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MARION F. LAMARRA v. CAPITAL BANK PLC+SHIELDS AUTOMOTIVE LTD TRADING AS SHIELDS LAND ROVER


EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

Lord Osborne

Lord Philip

Lord Kirkwood

[2006] CSIH 49

XA4/05

OPINION OF THE COURT

delivered by LORD OSBORNE

in the case of

MARIO F. LAMARRA

Pursuer and Respondent;

against

CAPITAL BANK plc

Defenders;

and

SHIELDS AUTOMOTIVE LTD, TRADING AS SHIELDS LAND ROVER

Third Party and Appellants:

_______

Act: Buchanan, Allan McDougall (for Buchanan MacLeod, Solicitors, Glasgow)

(Pursuer and Respondent)

Alt: Ellis, Q.C., Lamont; Balfour & Manson (for Levy & McRae, Solicitors, Glasgow)

(Third Party and Appellants)

Alt: McClure Naismith

10 October 2006

The background circumstances
[1] The respondent in this appeal entered into a hire purchase agreement with the defenders on 9 March 2001 for the hire and subsequent purchase of a 4.6 litre Range Rover motor vehicle, LMR 72, which was a new top-of-the-range automatic model. It was sold to the defenders by the appellants. The total cash price, as appears from the hire purchase agreement, was £51,550. The respondent paid a deposit of £6,717.82. In terms of the agreement, the respondent was due to pay a total of 36 monthly instalments, the first of which was of £1,517.80, subsequent instalments being of £1,422.80. The respondent paid the deposit and the first two instalments. These sums total £9,658.42.

[2] In the present action, raised by the respondent in Hamilton Sheriff Court, he craved the court:

(1) To find and declare that the hire purchase agreement dated 9 March 2001 between the parties is rescinded and the pursuer's obligations thereunder are at an end.

(2) To grant decree against the defenders for payment to the pursuer of the sum of £9,857.42, payable with interest thereon at the rate of 8% per annum from citation to follow hereon until payment with expenses; and to grant warrant to arrest on the dependence.

The sum sued for in the second crave represented the deposit and the first two instalments which the respondent had paid under the hire purchase agreement, together with the cost of a telephone system, which the respondent had had fitted to the dashboard of the vehicle, which amounted to £199. This had not been returned to him following upon the rescission of the contract.

[3] The respondent's case was that the Range Rover vehicle was not of satisfactory quality, particularly having regard to the price paid for it. In his pleadings, he averred that the vehicle, when delivered, had several defects. He maintained that, when driven, it pulled to the left, causing undue tyre wear. Because of the layout of the pedals, his foot had become trapped underneath the brake pedal. His foot had caught on the underside of the fascia panel. Because the pedals were positioned incorrectly, the vehicle was not safe to drive. There was a loud noise from either the engine or the transmission system. The respondent also maintained that there was a deep scratch on the ashtray and that the glove box was obviously incorrectly fitted. The respondent averred that a reasonable person would expect to receive a vehicle free of such defects. Accordingly, by letter dated 30 March 2001, the respondent rejected the vehicle. It was in these circumstances that he sought the remedies described.

[4] Following an extensive proof, the sheriff found that, at the time when the respondent took delivery of the vehicle, he was aware of the scratch on the ashtray and that a navigation disk was missing. A navigation disk had been fitted pending delivery of a new one. A new ashtray lid had been ordered. The appellants had rebalanced the wheels to deal with vibration of which the respondent had complained, but had found no evidence that the vehicle was pulling to the left. The appellants also offered to replace the brake and accelerator pedal housing with pedals of the respondent's choice without charge. Part of the defence to the action had been that the pedals complied with the United Nations Agreement concerning the adoption of uniform conditions of approval and reciprocal recognition of approval for motor vehicle equipment and parts, being Uniform Provisions Concerning the Approval of Vehicles with regard to the Arrangement of Foot Controls (E.C.E. Regulation No.35). The sheriff had found that the pedal positioning conformed to that Regulation and did not make the vehicle unsafe. The respondent had claimed in evidence that the pedals should have been so positioned that he could pivot his foot between the accelerator and the brake. The sheriff had found that foot pedals did not require to be in such a position so as to allow the respondent to pivot his foot between these pedals. As she put it in finding-in-fact 11:

"For safety reasons, there was a height difference between the pedals to prevent pivoting. Pivoting is not good driving practice."

[5] The sheriff also found that the respondent had validly rejected the vehicle by the letter dated 30 March 2001 and had not invalidated his rejection by continuing to drive the vehicle for a period of time thereafter, nor by paying instalments. The vehicle had been uplifted from the respondent early in June 2001, by which time it appeared to have been driven nearly 6,000 miles. The sheriff had concluded that the motor vehicle was not unsafe and that the respondent had exaggerated all his complaints. The appellants had been prepared to replace the foot pedals, the ashtray cover and the navigation disk, to rectify the alignment of the glove box and to re-test the steering alignment. So far as the transmission noise was concerned, the sheriff found in finding-in-fact 16 that "they were prepared to check this and repair it if required." The sheriff had also found that the appellants had been prepared to carry out all of the necessary work without any charge to the respondent and at a time convenient to him, but the latter had refused to accept their offer.

[6] It appears from the sheriff's findings-in-fact that, at the time when the motor vehicle was delivered, it had the following defects, in addition to the missing navigation disk:

(a) The front wheels were incorrectly balanced, causing excessive tyre wear. This had been corrected by balancing of the front wheels in March 2001. The steering geometry of the motor vehicle was also corrected, as appears from paragraphs 342 and 343 of the sheriff's Note.

(b) There was road speed related noise emanating from the transmission or drive system. This fault was rectified by the appellants at a much later date than the rejection of the motor vehicle by the respondent, following its re-purchase by the appellants, by replacing the front differential, a task which took about two hours.

(c) There was a scratch on the ashtray cover.

(d) There was misalignment of the glove box.

(e) There was poorly finished paintwork on parts of the roof of the vehicle.

[7] The sheriff concluded in finding-in-fact 23 that, notwithstanding these defects, the vehicle was of "satisfactory quality" in terms of the Supply of Goods (Implied Terms) Act 1973, as amended. She found that the defects were easy to rectify and that they would have been covered by the Land Rover warranty. She also found that such 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 respondent had not been entitled to reject the vehicle. Accordingly the defenders were absolved from liability. Accordingly she sustained the third and sixth pleas-in-law for the defenders; quoad ultra repelled the respondent's and defenders' pleas-in-law; assoilzied the defenders; and found the respondent liable to the defenders in the expenses of the cause.

[8] Against the sheriff's decision, the present respondent appealed to the sheriff principal, who, on 22 November 2004, allowed the appeal; recalled the interlocutor of the sheriff of 26 February 2004; and amended certain of the sheriff's findings-in-fact. The terms of the sheriff's findings-in-fact 23 and 24 were as follows:

"23. The vehicle supplied to the pursuer was of satisfactory quality. Any 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 effect (sic.) the durability, longevity or value of the vehicle.

24. 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."

The sheriff principal made certain amendments to these findings-in-fact. In finding-in-fact 23, the first sentence was amended by the insertion of the word "not" between the words "was" and "of". In finding-in-fact 24, the sheriff principal deleted the third and fourth sentences. In addition, the sheriff principal added a new finding-in-fact 25 in the following terms:

"25. The vehicle was supplied to the pursuer in terms of the hire purchase agreement with the foregoing defects. The defect in the differential was not a minor defect. It required to be and was later replaced. The defenders were in material breach of contract by hiring the vehicle in that condition to the pursuer. The pursuer was entitled to reject the vehicle and claim damages."

The sheriff principal went on to substitute for the findings-in-fact and law made by the sheriff the following:

"1. The defenders, having hired to the pursuer a vehicle which was not of satisfactory quality and being in material breach of contract, the pursuer was entitled to reject it and treat the hire purchase agreement dated 9 March 2001 as repudiated.

2. The pursuer is entitled to repayment of his deposit and of the instalments paid by him in terms of that agreement, i.e. to repayment of the sum of £9,658.42."

Thereafter he sustained the fourth, fifth, sixth, ninth, tenth and eleventh pleas-in-law for the pursuer; quoad ultra he repelled the pleas-in-law for the pursuer and the defenders. He went on to ordain the defenders to pay to the pursuer the sum of £9,658.42, with interest thereon at the rate of 8% per annum from 10 July 2001 until payment. He found the defenders liable to the pursuer in the expenses of the cause, save so far as previously decerned for. Against the sheriff principal's decision, the appellants have now appealed to this court.

