Harbor Marine Ltd v. David Shapiro
Read the full judgment text of DCCJ 9447/1972 on BabelCite. This District Court judgment.
1. The plaintiff, whose business is to build and equip what might be described as luxury pleasure boats, commenced this action by suing the defendant for the sum of $4,895.00, being the balance of the sale price of the vessel "Soluna" which the defendant had ordered from the plaintiff.
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DCCJ009447/1972 IN THE DISTRICT COURT OF HONG KONG HOLDEN AT KOWLOON CIVIL JURISDICTION ACTION NO. 9447 OF 1972. -----------------
----------------- Coram: J.J. Rhind, D.J. in Court. Date of Judgment: 26th June 1973 ----------------- JUDGMENT ----------------- 1. The plaintiff, whose business is to build and equip what might be described as luxury pleasure boats, commenced this action by suing the defendant for the sum of $4,895.00, being the balance of the sale price of the vessel "Soluna" which the defendant had ordered from the plaintiff. 2. Although the plaintiff in its Particulars of Claim sought to categorise its contract with the defendant as one of "work done and materials supplied", this approach was dropped at the trial, and both parties proceeded on the footing that any contract in issue between them was one of sale, with the result that any implied warranties arising under any such contract fell to be determined in accordance with the Sales of Goods Ordinance. That the parties in fact proceeded on the correct basis is to be gathered from such cases as Reid v. Macbeth & Gray (1904) A.C.223 and McDougall v. Aeromarine of Emsworth Ltd. (1958) 1 W.L.R. 1126 which clearly establish that a contract to have a boat built and equipped is one of sale. 3. The defendant denied that he was liable for the amount claimed on the ground that the plaintiff was itself in breach of contract by supplying some mattress covers for the boat which were unsuitable in that they shrank as soon as they were laundered. The defendant's contention was that the plaintiff was a dealer to whom the defendant had made known the particular purpose for which he had required those covers, namely to use as washable mattress covers aboard the boat, but they were unsuitable for that purpose because they could not be laundered without becoming useless. The defendant also counter-claimed for the cost of replacing the covers, the counter-claim covering the same grounds as the defence. 4. In essence, the defence raised amounted to a contention that the plaintiff was in breach of the implied warranty of fitness which can arise by virtue of S. 16(1) of the Sale of Goods Ordinance. 5. Two questions arose for consideration in this case. Firstly was the plaintiff in fact the seller of the fabric from which the mattress covers were made? The plaintiff contended that the real seller was one, A Lam, a sail-maker to whom the plaintiff had merely introduced defendant. Then secondly, if the Court found that plaintiff was the seller, was the plaintiff liable under an implied warranty of fitness pursuant to S.16(1) of the Sale of Goods Ordinance? In the event of the plaintiff being held thus liable, it was agreed that the damages flowing from this breach should be quantified at $970, which was the amount it cost defendant to get the mattress covers replaced. Thus the balance, amounting to $3,923, of plaintiff's claim was no longer in dispute at the trial. 6. At this point, because of its significance in this case, it might be as well to set out S. 16(a) of the Sale of Goods Ordinance Cap. 26, in full:-
7. This sub-section is in identical terms to S. 14(a) of the English Sale of Goods Act. 8. On the ground that the defendant had never relied on its skill and judgment, the plaintiff denied that any such implied warranty had arisen, or alternatively, even if it had, plaintiff was still not liable because the material shrank not because of any unsuitability but because defendant did not follow the usual method of washing it, which was by rinsing in cold water. 