JOHN PEEBLES AND CATHERINE PEEBLES AGAINST REMBRAND BUILDERS MERCHANTS LIMITED
SHERIFFDOM OF TAYSIDE, CENTRAL AND FIFE AT DUNDEE
[2016] SC DUN 31
A42/14
JUDGMENT OF SHERIFF S G COLLINS, QC
In the cause
JOHN PEEBLES AND CATHERINE PEEBLES
Pursuers;
Against
REMBRAND BUILDERS MERCHANTS LIMITED
Defenders:
Dundee, 29 February 2016
The sheriff, having resumed consideration of the cause, sustains the first plea in law for the defenders to the extent of excluding from probation the following averments:
(i) in condescendence three, the tenth, eleventh and twelfth sentences thereof;
(ii) all of condescendence four (and as a consequence, all of answer four), the twenty second sentence of condescendence five, and the seventh sentence of condescendence six;
(iii) in condescendence seven, from the beginning of this article until the end of the eighth sentence thereof;
quoad ultra allows parties a proof of their remaining averments, before answer; reserves all questions of expenses occasioned by the diet of debate on 8 February 2016.
NOTE:
Background
1. The pursuers purchased 5000 roofing tiles from the defenders in 2003 and 2004, for use on their home and garage. The purchase price was £8,941.02. This was a consumer contract for the purposes of the Sale of Goods Act 1979. The tiles were concrete, with an anthracite coloured coating applied. The pursuers aver that they chose the tiles, inter alia, because of their appearance and finish, and in particular the colour. They further aver, however, that by 2009 it had become apparent that the tiles suffered from a latent defect, in that the tile coating was defective. As a result it is said that severe discolouration had occurred, in that parts of the tiles had suffered loss of the coating and were now concrete rather than anthracite in colour. The pursuers further aver that although the manufacturers undertook works to the tiles in situ in an attempt to remedy the discolouration, these works were ineffectual and that the roof colour remained patchy and uneven, and continued to deteriorate.
2. The pursuers accordingly seek damages from the defenders for breach of contract. They found on section 14 of the 1979 Act which provides:
“(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 the goods of the kind in question are commonly supplied,
(b) appearance and finish,
(c) freedom from minor defects,
…(e) durability.”
The pursuers aver that by supplying the tiles with a defective coating, the defenders were in breach of these implied terms of the contract of sale. In particular, although the pursuers accept that the tiles remain watertight and structurally sound, they say that a reasonable person would not regard the tiles as of satisfactory quality in circumstances in which there was a defect such that the coloured coating failed when it did, resulting in a patchy and uneven finish to the roof.
3. As to damages, the pursuers refer to section 53A of the 1979 Act, which provides:
“(1) The measure of damages for the seller’s breach of contract is the estimated loss directly and naturally resulting, in the ordinary course of events, from the breach.
(2) Where the seller’s breach consists of the delivery of goods which are not of the quality required by the contract and the buyer retains the goods, such loss as aforesaid is prima facie the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had fulfilled the contract.”
Notwithstanding the terms of subsection (2) the pursuers aver that the roof tiles will require to be removed and replaced and that the appropriate measure of pecuniary damages is the cost of this work. They quantify this by reference to a 2014 quotation from a slating surveyor as being around £11,000 for materials, and £19,000 for labour and equipment, although they aver that the total cost had risen to around £36,000 by the date of citation. The pursuers accept that the quotation is for replacement with clay tiles, but aver that this is necessary because the original concrete tiles are no longer available. They aver that the cost of the clay tiles is less than the cost of the concrete tiles however, when adjusted for inflation, and accordingly deny betterment in using such tiles. They aver that any betterment in having new tiles as opposed to ones that are ten years old is incidental and unavoidable. The pursuers believe and aver that the concrete tiles, once removed from the roof, would have a nil or negligible value. Additionally, the pursuers set out a claim for damages for non pecuniary losses, namely inconvenience and loss of amenity, which they estimate at £5,000.
4. The defenders deny any breach of contract. They aver that the tiles were and are satisfactory and fit for purpose. They deny that there was any latent defect in the tile coating. They aver that there are many causes of change in the appearance of roof tiles over the years, including fair wear and tear. They remain sound and watertight. The defenders further aver that the works undertaken by the manufacturers in 2009 were done purely as a goodwill gesture and expressly without admission of there being any defect in the tiles. As regards the measure of damages, the defenders meet the pursuers’ claims with a general denial. They aver that the replacement of the existing tiles with new, clay tiles would result in a substantial betterment. They also aver that in any event the tiles are now in a satisfactory state following the manufacturers’ remedial works after 2009, and that the pursuers have suffered no loss.
5. The defenders tabled a general plea to the relevancy and specification of the pursuer’s averments. A debate took place in October 2014 at which the defender’s agent moved the sheriff to delete various of the pursuers’ averments pursuant to this plea. By interlocutor of 25 February 2015, however, the sheriff dismissed the whole action. The pursuers appealed to the sheriff principal, and tendered a minute of amendment. The defenders conceded the appeal, accepting that the pursuers had pled a sufficiently relevant and specific case for proof as regards their claim for non pecuniary loss. The sheriff principal allowed the record to be amended in terms of the pursuers’ minute of amendment, but on the defenders’ motion then remitted the matter to a further diet of debate. It called before me for this purpose, and parties were agreed that notwithstanding the rather unusual procedural history all relevant matters were at large for me to reconsider and determine.