Submissions by junior counsel for the appellants
[9] Junior counsel for the appellants indicated that his submissions would relate to five aspects of the case: (1) he would examine the judgments of the sheriff principal and the sheriff; (2) he would consider the extent of the defects in the motor vehicle; (3) he would set out the law applicable to the situation; (4) he would deal with the tests which an appeal court should apply in relation to findings-in-fact made by a judge of first instance; in particular, this would be considered in the context of findings relating to "satisfactory quality"; and (5) he would make submissions relating to the decision of the sheriff principal to the effect that (a) he should not have substituted his own view for that of the sheriff; (b) upon the assumption that he was entitled to interfere with the decision of the sheriff, in doing so he applied the wrong test; and (c) the sheriff principal made a judgment on a critical issue without taking into account the full content of the evidence.

[10] Following that pattern of submissions, junior counsel first drew attention to paragraphs 27-33 of the sheriff principal's judgment, in which it was contended that, while he had identified the correct test, he had applied it wrongly. In this connection he submitted that a warranty was a relevant factor to be taken into account in relation to the decision of the hypothetical "reasonable person" referred to in section 10(2A) of the 1973 Act. In paragraph 30 of his judgment the sheriff principal had held that the warranty was, in effect, irrelevant. That was an erroneous view on account of the reference in section 10(2A) of the 1973 Act to "all the other relevant circumstances". In paragraph 32 of his judgment, the sheriff principal had set forth the function of an appellate court in a case in which a judge of first instance had made findings-in-fact. No issue was taken with that, save that the sheriff principal should have made clear that it was only in the circumstances outlined that an appellate court could interfere. Junior counsel went on to examine the remaining paragraphs of the sheriff principal's decision, making a number of points regarding the manner in which they had been stated. In paragraph 50, the sheriff principal had erred in law. In that paragraph, while drawing attention to the "reasonable person" referred to in section 10(2A) of the 1973 Act, he had gone on in the latter part of the paragraph to refer to "an objective purchaser". That was an erroneous formulation. The "reasonable person" was an hypothetical person, who had to be seen as an outsider looking into the transaction, not a party to it, as contemplated by the sheriff principal. However, it was accepted that there was little authority in relation to the application of section 10 of the 1973 Act. It was appropriate to mention in relation to the decision of the sheriff principal that the criticism made of the pedal arrangement in the vehicle, of the ashtray and the missing navigation disk had been rejected.

[11] In relation to the judgment of the sheriff, paragraphs 343-346 of her Note were crucial. It was in these paragraphs that the vital conclusions of the sheriff had been expressed, including the conclusion that the vehicle had been of satisfactory quality. The sheriff's finding-in-fact 5 related to the Land Rover warranty which was found to enable manufacturing and mechanical defects in the vehicle to be rectified free of charge to the pursuer during the three year period of its duration.

[12] Junior counsel next proceeded to consider the extent of the defects in the motor vehicle, the second part of his submissions. As already made clear, it was not necessary to explore the situation regarding the ashtray and the navigation disk. He drew attention to the sheriff's findings-in-fact 7, 18, 19, 20, 21 and 22, which set out the sheriff's conclusions regarding the defects. The sheriff principal had dealt with these matters in paragraph 49 of his judgment, but it was not clear what defects the sheriff principal had accepted as being significant. It was of some interest to note that the respondent's letter of rejection of 30 March 2001 did not mention a number of the defects subsequently founded upon, in particular, the defect in the transmission. However, it had to be accepted that that had to be taken into account nevertheless in applying the test set forth in section 10(2A) of the 1973 Act.

[13] Junior counsel turned next to the third part of the submissions, his exposition of the law applicable to the case. The present form of section 10 of the 1973 Act was a consequence of amendment effected by the Sale and Supply of Goods Act 1994, the purpose of which had been to strengthen the position of consumers. Section 7 of, and Schedule 2 to, the 1994 Act had made amendments to the 1973 Act. The 1994 Act had followed the making of certain recommendations by the Law Commission and the Scottish Law Commission in a Report on the sale and supply of goods presented to Parliament in May 1987 (Law Com. No. 160; Scot. Law Com. No. 104). It was instructive to consider the contents of that Report, in particular paragraphs 3.21-3.24 and 3.42 and 3.43. Nowhere did one see any reference to the "objective purchaser" concept of the sheriff principal.

[14] Junior counsel for the appellants then moved on to the fourth section of his submissions, the appropriate tests to be applied by an appeal court where findings-in-fact had been made by a judge of first instance. It was accepted that the question of whether goods met "the standard that a reasonable person would regard as satisfactory", referred to in section 10(2A) of the 1973 Act, as amended, was essentially a jury question to be answered in the light of the whole circumstances of the particular case, as was recognised by the sheriff principal in paragraph 31 of his judgment. However, that recognition did not detract from the limitations upon the powers of an appeal court, which were circumscribed. In this connection junior counsel relied upon Thomas v Thomas 1947 S.C.(H.L.) 45 per Lord Thankerton at page 54; Millars of Falkirk Ltd v Turpie 1976 S.L.T. (N.) 66, per Lord President Emslie at page 68 and Lord Avonside at page 69; and Thomson v Kvaerner Govan Ltd 2004 S.C. (H.L.) 1, per Lord Hope of Craighead at pages 5-6.

[15] Junior counsel came finally to the fifth part of his submissions. In the first place, it was contended that the sheriff principal had, but should not have, substituted his own views for those of the sheriff. In that respect the present case bore striking similarity to that of Millars of Falkirk Ltd v Turpie, although it was recognised that the issue in that case had been whether the goods concerned, a new motor car, were of "merchantable quality". The source of the trouble in that case had been a minor matter which could readily have been cured with great ease and at little expense. The court had held in that case that the sheriff principal ought not to have taken a different view from the sheriff, who had been entitled to reach the conclusion he did.

[16] The heart of the sheriff principal's decision here was to be found in paragraphs 48 and 49 of his judgment. It was submitted that the reasoning was not particularly clear. In particular, it was not clear whether he was saying that the sheriff had been plainly wrong in taking the view she did. Further, it was not clear that he was saying that she had misdirected herself as regards the law. It was possible that the sheriff principal was saying that the sheriff had taken into account an irrelevant consideration, namely that, in her view, the respondent was not a reasonable person. Reliance was placed on the concluding part of paragraph 48. The sheriff principal did not seem to have reached a definite conclusion about the sheriff's reasoning and, in particular, whether she had adopted the correct test. In paragraph 48 of his judgment, the sheriff principal had said that the sheriff appeared to have attached great significance to the facts that (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 saying that, the sheriff principal had ignored certain features of the sheriff's Note. It was clear from paragraph 344 that section 10(2A) of the 1973 Act was important. What she had subsequently said in paragraph 345 concerning the pursuer amounted in fact to the application of the appropriate tests.

[17] The sheriff principal had drawn attention to the fact that the sheriff had allegedly regarded the defects as minor. It was submitted that that did not in fact reflect her findings. The classification of defects into major and minor defects was not part of the scheme of the legislation. There could be a myriad of minor defects which would render a car of unsatisfactory quality. There could be no objection to the language used by the sheriff to describe the defects if in fact she had applied the correct criterion. That she had done.

[18] In paragraph 30 of the sheriff principal's judgment, he dealt with the significance of the warranty. It was correct to say that the warranty did not detract from the rights of the hirer, but it was nevertheless a relevant circumstance, for the purposes of section 10(2A) of the 1973 Act. The significance of it was a matter for the judge of first instance. In any event the sheriff principal was ambivalent on the matter of the warranty. In this connection junior counsel relied upon Rogers &c v Parish (Scarborough) Ltd [1987] 1 Q.B. 933, at pages 941, 944 and 945. It was accepted that that case had been one involving the issue of whether a vehicle was of "merchantable quality" within the meaning of section 14 of the Sale of Goods Act 1979. The sheriff principal, in paragraph 47 of his judgment, had derived comfort from the observations of Mustill, L.J. at pages 944 and 945 of the case cited. However, what had been said by him there was not consistent with Millars of Falkirk Ltd v Turpie. Accordingly, the law was uncertain as to the extent to which, if at all, a warranty was relevant to an issue such as had arisen in this case. If the view advanced by Mustill, L.J. were correct and applicable in the context of this case, then the sheriff may have misdirected herself in law.

[19] At this stage in his submissions, junior counsel for the appellants turned to the issue of whether the sheriff had been plainly wrong in relation to the defects founded upon in the case. In that connection he considered the significance of the ashtray, the missing navigation disk, the glove box, the paintwork on the roof and the differential problem. The two former items could not be founded upon by the respondent, for the reasons already given. The sheriff dealt with the glove box in paragraph 333 of her Note. It could not be said that her approach there was plainly wrong. Likewise, she dealt with the allegations concerning the paintwork in paragraph 336 of the note. Once again she could not be said to have been plainly wrong in relation to that matter. The fault in the differential mechanism was dealt with in finding-in-fact 19 and paragraph 337 of the sheriff's Note. Nothing had been done about this problem prior to the rejection of the motor vehicle. While the problem would have become a very serious one with continuing use, it did not have an effect on the roadworthiness of the vehicle. It had not been mentioned in the letter of rejection. There had been evidence from a Mr Bathgate that the transmission problem, the source of noise, could have been attended to quite easily and was not a major problem. Looking at all of these matters, it could not be said that the sheriff was plainly wrong in her assessment of the evidence. It could not be said that a reasonable person could not have reached the same view as the sheriff on the whole matter. It followed that the sheriff principal ought not to have interfered with the decision of the sheriff.