9. Having briefly set out the issues arising for determination by the Court, it now becomes necessary to consider in detail the facts giving rise to them. 10. After seeing a boat which the plaintiff had built for someone else, the defendant approached the plaintiff's director, P.W. 1, in April 1971 to enquire about having a boat built for himself, whereupon P.W. 1 furnished defendant with a detailed specification (Exhibits 1-4) of the boat plaintiff could supply. The defendant, who had practised in the past as an interior decorator, had some ideas of his own, though, on some of the furnishings and fittings he wanted to be included in his boat, so he presented P.W. 1 with a detailed list (Exhibits 5 and 6) of alterations he would require to the initial specification. The defendant not only discussed the decoration and furniture he wanted with P.W. 1 but also supplied sketches and designs. The defendant never denied in his evidence that he let P.W. 1 know that he had been an interior decorator and I accept as truthful what P.W. 1 said in his evidence to the effect that he knew defendant had been an interior decorator. Although P.W. 1 did not pinpoint the time when he first acquired such knowledge, I am satisfied that it would have been at an early stage of the negotiations with defendant, and at any event before any contract was actually entered into. Moreover, I think it more likely than not that P.W. 1 would also have known defendant's current line of business which was garment manufacturer. It would only be natural for P.W. 1 to want to find out a piece of information as basic as that about a potential customer, since it would assist plaintiff in determining its prospects of getting paid. I do not think, though, that P.W. 1 would have pressed his enquiries to find out how experienced the defendant was in that line of business. 11. In the initial specification, under the heading "Equipment to be provided by builder" appeared the item "Mattresses to be of synthetic foam with imitation leather coverings", and this case revolves around the developments and circumstances concerning that item. 12. When defendant came up with his list of alterations (Exhs. 5 and 6) he substituted for the item just mentioned, "Mattress either imitation leather covering or fabric as selected, "the plaintiff through P.W. 1 accepting his alteration, with the result that on the Parties entering into a formal sale agreement (Exhs. 7-12), there appeared under the heading "Equipment to be provided by builder" the item "Mattress to be of synthetic foam with either imitation leather covering or fabric as selected". 13. Obviously, during the time between defendant presenting his list of alterations (Exhs. 5 and 6) and the signing of the formal contract, the defendant and P.W. 1 discussed the question of the material to be used for these mattresses. A letter (Ex. 14) whereby defendant returned the signed contract to P.W. 1 presupposes such discussions and the evidence of both parties is consistent with them. The relevant paragraph of that letter is as follows:
The Captain Stark referred to in that letter was a marine surveyor defendant appointed to supervise the building of the boat. 14. While P.W.1 stated in Court that he would have chosen imitation leather coverings for the mattresses, he did not, however, claim to have warned Defendant at any time that fabric would be any less suitable, and I am satisfied that he informed Defendant before the contract was signed that the Plaintiff could supply fabric for the mattresses. 15. However, the arrangement contemplated throughout by the parties for the provision of the fabric appears to have been a loose one in that both sides were agreeable to Defendant obtaining this fabric from a source other than the Plaintiff, in which event Plaintiff would have made an appropriate deduction from the overall sale price of the boat. That overall sale price was $82,000. That this was what Defendant contemplated is made clear from the very letter (Ex.14) by which he returned the signed contract, and although, of course, quiescence is not necessarily acquiescence, I consider it reasonable to infer in this instance that by failing to object to Defendant's proposal, Plaintiff was willing to go along with it. Moreover, P.W.1 acknowledged in his evidence that it was contemplated Defendant might look elsewhere for the fabric when he said that he would have been quite contented if Defendant had got some from Japan. 16. Thus, despite the appearance of the item "...... fabric as selected" under the heading of the contract "Equipment to be provided by builder", it did not really belong there. It was no more appropriately placed under that heading than the subsequent one which was, "Item supplied by Owner but installed by Builder". In fact any such fabric was unique amongst the items to be supplied for the boat in that it might be supplied either by the Defendant himself or the Plaintiff at the election of the Defendant. 17. Therefore it is not only to the formal contract document (Exs. P7-12) for the sale of the whole vessel on 26th April 1971 and the events leading thereto that the Court must confine its attention when seeking to determine the incidents attaching to the sale of the fabric which Defendant in due course purchased. Whether in fact Defendant was to purchase the fabric from Plaintiff would not be known till later, and if in the end Defendant did decide to buy it from Plaintiff it would in my view be under a separate contract of sale from the main one (Exs.P7-12) for the whole vessel. The contract of sale for the whole vessel would then be regarded as no more than part of the background to and surrounding circumstances of the subsequent contract of sale of the fabric alone. 