her findings in fact as to the validity of the rejection were not challenged on appeal. At all events, after it had been uplifted, the vehicle was stored at Shotts from June 2001 onwards.
- The pursuer was aware that there was a scratch on the ashtray and that the navigation disc was missing when he took delivery of the Range Rover. Replacements for these had been ordered and subsequently became available for fitting. See finding in fact 6. Although these are minor defects, they were known to the pursuer prior to delivery and steps had been taken to enable them to be rectified. The pursuer may be assumed to have taken delivery on the basis that they would be rectified within a reasonable time. Considering these defects in isolation, in my opinion the Sheriff was entitled largely to discount them when determining whether the vehicle was of satisfactory quality. However the presence of these defects, along with others which were more serious, could be indicative of a vehicle which was not of satisfactory quality.
- The next fault identified by the Sheriff was the need to rebalance the wheels to prevent vibration and tyre wear. The wheels were rebalanced (See findings in fact 7 and 20). On 27 March the pursuer complained about the position of the pedals. He also complained that the vehicle was pulling to the left and was underpowered. Shields test drove the vehicle and did not detect either of the latter two faults. The Sheriff expressly found that the steering alignment was properly set. (See finding in fact 22.) It appears from paragraphs 342 and 343 of her note that the steering geometry had been rectified by Shields thereafter and was then satisfactory.
- In September 2002 the vehicle was again found to suffer from vibration, a problem which had been cured by re-balancing the wheels in March 2001. The Sheriff accepted that there had been excessive tyre wear for a low mileage vehicle because the steering geometry had been incorrectly set. But she concluded, on the evidence, that the steering geometry had been properly adjusted.
- It appears from finding in fact 16 that a transmission noise was detected following an inspection of the vehicle by T & T Technical Services, who were instructed by the defenders. That firm's report was dated 11 May 2001. In finding in fact 19 the Sheriff finds that:
"There was a road speed related noise emanating from the transmission/drive system. This was caused by a fault in the front differential unit. This was never noticed or rectified by Shields prior to the pursuer rejecting the vehicle. In the summer of 2003, Shields purchased the vehicle and replaced the differential unit in under two hours."
- The Sheriff records in her note that the pursuer complained about the fault in the differential from an early stage. The witnesses who had prepared reports on the vehicle "all found it to be a fault". She did not understand why Shields had failed to rectify it before the pursuer sent his letter of rejection. Nor could she understand why the pursuer put up with the fault for so long. Shields bought the vehicle back at auction in about June 2003 and rectified the fault. The Sheriff commented that:
"any reasonable person would be aware that continuing to use the vehicle with such a defect could potentially lead to a major problem. However such a defect being easily remedied and (sic) would not cause any long term problems to the vehicle if rectified. It would have been covered by the warranty."
(Paragraph 337)
- So far as misalignment of the glove box is concerned, the Sheriff in her note records that it was agreed that this was a defect but she pointed out that the pursuer had not complained of this defect either at the outset, when the vehicle was "put into the service department" nor in his letter of 30 March. This issue only arose after the vehicle was inspected by the RAC. (Paragraph 333) She also considered that the defect in the paint work on the roof was a minor matter which had been of no particular concern to the pursuer.
"It was, in my opinion, a small defect and not material in considering the durability of the vehicle."
(Paragraph 336)
- So far as the issue of the pedal position is concerned, I have had some difficulty, not having heard the evidence, in assessing the merits of the points which were made during the appeal. In particular I have found it difficult to determine the relevance of Regulation 35. Compliance with that Regulation is not mandatory, though compliance may be regarded as according with best practice. It does not appear to be the case that the Range Rover which the pursuer hired was different in respect of the pedal layout from some other similar Range Rovers, though it appears to have been the case that at that time some new Range Rovers had a different pedal layout. Nor does it appear to be the case that the pedal layout in that Range Rover could properly be categorised as a design fault. The pursuer did not test drive the vehicle before entering into the hire purchase agreement, though he is said to have inspected it. If the layout was unsatisfactory for him, it does not necessarily follow that there was a breach of contract nor that the Range Rover was not of satisfactory quality. The fact that he could not pivot his foot between pedals appears to have been presented to the Sheriff as evidence that the vehicle was not safe. But the Sheriff had evidence before her that pivoting between pedals was not good practice. Shields offered to change the pedal layout at no cost to him so that the pedals would be more convenient for him. He declined or at least did not take up the offer. The Sheriff considered, on the evidence, that pivoting was not good practice and that the pedals did not require to be positioned to enable the driver to pivot between pedals. She did not find that there was a design fault; nor did she find that the pedals which had been installed rendered the quality of the vehicle unsatisfactory. So far as this aspect of the appeal is concerned it was for the Sheriff to reach a view on the competing submissions. I can see no basis on which her decision in these respects could be said to be plainly wrong.
- In finding in fact 23 the Sheriff found that:
"All defects were easy to rectify and would be covered by the Land Rover warranty. The pursuer would not incur any cost in said repairs being carried out and they would not affect the durability, longevity or value of the vehicle."
In the second sentence I assume that "they" refers to repairs. The defects would have affected durability and value if they were not put right, particularly the defective differential, the steering geometry and the balance of the wheels.
- The conclusion of the Sheriff is set out in finding in fact 24. There she finds that:
"The pursuer acted totally unreasonably in refusing to accept Shields' offers to remedy any alleged defects. He also acted in a totally unreasonable manner in refusing to accept the defenders' attempts to have matters rectified. The vehicle being of satisfactory quality, the defenders were not in material breach of contract. The pursuer was not entitled to reject the said vehicle."