[20] In the second place it was submitted that, even if the sheriff principal had been entitled to interfere with the sheriff's judgment, he appeared to have applied the wrong test. In paragraph 50 of his judgment he had referred to the concept of "an objective purchaser", about which a submission had already been made. That concept was not reflected in anything to be found in the relevant legislation. What was in contemplation in the legislation was the test of the reasonable person who looked in on the transaction without being a party to it.

[21] In the third place, junior counsel contended that the sheriff principal had, in any event, made a judgment on a critical issue without taking into account the full content of the evidence. His assessment of the evidence in paragraph 50 of his judgment was unsound. In that paragraph he referred to the level of price attached to the vehicle in question and to the fact that it was sold as "a high quality vehicle". The sheriff principal had misconstrued the evidence in this connection, although it was accepted that, in principle, price and what might be called brand image were relevant to the issue of "satisfactory quality", within the meaning of section 10(2) of the 1973 Act. In particular the sheriff principal had not assessed the evidence regarding the expectations of a reasonable person in relation to an expensive up-market car. In connection with this submission junior counsel referred to the evidence of a number of witnesses, in particular, Angus Robertson at pages 245, 246 and 249 of the printed evidence; Alan Bathgate at pages 352, 355 and 424; Graham Alexander at pages 535, 544 and 556; Robert Woods at pages 693, 694, 732 and 751; Christopher Bradley at pages 840 and 842; Cameron Johnstone at pages 887-889, 1054 and 1055; and Andrew Grant at pages 1098-1099. On all of this material the submission was that the balance of the evidence did not support the sheriff principal's view that an expensive car could reasonably be expected to have no defects. In short, the balance of the evidence showed that a reasonable person would not expect that a new car would be free from defects, even if it was expensive. In particular the sheriff principal had made a decision contrary to the weight of the evidence of Alan Bathgate, Christopher Bradley and Andrew Grant. In conclusion, junior counsel moved the court to recall the interlocutor of the sheriff principal and to restore the judgment of the sheriff.

Submissions of counsel for the respondent
[22] Counsel for the respondent moved the court to adhere to the interlocutor of the sheriff principal and to dismiss the appeal. The question raised was whether the defenders were in material breach of contract as at 30 March 2001, when the respondent treated the contract as having been repudiated. That led to the question of whether the motor vehicle was of "satisfactory quality" within the meaning of section 10(2) of the 1973 Act. That question reduced itself into the issue of whether, at the date of delivery, 9 March 2001, the defenders had hired a motor vehicle of satisfactory quality, thus meeting the standards of the reasonable person, taking into account all of the relevant factors. These issues were focused in the pursuer's pleas-in-law, particularly pleas 10, 11 and 12.

[23] Counsel went on to traverse the cases of Thomas v Thomas and Thomson v Kvaerner Govan Ltd; also Gray v Gray 1968 S.C. 185 per Lord Cameron at page 197 and Stevenson v Rogers 1991 S.C. 164, at page 174. The gravamen of the respondent's submission was that the sheriff had misdirected herself in the application of the law, in relation to the manufacturer's warranty and the fact that the appellants had supplied a motor vehicle which everyone concluded was in need of a warranty repair. It was submitted that the sheriff principal had in fact recognised the limitations of his jurisdiction in a case such as this, in paragraph 32 of his judgment. The respondent's position was that the sheriff principal had correctly concluded that the sheriff had misdirected herself in law by taking into account irrelevant considerations and failing to take into account relevant matters.

[24] An important point was that the appellants had not made clear in their submissions when it was that they were saying that they had implemented their obligations in terms of the 1973 Act, as amended. It was submitted that, unless there was some agreement to the contrary, the test set forth in section 10 of that Act had to be satisfied at the moment of delivery. If that were correct, the warranty would disappear from the case.

[25] Counsel said that he was advancing five propositions:

(1) The test of "satisfactory quality" to be applied in terms of section 10(2) of the 1973 Act was to be applied according to the objective standard of the "reasonable person", referred to in section 10(2A) of that Act, that reasonable person being involved in an hypothetical evaluation of the goods hired under the contract, rendering the subjective standards of the individual hirer irrelevant.

(2) The objective standard of "satisfactory quality" encompassed a need to consider the quality of the goods in relation to several different aspects of characteristics of the goods; when looked at together, it must be possible to say that the standard of the "reasonable person" was attained.

(3) In a consumer contract, subject to sections 10-12 of the 1973 Act, delivery of the goods was performance by the "creditor" in the hire purchase contract and a material breach of contract in performance at the date of the delivery gave rise to a right in the hirer, or debtor, to treat the contract as having been repudiated by the "creditor".

(4) The existence of a manufacturer's warranty in a consumer contract was not a relevant circumstance in terms of section 10(2A) of the 1973 Act in the assessment of the quality of the goods because (i) the term implied by section 10(2) fell to be implemented by the "creditor"; (ii) a warranty was an arrangement with a third party which was not directly enforceable against the "creditor"; and (iii) the assessment of quality was to be made at the date of supply and not at the time of completion of warranty repairs, save as otherwise agreed. In any event, having regard to the terms of clause 6(b) of the hire purchase agreement, it was difficult to see how the warranty could have been of any avail to the respondent until the duration of the period of hire had expired.

(5) In a consumer contract, an opportunity to cure a defect might be afforded to the "creditor", but that would be at the option of the hirer. Its exercise in any particular contract might be a "relevant circumstance" in terms of section 10(2A) in the assessment of quality, if there had been an attempt to cure a defect which had failed.

[26] Counsel went on to discuss the foregoing propositions. As regards the first he contended that section 10(2A) of the 1973 Act had to be construed in context. When it provided for a "reasonable person", that should be assumed to be a reasonable person who had hired the goods in question. The provisions of that subsection only took effect where there was a hire of goods under a hire purchase agreement. That view was confirmed by what was said in Benjamin's Sale of Goods, 6th ed., para.11.049. In that context, the sheriff principal's reference to an "objective purchaser" was quite correct. In any event, the court had to reach its own conclusion about what the "reasonable person" might conclude, although the views of witnesses might be relevant to that decision. The existence of defects in goods was another matter; and they would require to be proved by evidence or agreed. Where a contract had been rescinded on the basis of repudiation, it did not matter that the reasons given for rescission were wrong or insufficient. If facts existed which would have provided a good reason, that would be sufficient. In that connection counsel relied on Universal Cargo Carriers Corporation v Citati [1957] 2 Q.B. 401; thus it did not matter that the transmission problem had not been mentioned in the letter of 30 March 2001. Counsel also referred to Shine v General Guarantee Corporation Ltd [1988] 1 All E.R. 911, at page 915. If the first proposition relied upon was correct, it followed that the sheriff could be shown to have gone wrong. That was evident from the contents of finding-in-fact 24 to the effect 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."

One had to ask why findings in those terms had been made. There could be no other explanation than that the sheriff had applied the wrong test. In addition, there were no findings-in-fact or findings-in-fact and law to the effect of what a reasonable person would have done in the circumstances. The terms of paragraphs 317, 318 and 338 in the sheriff's Note showed that she had gone off the rails. The focus of those paragraphs was the sheriff's assessment that the respondent had behaved unreasonably in a number of different respects. Paragraph 345 was also unsatisfactory. There was no reference to section 10(2B) of the 1973 Act, nor was there any reasoning. In particular the sheriff did not appear to have had in mind matters of "appearance and finish" and "freedom from minor defects", which featured in section 10(2B).

[27] In connection with his proposition (2), counsel submitted that section 10(2A) and 10(2B) had to be read together; the sheriff should have looked at the issue of "satisfactory quality" in the light of the factors set out in section 10(2B). Those matters should have been assessed according to the standard of the "reasonable person", but that had not been done. In this context counsel drew attention to paragraphs 3.28 to 3.43 in the Law Commissions' Report. It was quite clear that the Scottish Law Commission had taken an adverse view of the effect of the decision in Millars of Falkirk Ltd v Turpie. Counsel also relied on Benjamin's Sale of Goods, 6th ed. paragraphs 11.050, 11.052 and 11.062.