Submissions for the defenders
6. Mr Godden, for the defenders, moved me to sustain their first plea in law, delete certain averments from probation, and quoad ultra to allow a proof before answer. The particular averments to which he objected related to (i) the claim for pecuniary loss, (ii) a manufacturers’ guarantee in relation to the tiles, (iii) the tiles’ conformity or otherwise with certain British Standards, and (iv) a claim that the pursuers had rejected the tiles.
7. As regards the claim for pecuniary loss, Mr Godden pointed out that section 53A(2) of the 1979 Act provided that the default basis of measurement of damages for breach of a consumer contract was diminution in value, that is, the difference between the cost to the purchaser and what the goods were in fact worth standing the breach. He accepted that this provision does not preclude other methods of assessment being employed, and in particular that replacement costs could in principle be appropriate. However he submitted that it was clear, without the need for proof, that the present pursuers were not entitled to damages so measured. As their whole averments anent pecuniary loss were directed to the costs of replacement, they should all be deleted and – subject to any minute of amendment which might later be proposed seeking to introduce averments setting out a claim based on diminution – the pursuers’ claim for damages should be confined to non pecuniary loss.
8. Mr Godden reminded me that the general principle for assessment of damages arising from breach of contract is that the pursuer should be put in the same position, so far as money can, as if the contract had been performed. Reference was made to McBryde on Contract, 3rd Edition, at paragraph 22.91. Damages must be reasonable. There must be no betterment. They must not be out of all proportion to the benefit to be obtained. To obtain the costs of rectification it must be objectively necessary for such rectification to take place due to the breach. A number of cases were referred to in support of these propositions.
9. In CR Taylor (Wholesale) Ltd. v Hepworths [1977] 1 WLR 659 the plaintiffs’ property was a disused billiard hall which was gutted by a fire. They incurred certain costs for remedial and safety works, but claimed the greater cost of reinstating the hall. This latter claim was rejected. It was established after trial that the plaintiffs continued to own the property for its potential development value and had no intention of using it as a billiard hall. It was accordingly not reasonable to award reinstatement costs. To do so would be to place the plaintiffs in a better position, from the point of view of money, than they were immediately before the fire occurred. The case could therefore be distinguished from cases such as Harbutt’s “Plasticine” Ltd. v Wayne Tank and Pump Co. Ltd. [1970] 1 QB 477 where the plaintiffs’ factory having been destroyed by fire, it was reasonable to award them the costs of rebuilding so as to put them in the same position as they would have been at the fire not occurred, even though the factory had been rebuilt differently from before.
10. In Ruxley Electronics and Construction Ltd. v Forsyth [1996] AC 344 the parties contracted to build a swimming pool in the defendant’s garden with a diving area which was 7’6” deep. On completion the diving area was only 6’ deep, albeit that the pool was still suitable for diving and there was no adverse effect on the value of the property. The defendant nevertheless refused to pay the outstanding balance of the contract price, and counterclaimed for the very substantial cost of rebuilding the pool, as well as loss of amenity. On appeal to the House of Lords it was held that where the expenditure was out of all proportion to the benefit to be obtained, the appropriate measure of damages was not the cost of reinstatement but the diminution in the value of the work occasioned by the breach, even if that would result in a nominal award. As Lord Jauncey observed (at 357 – 358), the reasonableness of an award of damages, and thus of awarding the cost of reinstatement, is to be linked directly to the loss sustained. However what constitutes the aggrieved party’s loss is in every case a question of fact and degree. His Lordship offered the example of a person contracting for the building of a house and specifying that one of the lower courses of brick should be blue. In such a situation it would be unreasonable to award the owner the very large cost of reconstruction should the builder use yellow bricks for the course instead, if the house otherwise conformed to the contractual specification. Reference was also made by Mr Godden to the speech of Lord Lloyd at 366 – 368, for the proposition that in order to obtain the cost of remedial works they must be both necessary and reasonable in the particular case, which is a question of fact.
11. Seeking to apply these principles to the present case, Mr Godden submitted that if the pursuer’s claim for damages was allowed they would be able to obtain a brand-new roof with better quality tiles than at present. Alternatively if they did not in fact choose to spend the damages awarded on a new roof – which they would be entitled to do – they would have a £36,000 windfall and an existing roof that was structurally sound and watertight. Either way they would have obtained a significant betterment. There was no objective necessity to replace the tiles. The pursuers’ loss was not the lack of a perfectly serviceable roof with any consequent need to build a new one. The only defect was cosmetic and the only loss aesthetic. The damages being sought were out of proportion to the benefit to be obtained by replacement of the tiles – what was being sought was nearly four times the original cost of the tiles, all in order to rectify at best a minor defect, and obtain a roof the appearance of which was not “patchy and uneven”. For all these reasons it was submitted that the case was really on all fours with Ruxley. Even taking the pursuer’s averments pro veritate, as it was necessary to do at this stage, it was clear that damages on the measure sought by the pursuers could not properly be awarded. Proof of the pursuers’ averments would add nothing and should not be allowed. The proper measure of damages for the pursuers, assuming that they could establish a breach, was the difference between the price they paid for the tiles and what they were worth. However they made no averments about this. All their present averments of pecuniary loss in article seven of condescendence should therefore be deleted, and the claim thus confined to one for non pecuniary loss only.
