Case No: PR790185
Neutral Citation Number: [2010] EWHC 190 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
PRESTON DISTRICT REGISTRY
In the Leeds Crown Court

Date: 12/02/2010

Before:

THE HONOURABLE MR JUSTICE KING
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Between:

	PAUL ANTHONY GARSIDE	Claimant	
	- and -		
	
BLACK HORSE LIMITED	First Defendant/  Part 20 Claimant	
	-and-		
	JCT 600 LIMITED TRADING AS 
JCT 600 LEODIS COURT	Second Defendant/
Part 20 Defendant 	
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         Mr Guy Vickers (instructed by Napthens Solicitors) for the Claimant
  Miss Kelly Pennifer (instructed by Wragge & Co LLP) for the First Defendant
 Mr Simon Popplewell (instructed by Lupton Fawcett LLP) for the Second Defendant

Hearing dates: 1st – 2nd December 2008 & 13th – 17th July 2009 and 21st July 2009

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Judgment
Mr. Justice King: 
1. These proceedings concern an Aston Martin Vanquish S motor vehicle which the claimant acquired from new on hire purchase from the first defendant finance company by a hire purchase agreement entered into on the 30th of July 2005. The vehicle was supplied to the first defendant by the second defendant dealer for onward hire purchase to the claimant. Delivery to the claimant was on the 1st of August 2005.

2. The claimant’s case is that because of a distorted rear screen window the vehicle was not of satisfactory quality in breach of the term implied by subsection 2 of section 10 of the Supply of Goods (Implied Terms) Act 1973, that as a result he was entitled to and did reject the vehicle and treat the agreement as repudiated – he says in January 2006 but at the latest by October 2006. By his re-amended particulars of claim he seeks as against the first defendant damages equal to the monies paid by him up to the date of rejection together with the return of the further sums paid after that date together with other remedies including a claim for  loss of use and inconvenience.

3. The first defendant has not admitted, and the second defendant has denied that the alleged defect amounted to a breach of any such term if, which is disputed, the term extended to this particular feature of the vehicle having regard to an alleged examination of what is said to have been an identical vehicle prior to the agreement being made. Both defendants deny that there has been any effective rejection of the vehicle as against the first defendant with whom the material contract was made both as a matter of fact and as a matter of entitlement. As regards the right to reject, both defendants assert that this was lost before the claimant purported to reject the vehicle by reason of the passage of time and by the claimant continuing to drive the vehicle up until January 2006 and continuing to make payments under the agreement up to and beyond that date. All this is said to amount to an affirmation of the hire purchase agreement by which the claimant is bound. 

4. The second defendant dealer has counterclaimed against the claimant for storage charges while the vehicle has been stored with it since January 2006.

5. As between the first and second defendant the dispute in the part 20 proceedings relates to the extent of the remedy to which the first defendant is entitled from the second defendant in the event it is found that the claimant was entitled to and did validly reject the vehicle. In particular issue is the extent to which the first defendant must give credit for the value of the vehicle which it has retained.

6. The hire purchase agreement records the financial terms as follows: cash price of the goods £170,000 less a deposit of £5,000 and a part exchange allowance of £105,000 leaving a balance outstanding to be repaid by the claimant over two years of £63,726.77 - made up of the £60,000 balance of the cash price and £3,726.77 by way of credit charges. That balance was to be paid by 23 monthly instalments of £2,651.61, the first being due one month after the date of the agreement, and a final instalment of £2,739.74 which included the purchase fee of £88.13. The terms of the agreement contained a standard clause (clause 5) under which the claimant would become owner of the Goods upon payment of all payments due. It is common ground that the claimant continued to make the monthly payments and paid the entirety of the sums due, the final payment being made on the 2nd of August 2007. 

7. The part exchange allowance of £105,000 was in respect of an Aston Martin DB9 motor vehicle which the claimant had previously bought from the second defendant dealer in or about January 2005 for £113,209.00 and with which he had been dissatisfied. It is the claimant’s case that his position when negotiating with the second defendant for a new car in July 2005 which ultimately led to his acquiring the Vanquish S, was always that in any new deal he wanted to be reimbursed for the full value of the DB9, it being said that at this time the DB9 was selling at premium prices above list price.  The claimant has a discrete claim against the second defendant by which he seeks to recover the sum of £8,209, being the difference between that full value and the ultimate part exchange allowance. This is based upon an alleged implied term under an alleged price agreement concerning the amount to be allowed on the part exchange vehicle.