[28] Counsel went on to elaborate his proposition (3) by submitting that the test of "satisfactory quality" had to be applied at the date of delivery of the goods hired. That was evident from an examination of the hire purchase contract itself. It was necessary that the goods hired should demonstrate the requisite quality as at the commencement of the hire period. So, if the goods required a warranty repair to achieve the prescribed standard, that meant that the implied term as to quality had been breached. The matter of remedies for breach of a hire purchase agreement as regards Scotland were dealt with in section 12A of the 1973 Act. In paragraph 346 of her Note, the sheriff appeared to have overlooked the provisions of section 12A(2)(a). It provided that, if there was a breach by the creditor of any term, express or implied, as to the quality of the goods, that breach was deemed to be material. The sheriff's reference to section 12A(2)(b) was plainly inaccurate. In connection with these submissions, counsel relied upon Crowther v Shannon Motor Company [1975] 1 All E.R. 139; Lee v York Coach and Marine [1977] R.T.R. 35 at page 42; Rogers v Parish (Scarborough) Ltd at page 943 and J. & H. Ritchie Ltd v Lloyd Ltd 2005 S.C. 155. All of these cases showed that the punctum temporis at which quality had to be assessed was either the point of sale, or where a hire was involved, the point at which the hire commenced. The fact that the sheriff had made finding-in-fact 23, which referred to the rectification of defects under a warranty, indicated that she had misunderstood the law. The sheriff had looked at the question of whether the vehicle could be rendered to be in a satisfactory condition after work had been done on it. That was an erroneous approach.

[29] Counsel next proceeded to elaborate his proposition (4), essentially to the effect that the warranty was not a "relevant circumstance" in terms of section 10(2A) of the 1973 Act. A hirer who had defective goods, who was faced with a non-compliant manufacturer, would have no remedy against the creditor in the hire purchase agreement. In any event, in the present case, there was an insuperable difficulty concerning the enforcement of any warranty, having regard to the terms of clause 6(b) of the hire purchase agreement. Warranties might be issued for a number of commercial reasons, for example, public relations. A consumer might see a warranty as a positive benefit. However, a warranty was irrelevant in relation to quality because its existence did not relate to any aspect of the quality of the goods concerned. The expression "all the other relevant circumstances" in section 10(2A) had to refer to circumstances relevant to the quality and character of those goods. In its nature, a warranty was a collateral guarantee issued by the manufacturer concerning the goods, which might alleviate the fears of a purchaser. The features which figured in section 10(2B) militated against the relevance of any warranty in the present circumstances. On a practical aspect, it was pointed out that the terms of the warranty in the present case had never been seen. The document was not produced. Evidently the sheriff had made assumptions about its contents. It was obvious that the express wording of the warranty would be of importance, if it were to be relied upon. That was another reason why the making of finding-in-fact 23 was unjustified. Further, in terms of clause 9(e) of the hire purchase agreement, the defenders were not bound by any representation made by the appellants. The respondent had no contractual link with the manufacturer of the motor vehicle and could not rely on any representations made by the appellants. The observations of Mustill, L.J. at pages 944 and 955 in Rogers v Parish (Scarborough) Ltd and of Sir Edward Eveleigh at page 947 were pertinent. It appeared that the sheriff had had no regard to those opinions. In connection with the same point, counsel relied upon Chitty on Contracts 29th ed. paragraph 43.155 and Benjamin's Sale of Goods, 6th ed. paragraphs 11.043, 11.050 , 11.057, 14.043 and 14.062. These passages demonstrated that statutory rights ought not to be interpreted by reference to the existence of a warranty. The sheriff had done just that. Finally, counsel relied on Hunter v Wylie, 1993 S.L.T. 1091. The fact that the fault could easily be remedied did not affect its character.

[30] Counsel, noting that Millars of Falkirk Ltd v Turpie had figured prominently in the submissions for the appellants, made a number of points concerning that case. In particular, since its decision, the law had changed; the Sale of Goods Act 1893, as amended, had been in force at the time of the decision. The issue had been one of "merchantable quality". Having regard to the fundamental changes in the law which had occurred since the decision of that case, it was of no assistance here.

[31] Counsel went on to draw attention to tracts of evidence relating to the differential mechanism of the motor vehicle. It was plain from the evidence that there was a defect in a major component of the vehicle. In relation to that defect, the sheriff's conclusion, in paragraph 337 of her Note, that it was easily rectified, demonstrated a misdirection in law. If for no other reason, clause 9(i) of the hire purchase agreement demonstrated the irrelevance of the warranty to the issue of whether the respondent's statutory rights had been breached or not. Counsel also relied upon Jewsons Ltd v Leanne Boykan [2004] B.L.R. 31 at pages 44 and 45.

[32] Counsel proceeded next to elaborate his proposition (5). If the existence of the warranty was relevant, or if the ease of cure of a defect was relevant, or if the willingness of the third party to cure a problem was relevant, then the respondent's attempts to have the vehicle rectified had to be taken into account also as a relevant circumstance. Looking at findings-in-fact 7, 8, 9, 19 and 20, the third party's performance in attempting to deal with the defects left much to be desired. In particular the problem in the transmission system of the vehicle was never rectified while it was on hire to the respondent. In this connection counsel drew attention to paragraphs 28, 117, 118, 119, 161 and 319 of the sheriff's Note. Thus, if endeavours to cure the defects were relevant, the progress made was not satisfactory. There was resistance by the third party to requests for action by them. Counsel also relied upon passages in Benjamin's Sale of Goods: Special Supplement to the 6th ed. at paragraphs 1.007, 1.015, 1.160, 1.200, and 1.204 to 1.206.

[33] Counsel contended that the test was whether a reasonable person would have accepted the vehicle with the defects identified, or rejected it. It was plain from the evidence that the defects justified rejection by a reasonable person, particularly the problem with the transmission system. In this connection, counsel drew attention to the evidence of the witnesses who had dealt with those issues at the proof, namely, Angus Robertson, Alan Bathgate, Graham Alexander, Robert Woods, and Cameron Johnstone. There was no factual basis for the appellants' submissions that a consumer would expect defects such as those which emerged in the present case, nor would the "reasonable person" referred to in section 10(2A) of the 1973 Act. The price of the vehicle and its status as a top-of-the-range vehicle reinforced that point. Thus the sheriff principal, having concluded that the sheriff had erred in law, was justified in reaching the conclusion that he did. The only contrary evidence came from Christopher Bradley, a technical manager for Land Rover and Jaguar cars. That evidence could not properly be the basis of a judgment.

[34] Turning finally to the judgment of the sheriff principal, counsel said that, in paragraph 27, he had correctly stated the issues which arose. In paragraphs 48 and 49 he had indicated where the sheriff had erred in law. The decision of the sheriff principal ought to be affirmed.


Submissions by Senior Counsel for the Appellants

[35] Senior counsel began by adopting the submissions of junior counsel. He explained that he wished first to clarify certain points regarding the appellants' position. Thereafter he intended to reinforce the three principal submissions made by junior counsel in relation to the decision of the sheriff principal.

[36] Proceeding in that way, he made four points regarding the appellants' position. First, it was not said that, once there had been a breach of the implied term regarding quality, the appellants thereafter had an opportunity to remedy the breach; he was not relying on the concept of a "remedial breach of contract". So, if the judgment were made that the vehicle was not of "satisfactory quality", the warranty could not excuse that breach. Secondly, he accepted that the court had to proceed on the basis that quality had to be judged as at the time of delivery; however, that was subject to certain qualifications which would later emerge. Thirdly, the appellants submitted that there was no breach of the statutory implied term, unless the vehicle was not of "satisfactory quality"; but "satisfactory quality" was not to be equated with a complete absence of defects. Fourthly, the appellants argued that not every defect that required rectification would make a complex piece of machinery, such as the motor vehicle here involved, not of "satisfactory quality". It was a question of fact and degree whether a defect, or defects, amounted to a breach of the implied term. It had been argued for the respondent that, if there was a defect that required rectification, the goods were not of "satisfactory quality". Putting the matter in another way, unrepaired defects might be consistent with the existence of "satisfactory quality". An example of a defect which would not impair quality was a poor connection between the battery of the vehicle and the relevant electrical leads. In such a situation, the vehicle would not start; however, the matter could be rectified in a moment.

[37] Senior counsel then turned to elaborate the criticisms already made of the sheriff principal's judgment. He contended that the sheriff principal ought not to have interfered with the decision of the sheriff, substituting his view for hers. The sheriff had not misdirected herself on any material matter. Her decision was a decision on fact, although it had to be accepted that a judge could be responsible for a misdirection in making such a decision. If the issue was a pure question of fact, respect had to be accorded to the decision of the judge of first instance, although there was still an opportunity for review. Misdirection would include the adoption of an unsound legal approach. So, if the sheriff had erred in applying the provisions of section 10 of the 1973 Act, as amended, the sheriff principal and this Court would be justified in interfering.

[38] The decision in the present case involved the consideration of an hypothetical issue raised by the terms of section 10(2A) of the 1973 Act. That section did not define "all the other relevant circumstances". There was no statutory provision against taking the warranty into account in that context; a warranty might be a "relevant circumstance". However, it was accepted that the word "circumstances" had to be relevant to the issue of quality. The list of factors appearing in section 10(2B) was not a checklist; the elements in the list had to be considered and dealt with appropriately in all the circumstances. It was submitted that the sheriff had not ignored these matters. The list referred to did not have the effect of excluding other factors, for example, ease of repair.