12. Turning to the question of the manufacturers’ guarantee, Mr Godden attacked the relevancy of the averments regarding this at article two of condescendence. These state that:
“Another factor in the pursuer’s decision [to choose the particular tiles] was that Marley roof tiles were guaranteed for 50 years from the date of supply. The tiles themselves do not normally require any maintenance within that period. The pursuers chose Marley tiles in part because they do not normally require any maintenance within that period.”
It was submitted that this was not ‘mere background information’, but hid an intention to argue that if the tiles failed to maintain their original aesthetic experience for less than 50 years that they were thereby not of satisfactory quality. However, submitted Mr Godden, the guarantee does not say anything about the quality of the goods. Rather it sets up a collateral contract which is not a relevant circumstance to which the court can have regard for the purposes of section 14(2A) of the 1979 Act.
13. In support of that proposition Mr Godden referred to the case of Lamarra v Central Bank plc 2007 SC 95. This case concerned section 10 of the Supply of Goods (Implied Terms) Act 1973, but the terms of this section are materially identical to section 14 of the 1979 Act. The respondent entered into a hire purchase agreement for a motor car. He rejected it on the grounds that it was not a satisfactory quality. He sued for damages. The sheriff accepted that the car had a number of defects but held that it was nonetheless of “satisfactory quality”, in particular having regard to their being easy to rectify and covered by a warranty. On appeal, the Sheriff Principal held that the warranty was not a ‘relevant circumstance’ for the purposes of section 10(2A) of the 1973 Act, and awarded damages. On further appeal the Inner House upheld the Sheriff Principal’s decision in this regard. At paragraph 62 Lord Osborne explained why the Court had reached this conclusion:
“…While the words “all the other relevant circumstances” are potentially of wide scope, we consider that, in the context, they must be seen as referring only to circumstances actually bearing upon the quality of the goods in question… In our view, warranty cannot be seen as a matter bearing upon the quality of the goods supplied. In its nature, warranty can only be seen as an undertaking by the manufacturer of the goods concerned to remedy defects in the goods which emerge and which are within the scope of the warranty and that within a specified period of time... The fact that … defects may be… remedied [under the warranty] appears to us not to bear upon the issue of the quality of the goods at the time of their delivery, which is the subject matter of the implied term created by section 10(2).”
Mr Godden accepted that the particular question at issue in Lamarra was whether otherwise unsatisfactory goods were rendered satisfactory by the existence of a guarantee, but submitted that the flip side must also be true, that is, that otherwise satisfactory goods could not be rendered unsatisfactory by the existence of a guarantee. To allow the pursuers’ averments to remain would be to allow them to attempt to prove this. They should accordingly be deleted.
14. Turning to his third complaint, Mr Godden drew attention to the averments anent British Standards in articles four and six of condescendence. He submitted that these averments were lacking in specification. In article four all that was said was that the tiles should conform to certain British Standards. Detailed technical documents setting out these standards, running in total to more than a hundred pages, are then “produced and referred to for their terms, which are held to be repeated herein brevitatis causa.” The only passage specifically referred to is Annex C of BS EN490:1994, to the effect that “tiles should have a structure which gives a harmonious appearance to the finished roof.” As Mr Godden pointed out, however, Annex C also recognises that “… Slight colour variations may occur as a consequence of the production process” and that “under the influence of natural weathering, changes in colour and appearance will occur.” In article six, however, the pursuers aver that “a reasonable person would not regard the tiles of satisfactory quality in circumstances where they did not conform to the relevant British Standards which are hereinbefore, and the circumstances hereinbefore, described.”
15. Mr Godden accepted that a clear averment that the tiles did not conform to a particular requirement of British Standards for specified reasons could in principle be relevant as regards assessment of whether they were of “satisfactory quality” for the purposes of section 14(2) of the 1979 Act. However he submitted that the averments in article four did not do this. There was no clear averment that the tiles did not comply with any particular requirement of any British Standard. There was no clear averment that the tiles did not conform to Annex C of BS EN490:1994 – which was not surprising, given its whole terms. Wholesale incorporation of the various Standards documents brevitatis causa then left the defenders guessing as to what if any other requirements the pursuers might wish to found upon, and did not give fair notice. The averment in article six did not advance matters, in that it simply referred the reader back to article four in a vain search for specification which was nowhere there to be found. Accordingly the averments in both these articles of condescendence should be deleted.
16. Mr Godden’s fourth complaint related to the opening averments of article seven. These state that by letter of 20 July 2012 the pursuers’ then agents wrote to the defenders formally intimating their rejection of the tiles. It is said that it was confirmed that the tiles would require to be removed and replaced but remain in situ only because they cannot be removed without immediately being replaced. Accordingly it is averred that “the defender being in breach of contract in having supplied tiles which were not of satisfactory quality, and the pursuers having rejected the tiles accordingly, the pursuers are entitled to damages… Esto there has not been effectual rejection, in any event, the pursuers remain entitled to damages for loss…”
17. Mr Godden submitted that these averments had caused a great deal of confusion for the sheriff at the earlier debate. The question of rejection, and the vexed question of whether it had been done timeously, was relevant where the remedy sought by the pursuer was to get back the money which they had paid for the goods. In the present case however the pursuers were not asking for this: there was no crave to this effect related to the averments anent rejection. In any event it was clear that the pursuers had “retained the goods” for the purposes of section 53A of the 1979 Act and so could and did make a claim under this provision. They do not need to show that they had sought and failed to reject the goods in order to do so. Assessment of the measure of damages would be the same in either case. Insofar as the pursuers were keen to retain these fact heavy averments, it was perhaps merely a device to try and obtain a proof on the pecuniary claim where in truth this was not justified. However the averments were unnecessary and should be deleted.
