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Sale of a classic car: compliance with description: Brewer v. Mann.

In June 2007 Mrs Brewer acquired a vintage Bentley car under a hire purchase agreement from Fortis Lease UK Limited ('Fortis'). Fortis had purchased the Bentley from Stanley Mann Racing Limited ('SMRL'), a company wholly owned by Mr Mann (together 'the dealer'). Mr Mann had advertised the car as a '1930 Bentley Speed Six'. In an invoice to Fortis from SMRL on the basis of which Mrs Brewer paid a deposit directly to SMRL on behalf of Fortis the car was described as a 'Bentley motor car'. In the hire purchase contract between Fortis and Mrs Brewer the car was described as a '1930 Bentley Speed Six car'. A year after her purchase Mrs Brewer stopped paying the hire instalments, consulted an auction house with a view to selling the car, and received from the auction house certain erroneous information about the car and its value. Meanwhile Fortis terminated its contract with Mrs Brewer for non-payment. The car was repossessed by Fortis and SMRL made an offer to repurchase the car for the price at which SMRL had sold it to Fortis. That offer was accepted by Fortis and the car was subsequently resold by the dealer at a higher price than had been paid to Fortis.

Mrs Brewer brought a claim against Mr Mann alleging breach of collateral warranty. She asserted an oral warranty had been given by Mr Mann at a meeting with her in May 2007 that the Bentley was a genuine 1930 Speed Six containing an authentic Speed Six engine. She also brought a claim in damages against Fortis for breach of contract alleging the car did not comply with its description. On the second day of the trial the trial judge had allowed Mrs Brewer's request for the joinder of SMRL to the proceedings upon which Fortis applied to bring a third party claim against SMRL. Mrs Brewer then claimed the deposit and instalments paid by her under the hire purchase contract from both the dealer and Fortis. Fortis counterclaimed against Mrs Brewer a sum comprising inter alia the expenses of recovery of the car and storage.

Mr Mann did not dispute that he described the car to Mrs Brewer as a 1930 Bentley Speed Six but submitted it was a statement of opinion not a contractual warranty which had been given on behalf of his company and not by him personally. He disputed that he had warranted that the car's engine was a 'Speed Six engine'. He accepted only that he had stated that the engine had been prepared to Speed Six specification. Fortis submitted that there was no 'bailment by description' within the meaning of section 9 of the Supply of Goods (Implied Terms) Act 1973 arising under its hire purchase agreement. Both the dealer and Fortis submitted that the evidence of expert witnesses was that the car complied with any warranty that it was a '1930 Bentley Speed Six'.

The trial judge decided in favour of Mrs Brewer, upholding her claim against Mr Mann and SMRL as well as Fortis, and dismissed Fortis's counterclaim. The judge found that Mr Mann was liable because he had presented himself to Mrs Brewer as an individual dealer and not as the representative of a limited company, or alternatively, because he was liable as the agent of an undisclosed principal. The judge found SMRL liable because it accepted that it would be liable to Mrs Brewer if and to the extent that any breach of warranty was established. The judge found Mrs Brewer had retained the right to reject the car when Fortis terminated their contract, even if her claim was not based on such a right but was limited to damages for breach of the statutory implied term. He held that the moneys paid out by Mrs Brewer under her contract with Fortis were recoverable as reliance damages.

The trial judge stated that the car could not be described as a '1930 Bentley Speed Six Car' because the 1930 Speed Six engine had been substituted with a reconstructed 1927 standard 6 1/2-litre engine; changes made to the 1927 engine were not documented, the contents of the Speed Six specification had not been identified and no formal certification of the engine's specification had ever been undertaken; the performance parts of the Bentley Driving Club 1930 Speed Six specification were not capable of being satisfied by the engine that was in the car; the chassis was different from, and constructed to a different specification from, the original chassis; there was no continuous history available for the car or its chassis, its Standard engine and 1930 chassis or the racing characteristics and Speed Six performance capabilities that were said to have been provided. Expert evidence on the question of description was held to be irrelevant.

The trial judge delivered five judgments which culminated in an approved and handed down judgment being replaced or substantially amended by another judgment, albeit before perfection of the judge's final order and without affecting it.