[39] The approach of the sheriff principal to the sheriff's decision was to be found principally in paragraphs 48 and 49 of his judgment. In paragraph 48 he listed several alleged misdirections. Counsel for the respondent had identified several more. However, looking at the state of the vehicle, the decision of the sheriff was not perhaps surprising. In an area such as this, the issue depended on a matter of degree. The car worked and was roadworthy. The defects were few and minor. The sheriff had been entitled to come to the view that the defects were of this nature and had not troubled the respondent. It had been argued on his behalf that his view was irrelevant, but it was submitted that it could be taken into account in the context. Perhaps the most problematic defect was the fault in the differential. The sheriff principal had taken the view that this was not minor, as appeared from paragraph 49 of his judgment. In doing that, the sheriff principal was in error. In that connection senior counsel drew attention to findings-in-fact 15 and 19. This fault could be quickly and effectively repaired. It had not affected safety or roadworthiness. At this point in his submissions he sought to reinforce what he was saying by reference to certain parts of the evidence. It was submitted that the sheriff had had the correct test in mind when making her decision, as appeared from paragraphs 344 to 345 of her Note. Those passages were the culmination of a reasoning process set out in paragraph 236.

[40] It had been argued that the sheriff had taken into account allegedly irrelevant factors. The first of these was that the pursuer was not, in her view, a reasonable person. It was submitted that that was a part of the picture to which she was entitled to have regard. She had not confused the pursuer with the "reasonable person" referred to in section 10(2A) of the 1973 Act. Finding-in-fact 24, where she specifically found that the pursuer had acted totally unreasonably, was an unnecessary finding.

[41] It had been suggested that the sheriff's categorisation of the defects as minor indicated a misdirection on her part. However, that was an issue of fact, on which the sheriff principal had substituted his view for hers. In any event, the characterisation of a defect as major or minor was not the touchstone of quality as appeared from section 10 of the 1973 Act. Furthermore, in the crucial findings-in-fact 19 and 23, the sheriff had not used this characterisation. A defect such as the problem with the differential would not necessarily render the vehicle of unsatisfactory quality and it might therefore understandably be regarded as minor. In this connection, reference was made to Millars of Falkirk Ltd v Turpie. The defect under consideration in that case had been very similar to the one here referred to.

[42] The sheriff had been criticised by the sheriff principal for relying upon the existence of the warranty and upon the appellants' willingness to effect repairs. It had been said that she was not entitled to take those factors into account. Senior counsel submitted that she was. The weight given to them was for the sheriff herself to decide. There were four ways in which the warranty could be relevant. First, it had been sold as part of the contract for the acquisition of the vehicle. Senior counsel agreed that clause 6(b) of the hire purchase agreement was qualified, but the sheriff had felt able to make findings-in-fact 5 and 23. She must have relied on oral evidence for that purpose. Secondly, the warranty was relevant because it showed that a purchaser would expect some defects in a complicated vehicle and not perfection. It was relevant to the issue of the ease of remedying defects without cost to the consumer. Thirdly, the warranty was relevant because it led to the repair of any existing defects and the car dealer being willing and able to effect those repairs. Fourthly, the existence of the warranty was relevant in assessing whether any particular defect was sufficiently serious to render the vehicle not of satisfactory quality. As regards the appellants' willingness to repair the vehicle, that was relevant on the basis of the case of Millars of Falkirk Ltd v Turpie.

[43] Senior counsel acknowledged that findings-in-fact 5 and 23 had been made in the absence of evidence regarding the terms of the warranty. The document itself had not been before the court. The appellants had sought to lodge it during the proof, but that had been successfully opposed by the respondent. Oral evidence concerning it had been led without objection. The sheriff had been entitled to make findings on the basis of the evidence available to her. Senior counsel recognised that the decision in Rogers v Parish (Scarborough) Ltd presented a problem for his submissions. He sought to distinguish that case, since the defects there involved clearly made the car not of "merchantable quality". In any event, that case had been decided under the earlier law. It followed from that that the main significance of the case was as to the meaning of "merchantable quality". What Mustill, L.J. had said at page 944 was that a warranty was not able to make a vehicle of "non-merchantable quality" into one of "merchantable quality". That was an issue which arose only at a later stage than had been reached in the present case. At page 945 in the case there was a reference to the warranty being an addition to the buyer's rights, but those rights depended on the circumstances of the bargain. The sheriff here had considered that the warranty was relevant for the reasons explained in paragraph 346 of her Note. It would be of importance to the reasonable person to know that defects would be repaired free of charge, whether they would or would not affect the view taken of the importance of any particular defect. However, it was accepted that a line had to be drawn concerning the scale of defects, despite any warranty. The appellants' position was that useful guidance was to be obtained from Millars of Falkirk Ltd v Turpie. It was useful because there was an exercise of judgment in relation to defects in a motor vehicle, although, of course, the issue was one of "merchantable quality". The existence of the warranty was regarded as a relevant circumstance by the Lord President.

[44] It had been said in criticism of the sheriff that she had failed to take into account the circumstance that the vehicle was a new and luxury car. However, it was contended that she had made findings that showed that she had had that in mind. That appeared from paragraph 236 of her Note. It had also been submitted that the sheriff's reliance on the history of the car subsequent to its hiring to the respondent was reliance on an irrelevant matter. However, that was not so; finding-in-fact 19 was wholly pertinent to the issues in the case. The history showed how little had to be done to render the car of satisfactory quality. Senior counsel accepted that the law required that the vehicle had to be of satisfactory quality on delivery to the hirer. Finding-in-fact 23 reflected the fact that a vehicle with certain defects might yet be of satisfactory quality.

[45] Certain criticisms had been directed at the sheriff's decision in consequence of the appearance of the last two sentences in paragraph 346 of her Note. These sentences did not indicate misdirection in law by the sheriff. Her view was that the car was of "satisfactory quality". Accordingly there was no material breach. The sentences concerned did not show that the sheriff had misconstrued section 12A of the 1973 Act as amended. It was acknowledged that her reference to section 12A(2)(b) was erroneous; the reference should have been to section 12A(2)(a). There had also been criticism of the sheriff's reliance on Millars of Falkirk Ltd v Turpie. That case had already been discussed; there was no question of the sheriff having thought that it had been decided under the present law.

[46] The final criticism made of the sheriff was that she had failed to take account of the appellants' failure to have the transmission problem repaired. The fact was that there was no clear history of the transmission problem having been the subject of complaint by the respondent, which had been overlooked. In that connection, in paragraph 319 of her Note, the sheriff rejected the respondent's evidence at page 198 of the notes of evidence that he had been told that the noise emitted by the transmission was simply "a characteristic of the vehicle". Despite the contents of paragraph 337 of the sheriff's Note there was in fact no evidence that noise from the transmission had been brought to the attention of the appellants at an early stage. Transmission noise was not mentioned in the respondent's letter of rejection of 30 March 2001. There was no indication of material misdirection by the sheriff on these matters; accordingly the sheriff principal had not been entitled to interfere with her decision.

[47] Senior counsel moved on to the second of the criticisms made of the sheriff principal's decision, to the effect that, assuming that he had been entitled to interfere with the sheriff's decision and to consider the issue for himself, he had erred in the application of the appropriate test. This submission was focused on the use by the sheriff principal of the expression "objective purchaser", in paragraph 50 of his judgment. This expression was not just a shorthand method of referring to the test set out in section 10 of the 1973 Act; it appeared to be at the heart of the sheriff principal's reasoning and was wrong. The amendment to the 1973 Act had been designed to eliminate reference to a purchaser or hirer in defining the appropriate test. In that connection reference was made to paragraphs 3.21, 3.25 and 3.26 of the Law Commissions' Report. The sheriff principal's expression denoted some hypothetical purchaser, or, in this case hirer, who did not feature in the legislation. There was nothing in section 10(2A) to show that the intention of Parliament was that the "reasonable person" there employed was to be assumed to be in the position of a buyer or hirer. Section 10(2C) was focused on the position of the actual hirer.

[48] Turning to the third main criticism of the sheriff principal, to the effect that, even if he had applied the correct test, he did so without proper regard to the evidence on the matter, the factors on which he relied were apparently set out in paragraph 50 of his judgment. The sheriff principal did not explain where the material on which he relied in that paragraph had its origin. The only possible source was the evidence of Angus Robertson at pages 245-246 of the notes of evidence. The sheriff had noted that evidence in paragraph 255 of her Note. Alan Bathgate had given some evidence which tended to support the respondent's position at page 352 of the notes of evidence; however, he contemplated that the transmission unit would have been replaced under the warranty, if necessary, as appeared from page 425 of the notes of evidence. That was why new cars had warranties. Looking at the whole evidence including that of Christopher Bradley and of Andrew Grant, the evidence was not overwhelming. On balance, the evidence would support the sheriff's decision. In conclusion, senior counsel renewed the motion that the interlocutor of the sheriff principal should be recalled and that of the sheriff restored. Alternatively, the interlocutor of the sheriff principal should be recalled and decree of absolvitor pronounced.