Submissions for the pursuers
18. Miss Hood QC, for the pursuers, moved me to repel the defenders’ first plea in law and allow the action to proceed to a proof before answer without deletion of any averments.
19. On the principal matter Miss Hood submitted that the issues of pecuniary loss and damages were issues for proof. All the points that Mr Godden had made in this regard were ones which he could make at a proof and which the sheriff would be bound to consider. In particular questions of what was ‘reasonable’ or ‘proportionate’ were, as in the cases to which reference had been made, ones to be determined at proof. She founded on the observations in Ruxley that “what constitutes the aggrieved party’s loss is in every case a question of fact and degree” (at 358), and that “what remedial work is both necessary and reasonable in any particular case is a question of fact” (at 368). I should not form a judgment on these matters without hearing evidence. This was not a ‘yellow and blue bricks case’ akin to Lord Jauncey’s example in Ruxley. In such a case it would have been necessary to demolish and rebuild an entire house to replace one row of bricks with bricks of a different colour. All that was necessary in the present case was removal and replacement of the particular product which was, it was claimed, did not conform to the contract.
20. Miss Hood pointed out that the defenders accepted that if a breach of contract was established there would be entitlement to damages; they took issue only with the way that the pursuers sought to have damages measured. The defenders accepted that in some circumstances it might be appropriate for measurement not to be made on the prima facie basis specified in section 53A of the 1979 Act, but on the basis of the cost of replacement. For her part Miss Hood accepted that the pursuers might not obtain assessment on this alternative basis, but submitted that determination of what the appropriate basis should be was itself a question for proof. The cases went both ways. In Smith v Johnson 1899 TLR 179 for example rebuilding costs were allowed – albeit this was a case where the plaintiff was served with a local authority notice requiring demolition and rebuilding.
21. Accordingly Miss Hood submitted that the prima facie basis of measurement in section 53A – diminution in value – was the starting point: Benjamin, Sale of Goods, 9th Edition, paragraph 17.047. But there were potentially a variety of ways of assessing damages. Where it is a question of fact and degree as to which measure of damages is appropriate, it was submitted that it would be premature, except in the most extreme cases (which this was not), to say at debate that only one measure of damages could be appropriate. Reference was made to McBryde on Contract, 3rd Edition, at paragraph 22.93, where the author writes that:
“A broad approach can be taken to assessment of loss, which is largely a jury question, with the various measures of loss being used as a cross check on each other. Thus for example, diminution in value may be compared with rectification costs. The law of damages should not be reduced to a rule of thumb. The result may be that written pleadings which state all necessary facts for a proof are sufficiently relevant, even although in the end an alternative method of calculation of damages might be used. Nor need a pursuer aver all possible measures of damages – the defender can aver alternatives… Although the court is not bound by rigid rules, an award of damages must, nevertheless, be based on evidence. The court should not take an arbitrary sum “plucked from the air”… An award of damages is based on a calculation. Averments and proof should demonstrate how the pursuer arrives at the sum sued for.”
Reference was also made to paragraphs 22.107 to 21.110. All this made it apparent, submitted Miss Hood, that a pursuer was entitled to go to proof with averments which allowed the court to decide what sum would be appropriate to award by way of damages, to decide what basis of measurement would be just, and to cross check with other possible bases in order to do so.
22. In similar vein Miss Hood referred to Tainsh v McLaughlin 1990 SLT (Sh Ct) 102, in which the pursuers purchased a house and found the wiring to be defective. They sued on the warranty and claimed the cost of remedial works. The sheriff dismissed the claim as irrelevant at debate because the pursuers had not quantified the claim on the basis of diminution in value. The Sheriff Principal allowed the appeal and so allowed the pursuers a proof before answer. There was no rule that unless damages for breach of warranty are quantified quanti minoris the action is irrelevant. The general overarching principles for the award of damages were recognised and affirmed. Within these principles, it was recognised that in the assessment of damages the courts in Scotland are not bound by any rigid rules. On the facts, the Sheriff Principal was satisfied that the pursuers might well be able to establish that the cost of rewiring was reasonable and necessary. That being so, they were entitled to a proof, the true proposition being that an action will not be dismissed as irrelevant unless it must necessarily fail even if all the pursuer’s averments are proved (cf. Jamieson v Jamieson 1952 SC (HL) 44). Here too, submitted Miss Hood, it would be overly restrictive to not allow the pursuer’s averments to go to proof, and thereby to allow assessment of loss, assuming a breach of contract was established.
23. Reference was also made to Martin v Bell Ingram 1986 SLT 575, in which the pursuers purchased a house on the basis of a surveyor’s report which failed to mention a serious sag in the roof. This defect came to light when the pursuers came to sell the house two years later. They successfully sued the surveyor for negligence, with the sheriff awarding in particular £2,500 in damages as representing the difference in the value of the subjects, with and without the sag, as at the date of purchase. On appeal to the Inner House the surveyors contended, inter alia, that there was no evidence to justify the figure of £2,500. Refusing the appeal, the Court held that even in the absence of any evidence as to the value of the house, with the sag, at the relevant date, the sheriff was entitled to treat the issue as a jury question and to apply a broad assessment, derived from evidence of the value of the house as at the date of sale, cross checking against the cost of repairs.