18. It was on the advice of Plaintiff that, at the time of Defendant entering into the contract to buy the boat, he also appointed Captain Stark as his surveyor for the building of the boat. At that stage Defendant was evidently under the impression that a marine surveyor's functions extended to ensuring that Defendant's requirements for the interior furnishing of the cabin were carried out properly. This can be gathered from the final paragraph of the letter Ex.14. 19. However, Plaintiff never sent any samples of fabric to Captain Stark, and in fact Captain Stark had nothing to do with the interior decoration of the boat. I concluded that Defendant only made this request to Plaintiff about submitting samples of fabric to Captain Stark because he at first misunderstood the role of a marine surveyor in supervising the building of a boat, believing at first that such a person would concern himself with such details as the furnishings as well as the main structure of the boat. 20. The Plaintiff contends that by requesting the samples of fabric to be submitted to Captain Stark Defendant showed that he was not relying on Plaintiff's skill and judgment with regard to the fabric being suitable. I am satisfied that Plaintiff, with its experience of the boat building trade, must have realised that Defendant was deluding himself in believing that the marine surveyor would concern himself with the fabric for the interior furnishings. This would explain why Plaintiff did not even bother to submit samples to Captain Stark. Therefore, Plaintiff would have known that Defendant would not be able to rely on the marine surveyors skill and judgment concerning the fabric. Also, in the interval between Defendant sending the letter P14 and his actually purchasing the fabric, there were further discussions between the Parties from which one can infer that at the time when he actually came to make his purchase of fabric, Defendant would not have given any cause for belief that he was still placing any reliance on Captain Stark for choosing suitable fabric. 21. Shortly after Defendant sent Plaintiff the letter Ex.14, it appears that there was a conversation between the Defendant and P.W.1 in which the latter explained there was no hurry to make any decision about choosing a fabric as the mattresses would not be installed till the boat was built which would be several months later. 22. The next development occurred in about September 1971 when the boat had almost been completed. The Defendant then called at Plaintiff's boat-yard for the purpose of selecting a fabric. P.W.1 then produced some books of fabric samples for Defendant to choose from. Defendant selected a sample of the material which was ultimately used to cover the mattresses, saying to P.W.1 as he did so, according to his version, "Are these O.K. to be used for the cushions and is it available in stock?" Defendant's account of P.W.1's reply was that P.W.1 would let him know the following day after checking with the supplier. In his evidence P.W.1 at first said that he could not remember whether Defendant had asked this, but later he said that Defendant had only asked about whether the material was available in stock. The impression I got was that really P.W.1 could not remember the details of what transpired in this conversation and I find as a fact that Defendant's version of it is truthful. 23. On checking, P.W.1 found the fabric choosen by Defendant was available and informed Defendant of this. Once he heard that, it can be inferred that Defendant then gave P.W.1 instructions to go ahead with the making of the covers, and it would have been at that point in time that the contract for the sale of the fabric for the covers was made. 24. It was not disputed by the Defendant that the place where he selected this fabric was a cockloft above the Plaintiff's boatyard, and in that cockloft was a sign "A. Lam. Sailmaker". In that cockloft Mr. Lam made the mattresses and covers for Defendant's boat. At the time Defendant selected the fabric, Mr. Lam was already in the course of making the exterior mattresses for the boat, and there could be no question that they were being made by Mr. Lam on the Plaintiff's behalf in order to fulfil the latter's obligation to the Defendant under the main contract (Exs.7-12). The Plaintiff does not claim that Defendant was ever told that he was buying the fabric from Mr. Lam rather than from Plaintiff but the Court was asked to infer that Defendant should have known that. The Defendant for his part, claimed that he never regarded Mr. Lam in any other light than someone working for Plaintiff. On the evidence I heard I think that Defendant was entitled to regard himself as dealing with the Plaintiff alone in purchasing the fabric so that I find that the contract for that purchase was between Plaintiff and Defendant. 