Jaffco Ltd v Northern Motors Limited (Civil Appeal No. 5 of 1971) [1971] ZMCA 4 (19 October 1971)

JAFFCO LTD v NORTHERN MOTORS LIMITED (1971) ZR 75 (CA) COURT OF APPEAL DOYLE CJ GARDNER AND BARON JJA 19TH OCTOBER 1971 (Civil Appeal No. 5 of 1971) Flynote Contract 5- Sale of goods - Right to reject - Waiver of - Conditional acceptance - Nature of - Whether right to reject or rescind continues to be available. Contract - Sale of goods - Distinction between right to reject goods and right to rescind. 10 Contract - Contract of repair - Duty of bailer to collect goods when repairs completed. Headnote The plaintiff ordered a vehicle capable of transporting a John Deer Tractor 110. On delivery several defects were noticed and the plaintiff agreed to take delivery provided the defects were rectified. After having 15 made considerable use of the vehicle the plaintiff returned it to the defendant for the repairs to be carried out. On the defendant failing to repair the vehicle within a reasonable time the plaintiff purported to rescind the agreement for the purchase of the vehicle and sued the defendant for damages for breach of warranty; the defendant counter - claimed 20 and sought damages as result of the plaintiffs failure to collect the vehicle after the repairs had been completed. The plaintiff's claim was dismissed and damages, to be assessed, were awarded to the defendant on its counterclaim. On appeal: Held: 25 (i) The plaintiff had waived his right to reject the vehicle and chose instead to adopt a course which is called by certain text writers "conditional acceptance". (ii) Conditional acceptance is not a right to be exercised unilaterally by a buyer, but is an additional agreement between the parties. 30 (iii) A buyer's right to reject goods because they do not comply with the terms of the contract is not the same as the right to rescind. (iv) By virtue of conditional acceptance there comes into existence an additional agreement, and only if it could be said that 35 rescission or rejection, as the case may be, is a remedy available to the buyer on breach of the new agreement, or on breach of the original agreement as varied by the new agreements do such remedies or either of them continue to be available to the plaintiff; otherwise the plaintiff's rights are limited to a right to 40 damages on breach of that agreement. (v) The plaintiff's conduct in relation to the vehicle was quite inconsistent with the survival of the right of rescission. (vi) The plaintiff was obliged to collect its vehicle but it had not proved that it had suffered any loss. 45 BARON JA Cases cited: (1) Heilbutt v Hickson (1972) LR 7 CP 438. (2) Long v Lloyd [1958] 2 All ER 402. Legislation referred to: 5 Sale of Goods Act 1893, s. 35. A W W Cobbett - Tribe, Peter Cobbett - Tribe & Co., for the appellant. C A Stacey, Lloyd Jones & Collins, for the respondent. Judgment 1971 ZR p76 Baron JA: The appellant (to which I will refer as the plaintiff) appeals from a judgment of Bruce - Lyle, J., dismissing its claims against 10 the respondent (the defendant) to rescission of an agreement for the purchase of a motor vehicle and damages for breach of warranty, and awarding damages to the defendant, in an amount to be determined, on its counterclaim. The plaintiff carries on business at Lusaka as a landscape gardener; 15 the defendant is a dealer in motor vehicles carrying on business in Luanshya. In January, 1969, the plaintiff's managing director, Mr Mark Jeffries, approached Mr Barrington Shaw, a salesman employed by the defendant, with a view to buying a vehicle capable of transporting a John Deer tractor 110 from site to site; Mr Shaw came down to Lusaka in order to 20 measure the tractor. A week later, on the 31st January, a Morris JU250 pick - up was delivered to the plaintiff by Jack Rowse Limited of Lusaka. The plaintiff examined the vehicle and was very dissatisfied with it; there were several defects which required rectification. The plaintiff's secretary. who was present, made a list of the defects and handed it to Mr 25 Ames of Jack Rowse Limited, who agreed that the defects would be rectified. There was some dispute at the trial as to whether Jack Rowse Limited was the defendants' agent for the purpose of delivery only or whether its authority went further, but the point is immaterial since on the evidence it is apparent that Mr Shaw also agreed to rectify the defects. The 30 plaintiff agreed to take delivery of the vehicle on condition that these patent defects were rectified. They are set out in paragraph 4 of the statement of claim as follows: "lining to roof; torn seat; replace battery tray; one set keys not supplied; spare wheel rack missing; grummets to body missing; bodywork in bad condition; brakes binding". His case, on 35 this issue, is that there was an implied condition that the repairs would be effected within a reasonable time, that this was not done, and that he was therefore entitled to rescind, and did rescind, the contract. The plaintiff has advanced the submission that his acceptance of the vehicle was conditional only and that he therefore retained the right to 40 rescind the contract if the condition was not fulfilled. On the facts of this case this submission must fail for a variety of reasons, but there are aspects of the law relating to the rights of a buyer on which I think it is desirable to comment. A buyer's right to reject goods because they do not comply with the 45 terms of the contract is not the same as his right to rescind. Frequently 1971 ZR p77 BARON JA the distinction is of no practical importance, and rejection of the goods will necessarily involve rescission of the contract; but there are many cases in which a buyer is entitled to reject goods when he has no right to rescind the contract which the goods