24. Reference was also made to Locke v Murray (unreported), Dunoon Sheriff Court, 15 October 2015. This was another case involving a claim for damages in relation to the sale of Marley roof tiles allegedly defective by discolouration. As far as can be discerned from the sheriff’s judgment, the pursuers claimed £15,000 in damages but did not provide any detail in their pleadings as to how that figure had been reached. Objection to the lack of specification appears to have been taken but the sheriff refused to delete the averments, holding that:
“The matters at issue are straightforward. The original tiles cost £10,400. The defender cannot be surprised that 9 years later that replacement or repair will cost approximately £15,000. If he wishes to rebut that he can do so. It is within the defender’s knowledge just exactly what a replacement roof or tiles of a similar type would cost. The claim is simply for repair or replacement. I cannot see any difficulty in cross examining any expert in relation to that. The defenders are a company that has been in business for a substantial number of years. Supplying and fitment are presumably part and parcel of their business. They must know the likely cost of repair or replacement.”
It was submitted that this was a recent example, in a very similar context, of the broad brush approach to pleading on assessment of damages, the sheriff permitting the pursuers the opportunity to prove that replacement was the appropriate measure of damages for supplying roof tiles lacking colour fastness, apparently even in the absence of any specification of how the sum sued for was calculated.
25. Miss Hood submitted that these various cases demonstrated that a strict approach to excluding averments and thus evidence from the assessment process was inappropriate. The headline purpose of damages was to put the pursuers as nearly as possible in the position that they would have been in but for the breach. There were a number of ways of measuring that. If the pursuers’ averments anent replacement might be relevant – even if only as a cross check for the sheriff if he or she chose to measure damages on the basis of diminution of value – they should be allowed to go to proof. The pursuers had to set out the relevant facts regarding damages, so that the sheriff could take the approach to damages which he or she considered appropriate – and which might properly be a different approach from that sought. The facts averred and proved might only be used as a cross check, but that did not justify excluding them. The averments regarding rectification were accordingly relevant even if they might ultimately not be sustained.
26. In the light of these considerations Miss Hood submitted that the pursuers were entitled to proof of their averments anent pecuniary loss. They averred that they were sold tiles with two aspects: to keep their house watertight, and to give a certain specified appearance. Appearance and finish are aspects of whether the tiles were of reasonable quality. Due to a latent defect, the tiles fulfil the function of keeping the house watertight, but do not fulfil the function of giving it the appearance contracted for. The pursuers have averred that the tiles cannot be repaired, so they have to be replaced. Because the existing tiles are no longer made, new tiles were required but these are (adjusted for inflation) cheaper than the existing tiles. If the defenders disputed that, it was submitted, they could lead evidence to this effect. The pursuers would not get a ‘windfall’: their position was that they needed a roof on their house. If the defenders considered that the pursuers would not in fact use any damages awarded to carry out replacement of the tiles, it was for them to aver and prove it. In the circumstances, any betterment was unavoidable. Furthermore it was not for the pursuers to aver a sum to be discounted for any betterment, but for the sheriff to assess this after proof.
27. Finally, in a plea to pragmatism, Miss Hood pointed out that the defenders accepted that the case was going to a proof regardless of the outcome of this debate. In order to seek to establish the breach of contract evidence would be led in relation to the tiles, their cost and their claimed defects. Evidence would also be led in relation to the inconvenience suffered by the pursuers. Little extra time and effort would be required to take evidence in relation to the averments anent the cost of replacement. There was no appreciable prejudice to the defenders in allowing the disputed averments to go to proof.
28. Turning to the question of the guarantee, Miss Hood submitted that the pursuers were not seeking to say that if the tiles failed within the 50 year period of the guarantee, that they were thereby not of satisfactory quality. She submitted that it was simply “background”, in that the court might wish to know how long the product was supposed to last. The long length of the guarantee in this case implied a long lasting product. Miss Hood sought to distinguish Lamarra. There, the sheriff held that the product was not of satisfactory quality but refused damages because the defects were capable of being repaired, and thus that the breach was remediable, because of the existence of the guarantee. The present case was different: the guarantee was put in issue only to give guidance as to whether the tiles were expected to have long life or not. The Inner House decision in Lamarra was striking at something quite different.
29. In relation to the averments regarding British Standards, Miss Hood submitted that the averments were relevant, again by way of background. The tiles had to be conform to the relevant Standards. It was relevant that the manufacturer held out the product as conforming to the particular standards referred to. As for the incorporation of the Standards documents brevitatis causa, Miss Hood submitted that this had been done, by amendment, in response to the complaint in the defenders’ rule 22 note that these documents had not, inter alia, been incorporated. It was further submitted that Mr Godden had been correct to identify the references to the need for a “harmonious appearance” in Annex C of BS EN490:1994. In answer to my direct question, however, Miss Hood was unable to confirm whether the pursuers might wish to rely on any other part of the relevant Standards documents and, if so, which parts.