25. I do not doubt that as between Plaintiff and Mr. Lam they were engaged in separate businesses, but their internal arrangement would have been of no concern to Defendant. P.W.1 wanted the Court to accept that his presence in Mr. Lam's cockloft when Defendant bought the fabric could be explained on the basis that he was there merely to ensure that the fabric chosen would not exceed the price Plaintiff was prepared to allow for it out of the overall contract price for the boat. However, I am satisfied that P.W.1 acted in such a way that Defendant reasonably thought he was buying from the Plaintiff through P.W.1, who, as I have already found as a fact, dealt with Defendant's specific enquiry "Are these O.K. to be used for the cushions and is it available in stock?" which could only be explained on the basis that Defendant thought he was buying from Plaintiff. 26. Moreover, if Defendant had bought from Mr. Lam one would have expected Mr. Lam to render a separate account for the price. However the demands he got for payment were all from Plaintiff, which was consistent with Plaintiff being the seller. 27. In the end P.W.1 in effect conceded that the Plaintiff was the seller of the fabric, as may be judged from his affirmative answer when the following question was put to him in cross-examination:
28. Using the fabric selected by Defendant, the mattresses together with their coverings - 11 of them in all - were duly made for the interior of Defendant's boat and installed towards the end of 1971. Defendant was given no special instructions for cleaning them. They gave Defendant no cause for complaint till he came to have them laundered in August 1972. As one might expect with any cushion covers they got dirty in the course of time, but neither Party suggested there was anything unusual or significant about that. Through people sitting on them in wet bathing costumes and because of their ordinary use in the boat they had got stained with sea water and oil. 29. Having been instructed by Defendant to get them laundered, Defendant's boat-man D.W.2 took them all along to "Luck Laundry", Causeway Bay, where he left them for cleaning without any special instructions on how it should be done. No evidence was adduced on the method the laundry in fact used. 30. On getting the covers back from the laundry, it was discovered that they had all shrunk so much that they could no longer be used with the mattresses. One of these shrunken covers was produced as an exhibit (Ex.Def."A") 31. Having already found in favour of Defendant on the issue of whether Plaintiff was the seller of the fabric, the only remaining question is whether liability should attach to Plaintiff by virtue of the operation of Section 16(a) of the Sale of Goods Ordinance. 32. For that provision to apply, Defendant had to show that (1) he had made known to Plaintiff the purpose for which the fabric was required; (2) he relied on Plaintiff's skill or judgment; and (3) the fabric was goods of the description which it was in the course of Plaintiff's business to supply. 33. There can be little room for doubt that Plaintiff knew the fabric was to be used for the purpose of making mattress covers which would inevitably require cleaning from time to time. With fabric cushion or mattress covers, I think it can be taken as common knowledge that people usually want them to be made in such a way as to be detachable so that they can be cleaned more easily, and I hold that Plaintiff knew or ought to have known that the covers were to be made detachable, with this purpose in mind. 34. It is convenient to deal next with the element of whether the goods were of a description which it was in the course of Plaintiff's business to supply. I formed the impression that Plaintiff held itself out as complete out-fitters of boats and I hold that it was certainly in the course of their business to supply all interior furnishings including fabrics when so requested by a customer. It was not necessary for Defendant to show that they were specialist suppliers of fabrics. It could still be in the course of their business to supply something even if they did so only occasionally (see Ashington Piggeries