were intended to fulfil. Suppose a buyer enters into a contract with a motor dealer for the purchase of a specified 5 model of car with what are known as optional extras, such as automatic transmission, power steering and the like, delivery to be before a given date; and suppose that the car, when delivered two weeks before the appointed day, is not fitted with the optional extras ordered. Clearly the buyer has the right to reject that car, but it would be unrealistic to suggest 10 that he has the right to rescind the contract to buy a car conforming to the specifications stipulated; the matter might, for instance, be a simple case of the switching of two cars at the factory, a mistake which could be rectified in a day or two; or the manufacturers might be able for other reasons to fulfil the contract before the appointed day. 15 In the present case the plaintiff signed a contract on the 24th January, 1969, for the purchase of a new vehicle. When a vehicle was delivered to him a week later which was not in the condition in which a new vehicle should be he certainly had the right to reject it unless and until it was put in such condition; but I cannot think (although the point does not fall for 20 decision on the facts of the present case) that the patent defects listed above gave rise to a right to rescind. In the event, the plaintiff chose to waive his right to reject the vehicle, and chose instead to adopt a course which is called by certain text writers "conditional acceptance". Mr Cobbett - Tribe argues that by 25 virtue of this arrangement the plaintiff's right to rescind (which for the purposes of this argument I will assume he had) survived, and could be exercised on the failure of the defendant to fulfil the condition. In support of this argument he cites Schmitthoff on Sale of Goods, 2nd Ed., at p. 147, where the learned author, in dealing with conduct of a purchaser which is 30 not inconsistent with the ownership of the seller within the meaning of s. 35 of the Sale of Goods Act 1893, says: "The buyer retains the right to reject if he accepts the goods only conditionally and the condition is not fulfilled." I think this proposition, stated in this rather bold form, is somewhat 35 misleading; it tends to obscure the fact that conditional acceptance is not a right to be exercised unilaterally by a buyer, but as additional agreement between the parties. Chalmers' Sale of Goods, 14th Ed., puts it thus at p. 122: "Goods may, of course, by arrangement, be accepted conditionally 40 and the acceptance may in such case be withdrawn on failure of the condition." In Heilbutt v Hickson (1) Bovill, C. J., referring to a letter written by the defendant to the plaintiff following a dispute which had arisen concerning the quality of a large consignment of boots, said: 45 ". . . it must, we think, be treated as a new additional contract between the parties, adding fresh terms to the original contract BARON JA 1971 ZR p78 with reference to the difficulties that had arisen and were likely to arise. . .". Thus, by virtue of a conditional acceptance there comes into existence an additional agreement, and only if it could be said that rescission or 5 rejection, as the case may be, is a remedy available to the buyer on breach of this agreement, or on breach of the original agreement as varied by the new agreement, could it possibly be argued that such remedies or either of them continued to be available to the plaintiff in the present case. The additional agreement between these parties was that the plaintiff 10 agreed to accept the vehicle on condition that the patent defects listed would be rectified by the defendant or its agent; it is clear on the evidence that the plaintiff intended to accept title to the vehicle and to use it, and that this was contemplated by both parties. Bearing in mind particularly the trivial nature of the defects in question, I do not think it can seriously 15 be argued that, knowing that the plaintiff intended to use the vehicle and was in fact using it, the defendant must be taken to have agreed that it could be returned and the contract rescinded if these minor repairs were not carried out. Assuming therefore in the plaintiff's favour that he had the right initially to reject the vehicle because it suffered from these 20 minor defects, and assuming even further in his favour that he had the right to rescind the contract because of those defects, I am satisfied that, having obtained the defendant's agreement to rectify the defects and having accepted the vehicle on that basis, his rights thereafter did not include a continued right either to reject or rescind, but were limited to a 25 right to damages on breach of that agreement. On the facts, the matter goes even further. The evidence discloses that the plaintiff kept the vehicle in his possession for some four months and used it in his business to a significant extent; by the time it came back into the possession of the defendant for the purpose of effecting repairs the 30 vehicle had covered some 5 000 miles. The plaintiff gave a good deal of very vague evidence as to the efforts he had made to have the repairs in question carried out by Blair Motors in Lusaka, but the fact remains that his conduct in relation to the vehicle was quite inconsistent with the survival of a right of rescission. As Pearce, LJ, put it in Long v Lloyd (2) at 35 p. 408: "The matter does not rest there. On the following day the plaintiff, knowing all that he did about the condition and performance of the lorry, despatched it, driven by his brother, on a business trip to Middlesbrough. That step, at all events, appears to us to have 40 amounted, in all the circumstances of the case, to a final acceptance of the lorry by the plaintiff for better or for worse, and to have