30. In relation to the averments on rejection, Miss Hood accepted that ultimately it might make little difference whether the pursuers were held to have rejected the tiles or to have retained them. But she submitted that the issue was a live one and the court should decide the correct basis of the claim. If the pursuers had timeously rejected the tiles then the position would be as if they had not been delivered, and the claim to damages would lie under section 51 of the 1979 Act. Only if they had not validly rejected the tiles would their claim lie under section 53A. These averments too should be allowed to go to proof.
Discussion
31. In my view the pursuers’ averments anent pecuniary loss should be allowed to go to proof. In this regard I prefer Miss Hood’s submissions.
32. The general principle in assessing damages is to put the pursuer in the same position, so far as money can, as if the contract had been performed. Any damages awarded must be reasonable, and proportionate to the pursuer’s loss. In a consumer contract to which section 53A of the 1979 Act applies the starting point for assessment is diminution in value. But a pursuer is entitled to aver that in the circumstances assessment on this basis will not properly give effect to the general principle just stated, and that this can only be done by awarding damages assessed by reference to the cost of replacement. Whether this is so is a matter to be determined in the particular circumstances of the individual case, as the various authorities cited to me amply demonstrate. Such a determination clearly involves questions of fact and degree. Prima facie it is a matter for the sheriff to determine after proof.
33. As is apparent from the propositions set out in paragraph 22-93 of McBryde on Contract, quoted above, the authorities indicate that courts are entitled to take a broad approach to assessment of damages, which is sometimes described as a jury question. This does not so much reflect a lack of intellectual rigour, as a recognition that assessment of damages is often not capable of calculation with mathematical precision. An exercise of judgment is required, albeit one rooted in facts found established on the basis of the evidence. The authorities also suggest that even if ultimately the court does not award damages assessed by reference to replacement costs, it may still be entitled to consider the evidence led pursuant to averments of these costs by way of a cross check, so as to seek to ensure that any damages awarded give effect to the general principle. It follows that even if, at the stage of debate, the court is sceptical as to the likelihood of damages being awarded on the basis of the cost of replacement, this does not make averments directed to such costs irrelevant, and does not in principle justify excluding them from proof. That should only be done where the court is satisfied – notwithstanding that it has at this stage heard no evidence – that not only could damages never properly be assessed by reference to replacement costs, but also that evidence as to replacement costs could never properly inform any assessment by way of a cross check.
34. Short of this, or in marginal cases, other more practical issues may also properly come into play. It seems to me that there may be a balance to be struck between a pursuer’s prospects of establishing a claim for the cost of replacement after proof and any identifiable prejudice to the defender of allowing him to seek to do so. For example, it might be that the sheriff is satisfied that the cost to the defenders of investigating and responding to the pursuers’ evidence regarding replacement is likely to be disproportionate to the prospects of such evidence either founding a basis for assessment of damages or playing any material part in this exercise. In such circumstances it might be unfairly prejudicial to the defenders to allow the averments to go to proof. On the other hand if it is accepted that allowing the hearing of evidence on averments of replacement costs is unlikely to significantly add to the length of the proof, and that responding to that evidence is unlikely to cause any significant additional difficulty or expense for the defenders, then the sheriff may be reluctant by excluding the relevant averments to deprive the court of evidence which may assist either directly or indirectly in the assessment exercise. Put another way, at debate the objection may be presented by the defender as one of pure law, but matters of appropriateness and expediency may also properly be considered: see for example Kvaerner Construction (Regions) Ltd. v Kirkpatrick & Partners Consulting Engineers Ltd 1999 SC 291 per Lord McCluskey at 301D – F; Lord Morison at 304G.
35. In the present case the pursuers offer to prove, in substance, that in order to give proper effect to the general principle of assessment of damages it is necessary that the tiles be removed and replaced. They quantify the total resulting cost as being more than £36,000. On the face of it, and standing the considerations canvassed in Ruxley, I share some of Mr Godden’s scepticism that the court would be likely to award such a sum on such a basis, given the nature and extent of the claimed aesthetic defect, that it is nearly four times the original cost of the tiles, and that it is based on replacing new tiles of a different type for ones now more than twelve years old. But I am not satisfied, without hearing evidence, that assessment on the basis of replacement costs could never properly be awarded, nor that evidence regarding such costs could never properly inform an assessment made on another basis, standing the overarching requirement to give effect to the general principle. Whether – as in Ruxley – the defect is so minor, and the goods otherwise so satisfactory, that replacement is not necessary and justified, nor reasonable and proportionate to the pursuers’ loss, are matters to be assessed in the light of the facts found at proof.
36. In that connection it can be remembered that all the pursuers’ averments in relation to pecuniary loss are met by a general denial. They therefore do not accept that the cost of replacement is that which is specified by the pursuers. They do not accept that any replacement can only be with new tiles of a different type. They do not accept that the present tiles have no residual value, such as might fall to be deducted from the replacement cost. All these matters of fact therefore need to be determined at proof. The sheriff might find, after hearing the evidence, that the true cost of replacement was greatly less than that claimed by the pursuers, either because contrary evidence was led for the defenders or because he found the pursuers’ evidence to be exaggerated or otherwise not wholly reliable. For similar reasons the sheriff might also find that appropriate replacement tiles of a similar age were available for use instead of new tiles, and/or that there was likely to be some residual value to the present tiles once removed from the roof. In such circumstances the assessment of whether damages based on replacement costs would be reasonable, proportionate and necessary, might well be very different from one based simply on the figures set out in the pursuers’ pleadings. In any event I am not prepared to foreclose the possibility that it might be, and that the cost of replacement might be reasonable and proportionate. It also follows from this that I do not consider that it is appropriate, in effect, to assume at this stage that the pursuers will necessarily be awarded the whole of the amount claimed by way of replacement costs, given that these costs are for them to prove, and that they are presently in dispute.