Both the dealer and Fortis appealed. The dealer appealed on the basis that the trial judge fundamentally erred in his dealing with the credibility of Mrs Brewer and Mr Mann, misunderstood or misinterpreted the evidence of the experts; and created issues where there were none. Accordingly, the judge had lost his objectivity and had not afforded a fair trial. In particular Mr Mann submitted:

* the judge had overlooked the expert evidence that the car could be described as a Speed Six car even though it did not have a Speed Six engine, and that it could be described as a Speed Six on the basis of its chassis number;

* there was no pleaded issue that the engine did not comply either physically or in performance terms with Speed Six specification;

* if Mr Mann had said at the meeting in May 2007 that the engine had been prepared to Speed Six specification then there could be no complaint about what he had said about either car or engine;

* the judge was wrong to say the experts could not give admissible expert opinion on matters of description because even if not bound by such opinion, he was required to take it into account and give it appropriate weight;

* the judge was wrong to think that description was simply a matter of law and fact, since descriptions of items of connoisseurship were essentially matters of opinion rather than fact, which had to be judged by the standard of honesty, not accuracy;

* unless historic documentation for the car had been promised, its absence could not undermine the description of the car;

* the judge had failed to ask what was said at the May 2007 meeting and whether it was an adequate description, and instead had asked what was a perfect description of the car, wrongly treating the contract as one of the utmost good faith, rather than one in which 'buyer beware' was the order of the day;

* the judge's approach was damaging to the critical question of what had been said at the meeting in May 2007, since that question could only be fairly judged without the wrong assumptions about what needed to be said;

* the judge had found Mr Mann had been untruthful and dishonest, where dishonesty had never been asserted and then carried that over to his judgment as to the critical meeting of May 2007.

The dealer also submitted that the necessary conditions for a proper exercise of the jurisdiction to revisit a judgment were lacking. As neither party had asked the trial judge to reconsider his decision and he had revisited his judgment in order to meet criticisms made of it by way of grounds of appeal the rewriting of his third judgment was inappropriate and lacked caution.

Fortis submitted on appeal that the trial judge should not have permitted the joinder of SMRL because the third party claim had not been pleaded out and it was uncertain what additional witnesses, if any, were needed. It also submitted there was no bailment by description because Mrs Brewer had bought the car without any reliance on any description. It was a sale of specific goods between Fortis and Mrs Brewer and the contract's description of the goods as 'One Bentley Speed Six Car', which had been provided by Mrs Brewer, was merely for identification. Fortis also contended there was no bailment by description in that the car's description was a matter of opinion and was not intended to become a term of the hire purchase contract. Further, even if the contract involved a description of the car as a 'Bentley Speed Six', that went no wider than the car. It was not a description of the car's engine as a Speed Six engine (or as being prepared to Speed Six specification) nor was it a warranty as to performance. In addition, even if there was an implied contractual term which required correspondence with the description '1930 Bentley Speed Six', the car complied with that description and there was no breach because according to expert evidence the car could legitimately be called a Speed Six car, even with the engine it had in it.

Fortis also submitted that as it was not privy to the conversation between Mrs Brewer and Mr Mann in May 2007 the trial judge was wrong to import into the hire purchase contract between Mrs Brewer and Fortis any collateral warranty given by Mr Mann as to the car's engine, or any implicit warranty as to the engine whereby a reference to the car as a 1930 Speed Six involved a requirement that the engine be an original 1930 Speed Six engine.

Fortis further submitted that, even if Mrs Brewer were entitled to say that there had been a breach of the implied term of correspondence with description, she had repudiated her hire purchase contract, or had entitled Fortis to terminate the contract for non-payment of the instalments due under it, and was therefore not entitled to any damages. Furthermore any damages to which Mrs Brewer might otherwise have been entitled would have been reduced by reason of a discount to take account of her months of enjoyment of the car. In any event, Fortis was entitled to recover its counterclaim because Mrs Brewer had not kept up her payments under her contract with Fortis and Fortis had terminated the contract under its terms.

Mrs Brewer did not challenge Mr Mann's submission about the outcome of the experts' evidence concerning the acceptability of the expression '1930 Bentley Speed Six' in relation to the car. She submitted that, as a matter of law, to describe the car as a 1930 Speed Six involved a promise that the car had an original Speed Six engine. She accepted she had no case against Mr Mann and SMRL based on a collateral warranty about the car as distinct from the engine. She did, however, rely on the description of the car as against Fortis, for the hire purchase agreement described the goods as a 1930 Bentley Speed Six.

Mrs Brewer submitted that she was entitled to reliance damages and that although she had not accepted Fortis's repudiation, she would have been entitled to do so according to case authority. Damages under the collateral warranty, she submitted, were of a similar nature because, but for the warranty, she would never have entered into the hire purchase contract with Fortis. As for the alleged credit for use of the car, she submitted she should not have to give any credit for the hire of an asset she did not want and would never have hired if she had known the truth. She contended she had had nothing save for some intangible enjoyment which it was impossible and therefore improper for the law to value.

Held: Appeal allowed.

Per Rix L.J.:

There was an apparent loss of objectivity of the trial judge as demonstrated by his rewriting of his third judgment. Where a judge received no request from the parties to reconsider his judgment or add to his reasons, and had not demonstrated the need in conscience to revisit his judgment, but had received grounds of appeal and an application for permission to appeal based on the alleged inadequacies of his judgment, it was most unwise for him to rewrite his judgment and only extraordinary reasons would justify such a course on his part.