conclusively extinguished any right of rescission remaining to the plaintiff after completion of the sale. Accordingly, even if the plaintiff should be held . . . to have had a right to rescission which 45 survived the completion of the contract;, we think that on the facts of this case he lost any such right before his purported exercise of it." 1971 ZR p79 BARON JA It is unnecessary to set out any more of the facts of that case; suffice it to say that the plaintiff in the present case has done a great deal more to extinguish any right of rescission he might have had than did the plaintiff in Long's case. I am satisfied on the facts that the plaintiff's rights, if any, arising out of the defendant's alleged failure to effect the rectification of 5 these patents defects within a reasonable time are confined to a right to damages. The plaintiff pleaded also that the vehicle was not fit for the purpose for which it was ordered. He gave evidence that the tractor which it was bought to carry would not fit on to the vehicle, that he telephoned 10 Mr Shaw, who promised to make adjustments to the bodywork, but that Mr Shaw failed to cause these adjustments to be made and that he, the plaintiff, consequently cut a few inches off the cutters of the tractor. The plaintiff did not claim rescission on this ground (he had clearly waived any such right) but claimed damages for breach of warranty, Mr Cobbett - Tribe 15 conceded that the damages could be nominal only, and pursued the point only because, he submitted, an award of nominal damages would affect the question of costs. I will deal with this submission presently. The plaintiff argues in the further alternative that in breach of the implied condition that the vehicle would be of merchantable quality it 20 was not in such condition, and in para. 13 of the statement of claim he lists a number of latent defects which manifested themselves a short time after he took possession of the vehicle. These were that the points of the vehicle had to be replaced, that the reverse gear stuck, that the nuts, bolts and screws on the underside of the vehicle had to be tightened, that the 25 propeller shaft had to be tightened, and that the front nearside mirror of the vehicle fell off due to rust. He claims that by reason of the breach of warranty as to merchantable quality the vehicle was worth K500 less than if it had been as warranted, and that he did not have the use of it on a number of occasions whilst it was being repaired and in particular 30 whilst it was in the hands of the defendant between the 23rd May and the 19th June, 1969, as a result of which the plaintiff was unable to undertake certain contracts and thereby suffered loss. The learned trial judge found - correctly in my view - that the vehicle was of merchantable quality, but the point is not material since the defendant was prepared to treat 35 the latent defects in question as "warranty defects" which it was the defendant's obligation to rectify. The case therefore reduces itself to a claim to damages for breach of warranty. No evidence whatever was given concerning the value of the vehicle and this claim was not pursued before this court. 40 No doubt if the necessary conditions had obtained and satisfactory evidence thereof had been led the plaintiff could have established a claim to damages for loss of use on the basis that contracts were lost. I will not attempt to set out an exhaustive list of the necessary conditions, since these must vary according to the particular circumstances; clearly 45 however the plaintiff must show that the inability to use the vehicle in his business during the period in question was an effective cause of the loss 1971 ZR p80 BARON JA of the contracts, that he tried to mitigate his loss) by, for instance, hiring a vehicle to enable him to carry out his contracts), and so on. These matters were not canvassed. Significantly the plaintiff in his statement of claim, when referring to the fact that he did not have the use of the 5 vehicle on a number of occasions, says "and in particular . . . between the 23rd May and 19th June"; the evidence however shows that the plaintiff had bought a Mercedes 2 ton truck at the beginning of May, l 969, the invoice from Star Motors Limited bearing the date 8th May, 1969 As to the period prior to the purchase of the Mercedes the plaintiff's 10 evidence is, as I have said, vague in the extreme as to loss of use; reference is made to attempts to have the repairs carried out and there is an allegation also that the vehicle was "in and out of the garage". Evidence of this kind is totally inadequate to establish a right to damages. I return now to the plaintiff's submission that he is entitled to an 15 award of nominal damages in respect of the alteration to the cutter, and that such award affects the question of costs. There is no adequate evidence (such as the cost of the work) on which any award of damages could be made. But in any event an award of a nominal amount would not affect the order as to costs; the record discloses that the case was concerned 20 almost entirely with the claims arising out of the patent and latent defects, and the defendant was substantially successful. I would therefore dismiss this appeal in so far as it relates to the plaintiff 's claims. The defendant by way of counterclaim asked for damages against the plaintiff in respect of the expense incurred by reason of the plaintiff's 25 failure to collect the vehicle after the repairs were completed. The plaintiff in his defence to the counterclaim denied that he was obliged to collect the vehicle but denied in any event that the defendant had incurred expense and suffered damage as alleged and put the defendant to the proof thereof. It follows from the conclusion to which I have come in relation 