37. I am also not satisfied that the defenders would be unfairly prejudiced by allowing the pursuers’ averments on assessment to go to proof. It is accepted by them that a relevant claim for breach of contract has been averred. It is accepted by them that sufficient averments have been put on record as regards the pursuers’ claimed non pecuniary losses. It is therefore accepted that a proof will have to take place, at which the pursuers will lead evidence, inter alia, of the initial cost of the tiles, their claimed defects, and the claimed unsuccessful attempts by the manufacturers to remedy such defects in situ. It seems to me that the further evidence required to seek to establish the true cost of replacement of the tiles is unlikely to add greatly to the length or difficulty of the proof. Furthermore, given the nature of the defenders’ business, it seems to me that the relevant issues are unlikely to be matters which will cause them any great difficulty to investigate and answer. To that extent it seems to me that a relatively robust approach, akin to that expressed by the sheriff in the passage from Locke v Murray, quoted above, is also appropriate here. In these circumstances it seems to me to be appropriate and expedient to allow the pursuers’ averments regarding replacement costs to be considered at proof.
38. Turning to the question of the manufacturers’ guarantee, I agree with Mr Godden that these averments are irrelevant to the question of whether the defenders are in breach of the term of the contract implied by section 14 of the 1979 Act. As the judgment of the Court in Lamarra makes sufficiently clear, the question of whether goods are of satisfactory quality falls to be assessed at the time of delivery. The fact that the manufacturer has provided a guarantee says nothing about this. Although Lamarra concerns section 10 of the Supply of Goods (Implied Terms) Act 1973, I agree with Mr Godden that the court’s reasoning equally well applies to section 14 of the 1979 Act. I also agree with him that if the existence of a guarantee is irrelevant to a conclusion that goods are of satisfactory quality, there is no good reason to consider that it is any more relevant to an assessment of whether they are not. This is the other side of the same coin. I therefore agree that it would be impermissible for the pursuers to invite the court to draw an inference that the goods were not of satisfactory quality because they have become defective prior to the expiry of the period of a guarantee. But like Mr Godden I can see no other good reason for these averments being put on record. To seek to categorise them as mere ‘background’ does not meet the criticism that background material which is plainly irrelevant should not be the subject of proof.
39. In any event, there are other difficulties with the pursuers’ pleadings in this regard. In particular there is no averment that the guarantee related to the anthracite coating as opposed to the structural soundness of the tiles themselves. The averments in condescendence three seem to me to rather skirt round that issue and do not directly address it. Thus it is stated that the “tiles [i.e. not the coating?] were guaranteed for fifty years” and that “the tiles themselves [again, not the coating?] do not normally [but perhaps sometimes?] require any maintenance within that period.” This does not amount to clear averment that the particular defect complained of was covered by the terms of the particular guarantee granted. It is also at least noteworthy that there is no averment as to whether the pursuers have sought to make any claim under the guarantee, and if so, the outcome thereof. One might have thought that such a claim would have been made, as an alternative to the present litigation, had the claimed defect with the anthracite coating been covered by the guarantee. Accordingly even if I were wrong that the existence of a guarantee is in principle irrelevant for the purposes of section 14 of the 1979 Act, I would still not have been satisfied that the pursuers’ pleadings in this regard should be admitted to proof.
40. Accordingly in condescendence three, the tenth, eleventh and twelfth sentences thereof will be deleted.
41. In relation to the pursuers’ averments concerning British Standards, it seems to me that these are lacking in specification and should be deleted.
42. In the first place I think that Mr Godden was right to accept that, in principle, an averment that goods which did not conform to a British Standard to which they ought to have conformed, or to which they were held out as conforming, could be relevant to assessment of whether they were reasonably satisfactory for the purpose of section 14 of the 1979 Act. Unlike a manufacturers’ guarantee, conformity with such a Standard might be seen as bearing on the quality of the goods when supplied, and so might be a relevant circumstance which might be taken into account for the purpose of section 14(2A). The considerations relevant to a manufacturers’ guarantee discussed in Lamarra are accordingly not applicable here. However while such an averment might be relevant, it must also provide sufficient specification, clearly setting out the particular Standard to which the goods ought to have conformed, and identifying the particular respects in which they did not.
43. In the present case there is no such clear and specific averment in the pursuers’ pleadings. The twenty second sentence of article five of condescendence states that “the tiles do not conform to the relevant British Standards hereinbefore described.” The seventh sentence of article six of condescendence states that “a reasonable person would not regard the tiles as of satisfactory quality in circumstances where they did not conform to the relevant British Standards which are hereinbefore, and in the circumstances hereinbefore, described”. These averments suggests that the pursuers are indeed seeking to establish that the tiles were not of satisfactory quality for the purposes of section 14(2) by showing that they did not conform to British Standards, and are to that extent relevant. However such general averments clearly require further specification identifying the particular provisions of the Standards in question and the way in which the tiles are said to have failed to conform to them. The averments in articles five and six just quoted invite the reader to look elsewhere in the pursuers’ pleadings for such specification. But there is none, either elsewhere in these articles, or in article four, which contains the only other averments where British Standards are mentioned.