Submissions in reply by counsel for the respondent

[49] Counsel for the respondent stood by the submissions which he had earlier made. In reply to those of senior counsel for the appellants, he advanced three propositions: (1) if a car, as delivered, needed to have its condition changed to make it of "satisfactory quality", then it had been delivered in breach of contract, irrespective of the degree of failure; (2) section 12A of the 1973 Act provided that such a breach, irrespective of the degree of failure, would be deemed material; and (3) the existence of a warranty and the ease with which repairs might be effected were irrelevant to the assessment of whether goods which had been delivered were of "satisfactory quality" because (i) they were both means whereby the condition of the goods might be changed from that at delivery; and (ii) warranty defects were listed as factors or aspects of quality which might be taken into account in the assessment exercise required under section 10(2B) of the 1973 Act.

[50] Counsel accepted that some minor defects would be consistent with goods being of "satisfactory quality". Indeed, a vehicle could be of satisfactory quality with some minor defects which fell to be cured at the expense of the purchaser. In other words, the "reasonable person" of section 10(2A) would ignore a warranty in considering whether goods measured up to the requisite standard. The words "all the other relevant circumstances" in section 10(2A) could never include a warranty. Senior counsel for the appellants had figured a situation where a car had been bought of which the leads to the battery were not properly attached at the time of delivery. No doubt the car would not start. However, it would be a matter of a few moments to tighten the requisite bolts and to make a proper connection. That was an example of a defect where a "reasonable person" would conclude that he had been delivered a car which was of "satisfactory quality". The misdirection of the sheriff became clear when, on a natural reading, it emerged that it was her view that, provided that the car was put right in terms of a warranty, the purchaser or hirer would have had a car of "satisfactory quality". Findings-in-fact 23 and 24 were relevant. All that proceeded upon the basis that the supplier was entitled to an opportunity to cure such defects as existed. That approach was particularly evident from the terms of paragraphs 337, 338, 345 and 346 of the sheriff's Note. In short, the sheriff had assessed the problem as at the wrong time and on the wrong basis. In any event, the warranty in being was not part of a contract between the respondent and the appellants; there was no such contract. It was a part of a contract between the appellants and the defenders. The contents of paragraphs 342 and 343 of the sheriff's Note provided further evidence of misdirection. On any view, because the sheriff's judgment was defective, it should not be restored.

[51] It was quite clear that defects found to have existed in this case went beyond those which were consistent with the existence of "satisfactory quality". The tenor of the sheriff's decision was to recognise the existence of a remediable breach of contract, a concept eschewed by senior counsel for the appellants. The fact that a fair‑minded buyer might offer an opportunity to a supplier of goods to rectify defects in goods did not mean that the goods were originally of "satisfactory quality". It was necessary to look at all of the relevant circumstances in judging quality; that included the price and the "state and condition" of the goods in terms of section 10(2B) of the 1973 Act. The sheriff had failed to make any proper assessment of these matters in the light of the law. In this context the evidence of Angus Robertson was important. He contemplated that a new car would have a "clean sheet" report. A further point could be made about the approach of the sheriff, as reflected in paragraph 345 of her Note. It appeared that she attributed no importance to the appearance and finish of the vehicle. She seemed to have considered functionality only.

[52] The nature of the issue with which the sheriff had been faced was not a pure question of fact; it was a question of mixed fact and law. The consequence of that was that any appeal court had to consider a legal conclusion based upon primary facts. While the primary facts might be entitled to respect when found by a judge of first instance, the final decision was not, since the appeal court was in as good a position as the judge of first instance to make a decision on the application of the law to those facts. In these circumstances such cases as Thomas v Thomas and Thomson v Kvaerner Govan Ltd had no application here. If an error of law was evident in the sheriff's decision, that had to be the end of her determination.

[53] Senior counsel for the appellants had dwelt upon the scope of the expression "all the other relevant circumstances" used in section 10(2A) of the 1973 Act. While it was acknowledged that there was no definition of such circumstances, that did not mean that any circumstance was relevant. Only circumstances relevant to quality would be relevant.

[54] In conclusion, counsel summarised the submissions already made. His motion was that the appeal should be refused which failing, on the view that the court might conclude that the sheriff principal's judgment was in some way defective, his decision should be upheld for this court's own reasons.

The Decision

[55] In our opinion, three main questions arise for our consideration in this appeal. These are: (1) whether the sheriff principal was entitled to interfere with the decision of the sheriff; (2) upon the assumption that he was entitled to interfere with that decision, whether he applied the correct legal test in formulating his own decision; and (3) whether the decision of the sheriff principal was warranted in the light of the acceptable evidence. It is these questions that we intend now to address.

[56] The first of the main questions we have posed, in turn, raises two further questions, first, what were the grounds of the sheriff principal's interference with the judgment of the sheriff; and, second, whether the sheriff principal was correct in his identification of grounds for interference? Thus it becomes necessary, in the first place, to examine the sheriff principal's reasons for the course which he took. We consider that these are to be found in paragraphs 48-50 of his opinion. There he said this:

"[48] 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 £51,500 was of the standard that a reasonable person would have regarded as satisfactory for such a vehicle, taking all of all the relevant circumstances. (sic)

[49] 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 the opinion that the sheriff misdirected herself and that the matter is at large for this court.

[50] 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. ...".

[57] Looking at these reasons given by the sheriff principal for his decision to recall the interlocutor of the sheriff, it is plain to us that what the sheriff principal was considering was whether, in the sheriff's decision, which was undoubtedly a decision on a question of mixed fact and law, involving the application of sections 10 and12 of the 1973 Act to the primary facts, an error of law could be discerned. He concluded that it could and that it was evident that the sheriff had misdirected herself in law in reaching the conclusion which she did.

[58] During the course of the debate before us, some reliance appeared to be placed by the appellants on the decisions in Thomas v Thomas and Thomson v Kvaerner Govan Ltd. In our view, the well-known dicta in these cases, concerning the limitations imposed upon an appellate court when reviewing a decision on fact of a judge of first instance, have no direct bearing upon the issues in this case. What the sheriff principal did was to examine critically the sheriff's decision on a question of mixed fact and law and to conclude that the sheriff had misdirected herself in law. He did not interfere with the sheriff's findings of primary fact. In our opinion, nothing said in those cases constitutes an obstacle to his reaching such a decision.

[59] The next issue that we have to consider is whether the sheriff principal was correct in deciding that the sheriff had misdirected herself in law. Resolution of that issue involves first, the identification of the law which had to be applied in the circumstances of this case and second, consideration of whether the sheriff correctly applied that law. To these matters we now turn. As the sheriff principal observed in paragraph 7 of his judgment,

"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."

[60] The terms of section 10 of that Act, are, inter alia, as follows:

"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 the 1973 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, ... shall be deemed to be a material breach.

(3) In subsection (2) above 'consumer contract' has the same meaning as in section 25(1) of the Unfair Contract Terms Act 1977; and for the purposes of that subsection the onus of proving that a hire-purchase agreement is not to be regarded as a consumer contract shall lie on the creditor. ...".

[61] It was acknowledged by all parties to this appeal that, neither in the foregoing statutory provisions nor elsewhere, there was any recognition in law of the concept of what might be described as a remediable breach of contract. It appears to us to follow from that, and more particularly from the statutory provisions themselves, that the issue of whether the implied term created by section 10(2) of the 1973 Act has or has not been satisfied in any particular case must be capable of determination upon the delivery of the goods hired to the person hiring them. This feature of the law, in our opinion, has importance in the context of this case, for reasons which we shall explain. It was also acknowledged during the course of the debate before us that the concept of "satisfactory quality" utilised in section 10(2) was not to be understood as implying perfection in the goods concerned. With that view we would agree.

[62] A controversial issue, which figured prominently in the debate, was that of the significance of the warranty which was the subject of finding-in-fact 5 by the sheriff. The controversy related to whether the warranty was one of "the other relevant circumstances" referred to in section 10(2A) of the 1973 Act. The position of the appellants was that it should be so regarded, there being no reason why it should not be seen as relevant. The conclusion which we have reached is that the warranty cannot properly be seen as one of the "relevant circumstances". We have two reasons for reaching that conclusion. First, section 10(2A) of the 1973 Act is concerned with elaborating the meaning of the words "satisfactory quality", which appear in section 10(2). In section 10(2A) the concept of the hypothetical "reasonable person" is introduced as the origin of the standard of quality to be attained as "satisfactory quality". In the application of "the standard that a reasonable person would regard as satisfactory" there is to be taken into account "any description of the goods, the price (if relevant) and all the other relevant circumstances". 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. After all, sections 10(2) and (2A) are concerned with that very matter. In our view, a warranty cannot be seen as a matter bearing upon the quality of the goods supplied. In its nature, a warranty can only be seen as an undertaking by the manufacturer of the goods concerned to remedy defects in the goods which emerge and are within the scope of the warranty and that within a specified period of time. Thus the warranty must be seen as a means whereby the defects in existence at the time of delivery, or emerging thereafter within the specified period, may later be remedied by the manufacturer at no cost to the customer. The fact that such defects may be so remedied 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). In its nature, a warranty is concerned with the provision of remedial action within a limited period after delivery. In short, it seems to us that, because the issue of whether the quality of the goods is satisfactory requires to be judged as at the time of delivery, the warranty can have no bearing upon that matter. The contention that the warranty may be a "relevant circumstance" appears to us to be tantamount to a clandestine introduction of the concept of remedial breach of contract into the legal structure of the contract. Any such concept was however eschewed by counsel for the appellants.