30 to the plaintiff's claims that I find that he was in fact obliged to collect the vehicle, and the question therefore is whether the defendant has proved that it had suffered any loss by reason of the plaintiff's failure to do so. The evidence given on behalf of the defendant in this regard was, 35 like so much of the evidence in this case, vague and quite inadequate. It was given by Mr John Grey, the defendant's group service manager; in examination - in - chief he said: "When a vehicle is left and is not driven it tends to deteriorate. It needs constant attention to keep it in proper order. We can only 40 keep vehicles that are with us any length of time under a shed without sides. With the vehicle standing and not collected the roof lining warped the second time. We had to make reinforcing strips to keep the lining in place." In cross - examination he said: 45 "The roof lining got warped again. I would say the repairs to it was 2 to 3 hours work. This would cost about K20 to K25. The roof warping in this type of vehicle is most common. We put a 1971 ZR p81 BARON JA new lining in but with it standing in the sun it warped again and we had to use the strips." Thus the defendant's claim can be separated into the cost of general care of the vehicle and the cost of the further repairs to the roof lining. As to the general care, there is no evidence that such care was given. 5 Mr Grey told the court what ought to be done but there is not one jot of evidence to suggest that it was in fact done, nor, if it was done, what was the cost to the defendant. I tend to think that in fact no attention whatever was given to the vehicle; I note that although there was available at the defendant's premises a shed without sides for the purpose 10 of keeping vehicles which are there for any length of time, this vehicle was left standing in the sun. The further repairs to the roof lining are not in the same category as the cost of constant attention which this vehicle should have had. The roof lining was one of the patent defects of which complaint was made 15 at the outset, and it was the defendant's obligation to rectify it in terms of the agreement between the plaintiff and Mr Shaw. The defendant's own evidence shows that the warping of the roof lining on this type of vehicle is most common, and I do not think that the evidence has established that the second warping was anything other than because the 20 first effort at repair was unsuccessful. Since it was the defendant's obligation to rectify this defect the use of reinforcing strips, which it was finally decided was necessary in order to prevent further warping, was a course which clearly should have been adopted in the first place. I would therefore allow the appeal in respect of the counter - claim, 25 with the costs attributable thereto in both courts. Judgment Doyle CJ: I agree with the judgment of my brother Baron, J. A, and have little to add. The evidence in this case was of a very tenuous character. We were told that there was some sort of agreement between counsel not to deal with the question of quantum; but before reaching 30 quantum one must first prove breach and then damage following therefrom. The appellant agreed to buy and the respondent agreed to sell a new Morris J. U. pick - up motor vehicle. When the vehicle was delivered it had a number of minor defects, bad body work, torn seat etc. It was clearly in a condition which would have justified the appellant in refusing to 35 accept it. That would not have ended the contract. The respondent would still be liable to sell and the appellant to buy a new vehicle. If the appellant had rejected the vehicle and the respondent had then not been in a position to deliver a new vehicle, other considerations would have arisen. That did not happen. Instead appellant accepted the vehicle on the 40 understanding that the defects would be remedied. He used the vehicle for a considerable time and after some months it was taken back by the respondent and the defects were remedied. That carried out the undertaking and fulfilled the contract. It was only after the vehicle had been taken back for repair that appellant then attempted to repudiate. On the 45 evidence there was nothing to justify repudiation at that stage. 1971 ZR p82 DOYLE CJ Appellant also pleaded in para. 9 of the statement of claim that he had relied on the respondent's skill and judgment to supply a vehicle of sufficient size to carry a 110 John Deere tractor. The evidence shows that the vehicle was capable of carrying such a tractor. What it was not 5 capable of carrying was a John Deere tractor while it was fitted with a detachable grass cutter. That was not what was pleaded. That alleged cause of action therefore also fails. As there has been no breach of the original contract proved, the question of damages does not arise. If it had, in my view the appellant's 10 vague reference to lost contracts would not have been a substitute for evidence on that point. As to the counter - claim, there is again no evidence as to any damage suffered. Respondent stated that constant attention was required to keep a vehicle in good order and condition while awaiting collection. No 15 evidence was given that constant, or any, attention was in fact given. The only reference to anything done to the vehicle was that the roof again warped and had to be re-done. That was a repair which should have been efficiently done in the first place. The delay enabled the respondent to rectify his original faulty workmanship. It did not give him a right of action 20 for the cost of this rectification. In my judgment the appeal against judgment on the original claim should be dismissed but the appeal against judgment on the counterclaim should succeed. Judgment Gardner JA: I concur. Appeal dismissed