The reasoning for the trial judge's findings as to the meeting was seriously flawed by a combination of assuming the truth of Mrs Brewer's account of the meeting and doubting Mr Mann's credibility as well as his failure to examine the parties' different accounts of the meeting by reference to contemporaneous documentation or undisputed findings of fact.

The trial judge's comments about Mr Mann's credibility amounted not only to a rejection of Mr Mann's credibility as a witness, but to a wholesale attack on the honesty of his dealings as a dealer, in a case where his honesty as a dealer was not in question. It was unfair for a judge to make findings of dishonesty without such dishonesty being put properly in issue.

To be enforceable as a collateral contract, a promise must be supported by consideration which in the hire-purchase context was the entering by the customer into a hire-purchase agreement with the finance company. The trial judge's loss of objectivity and his concern to arrive at an analysis which supported his conclusion that Mr Mann was personally liable for a breach of collateral warranty was demonstrated by his finding that the relevant time for considering the status of the representor in a case of collateral warranty was the time of representation (in this case at the meeting of May 2007) and not the time of effecting the contract to which the representation was collateral. However, as of the meeting in May 2007 Mrs Brewer had committed herself to nothing. She had not entered into the hire purchase contract until June 2007.

The description of the car in the hire purchase contract was prima facie a bailment by description. The fact that the description also identified the goods did not detract from a sale or bailment by description. However if the description was viewed as an opinion, rather than as intended to become a term of the contract, then there was no bailment by description. There was an intrinsic difficulty in describing a car which had in its past been dismantled and then rebuilt from various original and replica parts. It was not for the law to destroy a market by demanding some perfect correspondence or authenticity which could no longer be achieved. If Mr Mann were able to satisfy the court upon any retrial of his submission that what he said to Mrs Brewer would have been objectively understood as a matter of opinion on the philosophical question of what constituted a Bentley Speed Six, then it would be an open question whether Mrs Brewer could rely on the description, which she herself introduced into her contract with Fortis, as intended to be a term of the contract on which she relied.

The trial judge's reasoning that the car's description in the hire purchase contract required an original 1930 Speed Six engine was impermissible. It was not possible to carry over into the contract between Mrs Brewer and Fortis an oral warranty which emerged out of the conversation between Mr Mann and Mrs Brewer in May 2007 to which Fortis was not privy.

The trial judge was wrong to ignore and set aside the evidence of the experts as to the common understanding of what was meant by a 'Speed Six car'. Common understanding was part of the factual background against which the description of a Speed Six was to be judged. The description of the car in the hire purchase contract with Fortis did not require a 1930 Speed Six engine; and it was sufficient if the car's chassis with its chassis number was incorporated in the car.

The trial judge was also wrong to address the issue of description through the lens of the question of what duty might have required a seller to disclose. In this respect the trial judge had confused two separate issues. One was what 'Speed Six car' meant and whether the car corresponded with that description (a question of construction followed by a question of fact). The other was how the car might have been best described in order to avoid any argument as to whether the description could have been said to have been inadequate, negligent or worse. This question might have arisen in the context of a claim in misrepresentation, or for breach of a Hedley Byrne duty of care, or in fraud, or, where a contract was one of the utmost good faith, in non-disclosure. However, none of those matters was in question in this case, least of all in the claim against Fortis.

There was also unfairness and apparent loss of objectivity in the trial judge's errors in his finding that the car had been represented and sold on the basis of an implied promise of a continuous and documented history. Proof of provenance or of history had to be negotiated for, did not come for free, and was not inherent in an article's description.

Fortis was entitled to recover its counterclaim. Fortis was not in breach of its contract with Mrs Brewer; however, Mrs Brewer was in breach of the payment provisions of her contract which clearly stated that failure to pay the contract instalments was a repudiation which permitted termination, with the contractually agreed consequences.

Mrs Brewer must give credit for her use of the car, and, if she had been entitled to any damages from Fortis, or was entitled to any damages from the Dealer, she had to give credit against such damages for her use of the car during the period of the hire purchase contract and until its repossession.

Although the issue of joinder of SMRL fell to be part of any retrial between Mrs Brewer and Mr Mann there was no need to consider further the question of any claim over by Fortis against SMRL.

Before: Rix, Sullivan and Lewison L.JJ.

(1) [2012] EWCA Civ 246, Court of Appeal (Civil Division), 7 March 2012.

Katharine Mason, Independent Legal Analyst, B.A. (Hons), LL.B., University of Sydney.
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Author:Mason, Katharine
Publication:Art Antiquity & Law
Date:Dec 1, 2014
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