[63] We find support for our conclusion in Rogers v Parish (Scarborough) Ltd. It must be acknowledged immediately that the issue in that case and the legislation under consideration there differed from the issue and legislation with which the present case is concerned, in that the issue was one of "merchantable quality" in terms of the Sale of Goods Act 1979, section 14(2) and (6). Coincidentally the case was concerned with certain defects in a Range Rover motor vehicle, which displayed defects in the engine, gearbox, bodywork and oil seals at vital junctions. The vehicle was rejected by the purchasers. The judge of first instance found that the vehicle had properly been described as new and that, since none of the defects had rendered the vehicle unroadworthy, unusable or unfit for the normal purposes for which a Range Rover was used, it had been of merchantable quality and reasonably fit for its purpose when delivered. Accordingly the plaintiffs' claim was dismissed. The plaintiffs appealed successfully. The Court of Appeal held that goods which were defective on delivery were not to be taken to be of merchantable quality for the purpose of section 14 of the Act of 1979 by reason only of the fact that the defects had not destroyed the workable character of the goods; it was not relevant to whether the goods had been of merchantable quality on delivery that the defects had subsequently been repaired; and that in respect of any passenger vehicle the purpose for which goods of that kind were commonly bought would include, not only the purchaser's purpose in driving it, but that of doing so with the degree of comfort, ease of handling, reliability and pride in its appearance appropriate for the market at which the vehicle was aimed. The issue of the significance of a warranty in that context was the subject of argument. The argument was that any car which did not satisfy basic requirements was not merchantable, but a defective new car which satisfied those requirements would be of merchantable quality, if there was a warranty that any fault would be repaired immediately without cost to the buyer. The manufacturer's warranty fell to be considered as a relevant circumstance for the purpose of the statutory warranty under section 14(2) and (6). At pages 944 to 945 Mustill, L.J. made certain observations on the relevance of the warranty, saying this:

"It is however also necessary to deal with an argument based on the fact that the vehicle was sold with the benefit of a manufacturer's warranty, a fact which was relied upon to show that the buyer was required to take in his stride to a certain degree at least the type of defects which would otherwise have amounted to a breach of contract. Speaking for myself, I am far from satisfied that this argument is open to the defendants at all, having regard to the express disclaimer in the contract of sale, and also in the warranty, of any intention to vary the buyer's rights at common law, and also having regard to section 6 of the Unfair Contract Terms Act 1977. Nor am I convinced that this objection can satisfactorily be answered by saying that the argument founded on the warranty operates not to deprive the buyer of his common law rights but rather as a relevant circumstance for the purposes of section 14(6) operating simply to diminish the reasonable expectation of the buyer.

Moreover, I am not clear about the logic underlying the argument. Assume that on an accurate balancing of all the relevant circumstances it could be said that the buyer of a new Range Rover could reasonably expect it to have certain qualities and that accordingly he has a contractual right to receive a vehicle possessing those qualities and to recover damages, including damages for any consequential loss, if it does not possess them. Can it really be right to say that the reasonable buyer would expect less of his new Range Rover with a warranty than without one? Surely the warranty is an addition to the buyer's rights, not a subtraction from them, and, it may be noted, only a circumscribed addition since it lasts for a limited period and does not compensate the buyer for consequential loss and inconvenience.

If the defendants are right, a buyer would be well advised to leave his guarantee behind in the showroom. This cannot be what the manufacturers and dealers intend or what their customers reasonably understand."

A similar view was shortly stated by Sir Edward Eveleigh at page 947 where he observed: "The fact that the plaintiff was entitled to have remedial work done under the warranty does not make it fit for its purpose at the time of delivery." While it is plain that the implied condition which was the subject of consideration in that case was different from that involved here, nevertheless, in the former legislation the expression "all the other relevant circumstances" was used; thus the Court of Appeal was concerned with whether a manufacturer's warranty was such a circumstance and concluded that it was not.

[64] In the context of this part of our consideration, it is also appropriate to draw attention to certain express conditions of the hire purchase agreement involved in this case. Clause 6(b) of that agreement dealt with the matter of a manufacturer's warranty in this way:

"If you have complied with all the requirements of this Agreement, we shall, if so requested by you and so far as it is reasonably practicable for us to do so, transfer to you the benefit of any warranty given by the manufacturer or supplier of the vehicle which is capable of transfer by us. If you make such a request, you shall indemnify us against all costs, claims, damages, expenses and liabilities incurred by us in connection with the transfer and enforcement of any such warranty."

[65] It appears to us that the foregoing clause makes it clear that, in the context of the present transaction, it could not be assumed that the benefit of the manufacturer's warranty was, in fact, ever available to the respondent. Although the warranty document was not before to the court, we proceed on the basis that it was issued by the manufacturer to the buyer of the vehicle, that is to say, the defenders. Plainly the stage was never reached in this transaction at which, under clause 6(b), the benefit of it might be contractually available to the respondent, since he never complied with "all the requirements of this Agreement", in the sense of performing all the hirer's obligations under it by making payment of all the instalments due.

[66] Further, Clause 9(i) of the agreement provided: "Nothing in this Agreement shall in any way affect your statutory rights." While we did not have the benefit of detailed argument on the subject of this contractual provision, on the face of it, it is recognised as a matter of contract that the possible availability of the manufacturer's warranty to the hirer of the goods would not affect and, in particular, diminish the hirer's statutory rights.

[67] The appellants relied on Millars of Falkirk Ltd v Turpie, although recognising that that case had been decided under different legislation, namely the Sale of Goods Act 1893, as amended by the Supply of Goods (Implied Terms) Act 1973. Once again the issue before the court there was one of merchantable quality in relation to a new motor vehicle. The problem with the car was principally an oil leakage from the power steering unit, which the sheriff held to be a comparatively minor matter which could readily have been cured with very great ease at very little cost. The sheriff held that the car was of merchantable quality. There followed an appeal to the sheriff principal who adhered to the interlocutor of the sheriff. Thereafter there was an appeal to the Court of Session. The Lord President (Emslie) with whom the other judges concurred held that the sheriff had been entitled to reach the conclusion that he did, having in mind that the defect was a minor one which could readily and very easily have been cured at very small cost. He also noted that the car had been sold with a manufacturer's repair warranty, although that was not produced or examined at the proof.

[68] Having regard to the fact that that case was decided under different legislation and that the principal issue was whether or not the car was of merchantable quality, we do not find it of any assistance to us. Furthermore, in particular, we do not consider that it is of any assistance in relation to the issue of the relevance or otherwise of a manufacturer's warranty, since the significance of that was not the subject of any argument.

[69] We now turn to consider whether the sheriff principal was correct in holding that the decision of the sheriff proceeded upon the basis of a misdirection in law. In this connection, first, we note that, in paragraph 344 of her Note, the sheriff refers to section 10(2A) of the 1973 Act, as amended. However, in her reasoning we see no reference to section 10(2B) of that Act. We regard this as indicative of a failure on her part to consider the impact of that sub-section on the circumstances of this case. Since that sub-section refers to "(b) appearance and finish" and "(c) freedom from minor defects", that provision was of particular significance in the circumstances here. At a number of points in the sheriff's Note, she appears to regard minor defects and the defect in the paintwork of the vehicle as of no real significance. Her omission to take into account the provisions of section 10(2B) appear to us to amount to a misdirection in law in the circumstances of this case.

[70] Secondly, what is said by the sheriff in paragraph 346 of her Note appears to us also to demonstrate misdirection in relation to a matter of law. She there observed:

"It also appeared to me that counsel for the pursuer in making his submissions failed to have regard to the terms of the 1973 Act which referred to section 12A(2)(b) which entitles the person to reject any goods 'if the breach is material'. I can see no material breach."