Ltd. v. Christopher Hill Ltd. (1971) 1 All E.R. 847 per Lord Wilberforce at p.875h) 35. Once it is established that it was in the course of Plaintiff's business to supply fabric, the inference readily arises that the Defendant relied on Plaintiff's skill and judgment. How readily the courts are prepared to draw this inference in favour of a buyer when the sale is by a supplier whose business is to deal in that type of goods, provided of course the particular purpose is made known, can be drawn from such cases as Henry Kendall v. William Lillico (1968) 2 All E. 144 (the Hardwick Game Farm case) per Lord Pearce at p.483 and the Ashington Piggeries case (supra) per Lord Diplock at p.885, and there is even judicial authority for the proposition that in such circumstances there is a presumption that the buyer is relying on the seller's skill and judgment (see Mash & Murrell v. Joseph I. Emmanuel (1961) 1 All E.R. 485 at 489) 36. The Plaintiff asks the Court to infer that because from the outset it was agreed that Defendant should buy "fabric as selected", this precludes the possibility Defendant relied on their skill and judgment when he came finally to select one of their fabrics. I do not find myself impelled to that conclusion at all. The use of those words did not absolve Plaintiff from ensuring that such range of fabrics as they made available to Defendant for the purpose of selecting one would all have been fit for the contemplated purpose of washable covers. Because a buyer is to make the final selection of the article he wants does not necessarily mean the seller is thereby entitled to give him unsuitable goods to choose from. The usual way in fact of doing business is for a buyer to make a selection from a range of goods. An illustration of a buyer nonetheless being entitled to rely on an implied warranty of goods being fit for a particular purpose despite his making the selection of the particular goods is Jones v. Bright (1829) 5 Bing 533 where the buyer selected the copper sheathing he bought. When it turned out to be defective, the buyer was able to rely on an implied warranty. Presumably, no one would suggest that the purchaser of the hot water-bottle in Priest v. Last (1903) 2 K.B. 148 or of the woollen under-wear in Grant v. Australian Knitting Mills 1936 A.C. 85 would have been any the less protected merely because he selected the particular item he ultimately purchased, rather than leaving it up to the shop-keeper to pick out the goods for the customer. 37. A further reason advanced by Plaintiff for why Defendant could not be said to be relying on Plaintiff's skill and judgment was that Defendant, by virtue of his experience as a clothes' manufacturer and interior decorator, was something of an expert in fabrics, whereas Plaintiff had no special knowledge on this topic. However the only special skills Defendant held himself out as possessing related to the aesthetic and styling properties of materials. He did nothing to give the impression that he was a fabrics' technologist capable of ascertaining latent characteristics of fabric, such as whether it should wear and wash well. 38. No doubt for design and related aesthetic purposes, Defendant was relying on his own skill and judgment, but when it came to the hidden qualities of the material, I am satisfied that Defendant was relying on Plaintiff as a supplier who had chosen his stock with reasonable care. 39. This can be regarded as an instance of partial dependance by the buyer on the sellers skill and judgment, the buyer using his own skill and judgment up to a point in letting the seller know what commodity he wants, but then relying on the seller not to supply one with hiddendefects which will make it unsuitable for the contemplated purpose. Authority for the buyer being able to rely on the seller's skill and judgment in such circumstances is to be found in a line of cases commencing with Commell Laird & Co. v. The Mangarese Bronze & Brass Co. 1934 A.C. 402 and continuing in more recent times with the Hardwick Game Farm and the Ashington Piggeries cases already referred to. 40. Even I, as originally contemplated, Plaintiff had submitted the samples to Captain Stark for selection, I would still have held that Defendant was partly depending on Plaintiff's skill and judgment not to supply a fabric with hidden defects. Captain Stark's skill and judgment could only be expected to extend to the factors peculiar to boats which might affect a fabric, for example, whether it would be unsightly if stained with sea water, or whether it would be comfortable, knowing that it would be used mainly in the summer when people would sit on it wearing swimming costumes. 