44. Article four contains generalised averments as to the Standards said to be applicable to the tiles, but contains no claim that the tiles failed to conform to these Standards, let alone any specification of the manner in which this might be so. Although the pursuers have here incorporated two British Standards documents brevitatis causa, they have not given fair notice of which parts, if any, of those documents they might wish to rely on. Particular mention is made of Annex C of BS EN490:1994, but there is no clear averment that the tiles did not conform to this provision. Miss Hood was unable to confirm to me in answer to a direct question that the pursuers did not intend to found on any other part. In the circumstances the pursuers’ averments plainly do not give fair notice to the defenders of any claim that the tiles were not conform to British Standards and thus not of satisfactory quality. In particular the defenders cannot be expected to trawl through two large and technical documents, or to instruct an expert to do so, in order to see whether any parts of them might be relevant. And it is no good answer for the pursuers to complain that they only incorporated the documents brevitatis causa in response to the defenders’ Rule 22 Note. Either the resulting averments are sufficiently specific as to give fair notice, or they are not. In my judgment it is the latter.
45. There is a hint in the pleadings in article four that it was not so much the pursuers’ intention to prove that there was disconformity to British Standards, as to prove the opposite. It is averred that:
“Marley’s product catalogue confirms that if installed in accordance with Marley specifications and the requirements of BS 5534-1: 1997, the tiles should perform satisfactorily for the lifetime of the building. The tiles were installed properly on the property.”
On one reading the intention might have been that the Standards relating to the installation (rather than the physical construction) of the tiles, were complied with, with the consequence that the pursuers are entitled to rely on the terms of the Marley product catalogue mentioned. Put another way, it might have been intended to establish that the tiles should have ‘performed satisfactorily for the lifetime of the building’ if installed in a manner conform to the relevant British Standard, and that they were. If that was indeed the intention, however, there is again a lack of specification as to any particular installation requirements in BS 5534-1: 1997, or any clear averment that the installation of the pursuers’ tiles was in accordance with any such requirements. And in any event the averment that the tiles should ‘perform satisfactorily’ is in itself hopelessly unspecific, being unrelated to the particular defect in the coating of the tiles which is at the heart of the pursuers’ complaints.
46. In the circumstances I am satisfied that all of the pursuers’ averments in article four of condescendence, the twenty second sentence of article five and the seventh sentence of article six, are lacking in specification and should be deleted. As a consequence the defenders’ averments in answer four can also be deleted.
47. The final issue is the question of whether the pursuers’ averments anent rejection of the tiles should be allowed to go to proof. In my view it is obvious at this stage, in circumstances where it is averred that the goods were delivered in 2003 and 2004 but no intimation of rejection was sent until 2012, that the pursuers must be deemed to have retained and accepted them: 1979 Act, section 35(4). Their claim arises on the basis that the goods had a latent defect not apparent at the time when they were delivered, and indeed one which was not apparent until at least five years later. The pursuers were entitled to reject the tiles within a reasonable time, but even in the case of a latent defect time begins to run as soon as the goods are delivered: Douglas v Glenvargill Co. Ltd. 2010 SLT 634 per Lord Drummond Young at paragraph 34. What is reasonable may be said to depend on the nature of the goods and their function, and the court will be generous in fixing the period, but I am not aware (and nor was Lord Drummond Young) of any case where a period of eight years from delivery of any goods, and three years from the discovery of the latent defect, was held to be a reasonable time for rejection – far from it: Douglas, paragraphs 29, 30 and 35. Such cases as there are strongly suggest that reasonable time is to be measured in far shorter periods, months at most, rather than years: Adams & MacQueen, Atiyah’s Sale of Goods, 12th Edition, page 516. In my view it is sufficiently clear therefore that the pursuers’ averments do not disclose a tenable claim for rejection of the tiles and accordingly these averments should be deleted.
48. Further and in any event there is no good practical reason for allowing such averments to go to proof, and no prejudice to the pursuers in excluding them. It is accepted by the defenders that the pursuers have averred a relevant claim for damages under section 53A of the 1979 Act on the basis that they have in the circumstances retained the goods. It is accepted by the defenders that it is not necessary, in order to advance that claim, that the pursuers first establish that they have sought and failed to reject the goods. Miss Hood accepted that it made no practical difference to the assessment of damages whether the pursuers had effectively rejected the goods or claimed damages having retained them. The reality is that the pursuers retained the goods believing them to be conform to contract, and now seek damages from the defenders having come to the view many years later that they are not. I agree with Mr Godden that the pursuers’ averments are not consistent with the pursuers seeking repayment of the purchase price for non delivery – and nor are they consistent with them being content to have the defenders come and take the tiles off their roof. The proof should not be cluttered and confused with evidence or argument on such matters, but focused on the question of whether the defenders are in breach of the terms implied by section 14, and if so what the correct measure of damages should be under section 53A.
49. For these reasons I will delete, in condescendence seven, the averments from the beginning of this article until the end of the eighth sentence thereof.
50. Accordingly on the whole matter I will sustain the defenders’ first plea in law to the extent of excluding from probation the various averments specified above. Quoad ultra I will allow the pursuers a proof before answer. I was not specifically addressed on the question of the expenses occasioned by the debate, and will reserve consideration of this issue meantime.