The sheriff's reference to section 12A(2)(b) is plainly erroneous, since that provision relates to goods which are or are to be hired by description. That did not, of course, occur in this instance. However, even if the sheriff's reference is to be taken to be a reference to section 12A(2)(a), nevertheless she does not appear to appreciate the effect of that provision, the effect of which, of course, is that, where a hire purchase agreement is a consumer contract then, for the purposes of sub-section (1), which gives the right, if the breach is material to reject any goods delivered, a breach by the creditor of any term as to the quality of the goods shall be deemed to be a material breach. In paragraph 346, the sheriff does not appear to take into account the provisions of section 12A(2) at all.

[71] Thirdly, it is our conclusion that the sheriff has misdirected herself in relation to the relevance of the warranty, with which we have already dealt. She deals with the warranty in findings-in-fact 5 and 23. The latter finding is of particular significance, in that the sheriff stresses that any defects were easy to rectify and would be covered by the Land Rover warranty. Her heavy reliance on the warranty as, in her view, a significant factor in the case can be seen from paragraphs 333, dealing with the misaligned glove box, 337, dealing with the problem in the differential, 338, which dealt with replacement of part of the transmission unit following the rejection of the vehicle by the respondent, 345 and 346. We regard paragraph 345 as of particular significance in this respect, where the sheriff observes: "I also consider that a particularly relevant circumstance was that there was a three year warranty for the vehicle." It appears to us that this particular error underlies the whole basis of the sheriff's decision.

[72] Fourthly, we note that in several parts of her findings-in-fact and Note the sheriff lays stress upon the view that she had formed that the respondent was an unreasonable person. In finding-in-fact 24 the sheriff 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. ...".

In our view, there could be no purpose in making a finding such as that unless the sheriff considered that it was a relevant component in her decision. In paragraph 345 of her Note she reverts to her assessment of the respondent as an unreasonable person.

[73] In our opinion, the reasonableness or unreasonableness of a party to a transaction such as this cannot be of relevance to the resolution of the legal issues which arise, although it might be relevant to an evaluation of the evidence given by such a person. Section 10(2A) of the 1973 Act provides for the application of the standard of a "reasonable person" to the issue of whether the quality of the goods is satisfactory or not. These statutory provisions are not concerned with the reasonableness or unreasonableness of any party to the transaction. In these circumstances we conclude that, in this respect also, the sheriff has misdirected herself.

[74] Finally, we consider that the sheriff has misdirected herself in relation to the contractual position relating to the manufacturer's warranty, even upon the assumption, which we reject, that it is a relevant circumstance. In finding-in-fact 5 the sheriff finds that:

"The vehicle was subject to a three year warranty from Land Rover which would enable manufacturing and mechanical defects in the vehicle to be rectified free of charge to the pursuer during that period".

In that finding the sheriff says nothing about the entitlement to demand performance of the undertaking in the warranty of the manufacturer. We are prepared to assume, although we have not seen it, that the warranty was one given by the manufacturer to the person who became owner of the motor vehicle. At the material time, the owners of the vehicle were the defenders, not the respondent. Accordingly, the respondent would have had no entitlement to enforce the manufacturer's warranty. Yet it is implicit in the sheriff's reasoning that the benefit of the warranty was available to the respondent. That position flies in the face of the terms of Clause 6(b) of the contract of hire purchase quoted above. We would observe that it is perhaps not surprising that the sheriff misapprehended the contractual position relating to the warranty in this case, since the document was never before her.

[75] In all of these circumstances, we consider that the sheriff principal was correct in concluding that the sheriff had misdirected herself in law. What we have said regarding that goes beyond the conclusions of the sheriff principal, but the existence of any material misdirection in law rendered the case at large before the sheriff principal for his decision.

[76] We turn next to the second main issue for consideration, the question of whether the sheriff principal applied the wrong test in reaching his decision on the case. The appellants, in contending that he had done so, focused almost exclusively upon two words in paragraph 50 of his judgment. In that paragraph the sheriff principal stated, inter alia:

"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 words said to demonstrate the application of a wrong test were the words "objective purchaser". We would immediately acknowledge that these words do not appear anywhere in the statutory provisions relevant to the case, which we have quoted. However, we consider that they are no more than what might be referred to as judicial shorthand for the "reasonable person" whose standards are enshrined in section 10(2A) of the 1973 Act. The sheriff principal's choice of language is perhaps understandable when one recognises that that provision requires that a process of consideration of the quality of the goods should be undertaken, by the standards of such a person, in the context of a transaction. In any event, consideration of other passages in the sheriff principal's judgment, which we have quoted, makes it quite clear to us that he was under no misapprehension as to the test which had to be applied. In paragraph 7 of his judgment he quoted at length the relevant statutory provisions. In paragraph 27, the sheriff principal summarises the statutory provisions, quite correctly in our view. Finally, in the opening sentences of paragraph 50 he makes it quite clear that he is applying the statutory test. In these circumstances we reject the appellants' contention in this regard.

[77] The third and final issue for our determination is whether the decision which the sheriff principal reached was warranted in the light of the evidence. Before coming to consider the evidence available to the sheriff principal, it is appropriate at this stage to consider a point raised on behalf of the appellants relating to the terms of the letter of rejection by the respondent of the motor vehicle, dated 30 March 2001. That letter is reproduced at page 120 of the supplementary appendix. It is clear that the respondent did not raise in that letter any complaint regarding certain features of the vehicle in question which subsequently assumed importance. In particular, there is no mention of the transmission problem. In our opinion, that circumstance is of no significance. In Universal Cargo Carriers Corporation v Citati [1957] 2 Q.B. 401, at page 443, Devlin J., in the context of a case which was concerned with anticipatory breach of contract said:

"In that event can the rescinder, having rescinded for the wrong reason, perhaps because he misinterpreted the conduct of the other side, justify his action by relying on facts which come to his knowledge thereafter and with the aid of which he can prove inability? It is now well settled that a rescission or repudiation, if given for a wrong reason or for no reason at all, can be supported if there are at the time facts in existence which would have provided a good reason."

With that opinion we would respectfully agree. Thus, it seems to us that the absence of a reference in the letter of 30 March 2001 to some particular defect upon which the respondent now seeks to found possesses no particular significance, other than, perhaps, affording to the appellants the opportunity to comment on the absence of such reference in the context of any consideration of the respondent's evidence. So, in our view, the question arising is whether, on the evidence available to him, the sheriff principal was entitled to take the view he did regardless of the contents of the letter.

[78] In this situation, it is pertinent to consider what the sheriff principal said in his judgment regarding the basis of his decision. In paragraph 33 he states that:

"The sheriff found that the vehicle as delivered had a number of defects. These are referred to in findings of fact 6 (scratch on the lid of the ashtray and missing navigation disk), 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 paintwork 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 paragraph 332 to 343 of her Note."

In the succeeding paragraphs of his judgment the sheriff principal comments on these various defects. As regards the scratch on the ashtray and the missing navigation disk, he observes that the respondents might be assumed to have taken delivery on the basis that they would be rectified within a reasonable time. He then states:

"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."

[79] As regards the vibration caused by incorrect balancing of the wheels and steering pull, the sheriff principal, in paragraphs 36 and 37 acknowledges that the sheriff had expressly found that the steering alignment had been properly set on rectification by the appellants. The wheels had been rebalanced in March 2001, which at least for a period of time cured the problem of vibration.

[80] The sheriff principal, in paragraph 38 of his judgment, notes that transmission noise was detected following an inspection of the vehicle by T & T Technical Services, who were instructed by the defenders and produced a report, dated 11 May 2001 in consequence. The sheriff found, in finding-in-fact 19 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 front differential unit in under two hours. ..."

The sheriff principal goes on to say that the sheriff recorded in her Note that the respondent 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.

[81] As regards the misalignment of the glove box, the sheriff principal records, in paragraph 40, that the sheriff accepted that it had been agreed that this was a defect, although the respondent had not complained about it at the outset, or in his letter of 30 March 2001. Similarly, he records that the sheriff found that part of the paintwork on the roof of the vehicle was poorly finished (finding-in-fact 18). The sheriff had dismissed this defect in paragraph 336 of her Note as "a small defect and not material in considering the durability of the vehicle".

[82] As regards the pedal positions, dealt with by the sheriff principal in paragraph 41 of his opinion, he reaches the conclusion that the issue was one of some difficulty. However he reaches the conclusion that, on this aspect of the appeal, it was for the sheriff to reach a view on the competing submissions. He could see no basis on which her decision in these respects could be said to be plainly wrong. The sheriff principal's conclusion relating to the defects appears in paragraph 49 of his judgment where he states:

"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."

In paragraph 50 of his judgment the sheriff principal states:

"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 reacquired 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."

In these circumstances the sheriff principal concluded that the pursuer had been entitled to reject the vehicle. As we see it, the sheriff principal's conclusion was based upon findings of fact as to the state of the vehicle made by the sheriff. Having considered the basis of the sheriff principal's reasoning, we are of the opinion that he was quite entitled to reach the conclusion that he did. We are therefore not persuaded that we should interfere with his judgment. Accordingly, in all the circumstances, we shall adhere to the interlocutor of the sheriff principal and refuse the appeal.