- Her views of the pursuer are confirmed in her note. At paragraph 317 she remarks that she found the pursuer's attitude to be astonishing. She refers to his apparently instant dislike to the vehicle as "totally unsubstantiated". She regarded him as "rather self opinionated and prone to moan". She made other comments on the pursuer's attitude in much the same vein. See, for example, paragraphs 331, 333, 338, 339 and 345 of her note. On the other hand the Sheriff was impressed by the attitude and approach of Shields. It appeared to her that they did everything possible to try to resolve all the complaints which the pursuer made. (Paragraph 331)
- She summed up her approach in paragraph 343 where she said:
"In short I have found that there were a number of minor defects which the pursuer was aware of when he took delivery of the vehicle. Any other faults I have found with the vehicle had either been rectified in the case of the steering geometry, or were easily rectified, or were, in my opinion, minor defects which would not affect the safety and durability of the vehicle."
- She went on to say in her concluding paragraph that the pursuer exaggerated the alleged defects and that a reasonable person would have found the vehicle satisfactory. She considered that the existence of a three year warranty and the willingness of Shields to rectify all defects were relevant circumstances.
- Of the faults which the Sheriff found the most serious was that in the differential. Those who examined the vehicle were agreed that that fault existed. It had been a matter of complaint from a very early stage. The Sheriff recognised that continuing to use the vehicle in that state would have led to a major problem. She took account, as relevant circumstances, of the facts that there was a warranty and that Shields were willing to rectify any faults. Mustill LJ in Rogers v Parish, supra at page 944 was not convinced that a warranty would operate as a relevant circumstance to diminish the reasonable expectation of a buyer or a hirer of a vehicle. Nor am I convinced that that is a proper approach in respect of defects which the buyer or hirer was not aware at the time the agreement was entered into. See Lee v York Coach & Marine, supra. In relation to minor defects, of which the buyer or hirer was aware at that time, the fact that they would be repaired under warranty may be a legitimate consideration. But that is because the buyer or hirer was aware of them. The scratch on the ashtray and the need to supply a navigation disc fall into this category. See the 1973 Act, section 10(2C) quoted above. If that is correct, the willingness of Shields to carry out remedial work is not a relevant circumstance for the purpose of determining whether the standard has been met.
- The Act does not say that any fault, however minor, justifies rejection of goods. Nor does it say that the presence of minor defects will necessarily justify rejection, though it will do so if the presence of these defects would lead a reasonable person to regard the vehicle as not being of satisfactory quality. On the other hand the Sheriff appears to have attached great significance to the facts that, in her view, (a) the pursuer was not a reasonable person, (b) the defects were minor, (c) they could be remedied under warranty at no cost to the pursuer and (d) Shields were prepared to carry out remedial work. In attaching such significance to these considerations there is considerable room for doubt whether the Sheriff did ask herself whether this new Range Rover, costing £51,550, was of the standard that a reasonable person would have regarded as satisfactory for such a vehicle, taking account of all the relevant circumstances.
- Counsel for the defenders contended that the answer to that question was in the affirmative. He pointed out that the Sheriff had said in terms that that had been her approach and that, applying that approach, she was in no doubt that the vehicle was of satisfactory quality. But it is clear from her findings and her note that she attached great weight to the factors to which I have referred and particularly to the facts that the defects were remediable and that they could and probably would have been remedied under warranty. In these circumstances I do not consider that it can be said that the Sheriff's approach was sound. There were several defects in this vehicle at the time of delivery, only some of which were minor. The pursuer was aware of two of these at the time of delivery. At least one of the other defects was certainly not minor. The Act refers to "freedom from minor defects". This vehicle was not free from minor defects; nor were all the defects minor. For the reasons which I have discussed above and for the reasons advanced by counsel for the pursuer, I am of opinion that the Sheriff misdirected herself and that the matter is at large for this court.
- This court is required to put itself in the position of a reasonable person and ask itself whether, in the state in which it was shown to be when it was delivered, this Range Rover was of satisfactory quality for such a vehicle. I believe that a hypothetical jury would answer that question in the negative. So would I. This was a very expensive car, sold as a high quality vehicle. It was delivered with a differential which required to be replaced and which was later replaced by Shields when they re-acquired the vehicle. It had the other defects referred to above. An objective purchaser of such a vehicle would not, in my opinion, have expected to have a vehicle with these defects delivered to him in implement of the agreement which he had entered into. The Sheriff found that the pursuer had validly rejected the vehicle and that his rejection was not invalidated as a result of his having continued to drive the vehicle and pay the instalments. If I am right so far, the pursuer was entitled to reject the vehicle for most of the reasons which he gave. I do not feel able to conclude that he was entitled to reject the vehicle because of the position of the pedals for the reasons which I have given. Nor would I have reached that conclusion in relation to either of the defects of which he was aware. I have amended the Sheriff's findings.
- It was agreed that, in the event of the appeal being allowed, the Sheriff's interlocutor should be suitably amended and that decree should be granted for payment by the defenders to the pursuer of the amount of the deposit which he had paid and of the two instalments which he had paid i.e. for £9,658.42 with interest on that sum from the date when service of the writ was accepted. It was further agreed that expenses should follow success and that the appeal should be certified as suitable for the employment of junior counsel.