41. In view of the foregoing, my conclusion is that Defendant was entitled to rely on an implied warranty that the fabric was fit for the particular purpose of use for washable mattress covers, the consequence of which would be that Plaintiff would be liable for hidden defects even of a type which he would not have the slightest reason to suspect were present (see the Hardwick Game Farm case per Lord Reid at p.457 F and see the Ashington Piggeries' case per Lord Diplock at p.885) 42. Thus the Plaintiff was liable to ensure that the cushion covers were washable. However, this does not mean that they had to be washable by any means whatsoever, but only in so far as a reasonable method of washing was employed. 43. It is well established in law that the implied warranty of fitness for a particular purpose will only apply if the buyer pays heed to his own welfare by treating the goods in question properly. An illustration of this is the case of Heil v. Hedges 1951 T.L.R. 512 where the purchaser of some pork chops infected by trichinosis was not entitled to hold the seller liable because she had failed to cook them in the ordinary way which would have killed the organisms. 44. Only so long as the purchaser treats the goods in a way that accords with accepted standards and practices will he continue to enjoy any warranty of fitness implied in his favour. Both the cases cited in support of this principle happen to be concerned with food but the principle applies by analogy to all other commodities including fabrics. 45. Firstly in Heil v. Hedges, the relevant words used by McNair J. at page 515 are:-
Secondly in the Hardwick Game Farm case at page 484, Lord Pearce had this to say:-
46. It might well be that in this day and age of comparative affluence and sophistication in Hong Kong a reasonable method to clean a fabric like Ex.DA would be in a washing machine using hot water, like the Defendant suggested. However, even on that point Defendant should have called some evidence to show the contemporary Hong Kong practice in relation to the methods of cleaning such a material. Anyone experienced in the laundry business here or even an experienced housewife could have told the Court what would be reasonable ways of getting this material clean. 47. Insofar as Defendant's own evidence relating to the cleaning of this fabric was concerned, it suffered from the defects that not only did he appear to lack any special experience of cleaning practices in Hong Kong, but also his whole approach was coloured by a misconception of the protection afforded to the consumer by the law in Hong Kong. The Defendant appeared to believe the law here to be that in the absence of any special washing instructions he was entitled to assume that the fabric was fit to undergo machine washing. I am not aware of any specific law to that effect in Hong Kong. Under the law as it stands in Hong Kong, a more cautious approach is required of a purchaser. He cannot indiscriminately assume that there is any one universally acceptable method of cleaning which, if followed, will allow him to turn round and blame the seller if anything goes wrong. 48. What is a reasonable washing method will thus vary from fabric to fabric in Hong Kong, the standard of reasonableness in each instance being determined by people who would be expected to know about such things e.g. laundry workers or experienced housewives. 49. In the absence of any proper evidence on this point, the Court is in no position to determine what would be a normally acceptable method of washing this fabric in Hong Kong. For what it is worth, the opinion of Defendant's boatman (D.W.2) was that cold water was a suitable method of washing this fabric whereas, by contrast, Defendant thought hot water was all right. It might even be that both methods should have been regarded as reasonable in Hong Kong, but the Court has no means of determining this without evidence. 50. Whichever methods of washing were in fact reasonable, Defendant has failed to surmount the further obstacle of establishing that Lucky Laundry actually used such a method. As a matter of common knowledge the methods used by, and quality of work emanating from laundries vary and the Court is not entitled to presume that the laundry employed in the instance used a reasonable method for Defendant's fabric. 51. It was up to the Defendant to prove his counter-claim and defence by evidence and the absence of evidence on reasonable methods of cleaning this fabric and whether the laundry in fact used such a method is fatal to the Defendant's case. 52. I accordingly enter judgment for the Plaintiff in the sum of $4,895.00 on its claim and dismiss Defendant's counter-claim.
26 JUN 1973 Representation: |