Respondent purchasing boilers from appellant for building conversion — Installation of boilers resulting in low standard assessment procedure ratings — Respondent unable to sell property — Whether appellant breaching contract under Sale of Goods Act 1979 — Appeal allowed
The respondent (Thomas Kelly) converted a property into a number of self-contained flats. He installed an electric boiler in each flat to service the hot water and the central heating. He selected the make and model of the boilers on the advice of the appellant’s representative, and confirmed with him that the boilers complied with “all relevant regulations and legislation”.
After the conversions had been completed, the respondent discovered that standard assessment procedure (SAP) rating calculations, the government’s recommended method for home energy rating, were required. These applied to buildings that had been converted into flats, and were to be calculated for the purposes of building regulation approval under the Building Regulations (Amendment) Regulations 1994. Since the calculations could be used by prospective purchasers, or those with an interest in the purchase (such as a mortgage company), to assess the energy efficiency of the property, a low rating could adversely affect the value of a property. Upon calculation of the figures, it was discovered that the SAP ratings were dramatically low. The respondent claimed that, as a result, he could not sell the flats and was forced to dispose of the entire project at a loss.
The appellant commenced proceedings on the ground that the respondent had failed to pay in full for materials, including the boilers. The respondent counterclaimed for damages for breach of the contract to supply the boilers. He maintained that they were not of satisfactory quality, nor did they fit for the purpose for which they had been purchased.
At first instance, the judge found that the appellant had breached the terms implied by section 14(2) and (3) of the Sale of Goods Act 1979 as amended. He held that, although the boilers were not intrinsically faulty, they were not adequate for the purpose for which they had been supplied, given that the respondent had made this purpose clear to the appellant. The appellant appealed.
Held: The appeal was allowed.
The functions of section 14(2) and (3) were different: subsection (2) dealt with goods that were intrinsically unsatisfactory, taking into account the predictable use of the goods, while subsection (3) imposed a specific obligation that the goods should be satisfactory, given the particular circumstances of each case. In the instant case, both subsections overlapped to some extent because the unsatisfactory element concerned the effect of the boilers upon the SAP ratings, which was dependent upon the particular characteristics of both the flats and the boilers.
Insufficient attention had been paid to the possibility that the buyer might have only partially relied upon the seller’s skill and judgment, as set out in Cammell Laird & Co v Manganese Bronze & Brass Co Ltd [1934] AC 402. The respondent had not discussed with the appellant the particular characteristics of the flats he was converting, nor had he relied upon the appellant’s skill and judgment in deciding whether the specific boilers were suitable for installation in his flats. He had relied only upon the appellant’s recommendations as to the intrinsic qualities of the boilers. As a developer, the effect of the boilers upon the flats’ SAP ratings lay within his own field of expertise, and that of his technical advisors, such as his plumber, but not his supplier.
Anthony de Garr Robinson (instructed by the Wilkes Partnership, of Birmingham) appeared for the appellant; Bryan McGuire (instructed by Bell Lax Litigation, of Sutton Coldfield) appeared for the respondent.
Vivienne Lane, barrister