8. Before the hire purchase agreement was entered into the claimant and the dealer entered into a binding agreement to buy and sell the car as a straightforward purchase by the claimant from the dealer. This agreement was by way of a vehicle order form signed by both parties which although apparently dated the 11th of July 2005 was in all probability completed on the 12th of July 2005 in the light of the copy fax message sent on that date to the claimant by the salesman Mark Hill of the second defendant with whom the claimant had been negotiating the purchase of the car the previous week on the 7th and 9th of July. That fax invited the claimant to sign the form and fax it back to Mr Hill which the claimant duly did. 

9. By that date it is clear both parties at least contemplated that the ultimate contractual arrangement whereby the claimant was to acquire the car would be by some kind of financing arrangement to embrace the balance of £60,000 payable after deduction from the £170,000 purchase price of the part exchange allowance and the £5,000 cash deposit.  The fax itself stated that Mr Hill would get his business manager Dean Shearman “to call you Wednesday to sort the finance”. The details on the order form of the price to be paid and how it was to be satisfied coincided (the finance charges apart) with those on the ultimate hire purchase agreement. Clause 11 of the terms and conditions of the Order Form expressly provided that the Purchaser should be at liberty, after notice that the vehicle had been completed for delivery, to arrange for a finance company to purchase the goods from the Seller at the price payable thereunder. The remaining provisions of that clause dealt with what was to happen in such circumstances to the arrangements in relation to the part exchange vehicle and the cash deposit. 

10. It is now common ground that the effect of the ultimate contractual arrangements entered between the respective parties did not involve the first defendant acquiring any interest in the DB9. 

11. The effect can be summarised thus: (1) the second defendant sold the Vanquish S to the first defendant for the purchase price of £170,000 (which vehicle it  then hired out to the claimant under the hire purchase agreement)  (2) the claimant sold the part exchange vehicle to the second defendant dealer for the amount of the part exchange allowance (£105,000); (3) instead of paying the sum in question to the claimant in cash, the second defendant held the sum as part of the deposit payable by the claimant to the first defendant under the hire purchase agreement (5) as against the first defendant finance company to whom the second defendant sold the Vanquish S, the second defendant retained as part of the price due to it, the deposit it had obtained from the claimant due to the first defendant. 

12. Accordingly, from the first defendant’s standpoint the second defendant had taken an exclusively cash deposit from the claimant consisting of the £105,000 price it had allowed on the part exchange goods (the DB9) and the further sum of £5,000 actually put down by the claimant, with the net result that £60,000 was payable directly to the dealer by the first defendant. This is all reflected in the invoice sent to the first defendant by the second defendant dated the 28th of July 2005.

13. For this analysis I am indebted to the exposition of principle in Professor Goode’s Hire Purchase Law and Practice 

My first Judgment
 
14. The trial of this claim and the associated part 20 claim commenced on the 1st of December 2008. On the 2nd of December 2008 at the invitation of the parties I gave judgment on a preliminary issue namely whether the claimed distortion effect in the rear screen window of the Vanquish S motor car rendered the vehicle not of satisfactory quality in breach of the term implied by subsection 2 of section 10 of the Supply of Goods (Implied Terms) Act 1973, assuming the term extended to this defect.  I gave judgment on this issue in favour of the claimant, the evidence having been confined to the competing expert evidence material to this discrete issue. On that occasion I received no lay evidence, in particular no evidence from the claimant himself or the dealer.  

15. This second judgment follows on the resumed trial of the action when evidence was called material to the outstanding issues raised by the claim against the first defendant, the claim against the second defendant, the counterclaim of the second defendant, and by the part 20 proceedings brought by the 1st defendant against the second defendant.

The Claim against the First Defendant for repudiatory breach of the hire purchase agreement.

16.  I deal first with the claim against the first defendant. Here two principal issues fall to be determined before the court can deal with any question of remedy. The first is as to whether the implied term extended to the distortion effect in question at all because of the provisions of  subsection 2C (b) of the 1973 Act. The second is as to whether the claimant ever validly rejected the goods. 

The defendants’ reliance upon subsection (2C) (b) of the 1973 Act

17. My first judgment was expressly made subject to any future consideration of whether the term implied by subsection (2) did not extend to this defect by virtue of the provisions of subsection (2C) of the same section. This in the context of the present case excludes from the ambit of the implied term defects, of which the hirer was aware or ought to have been aware before the agreement was made either through the defect specifically being drawn to the attention of the hirer (subsection 2C (a)) or through an examination of the goods (subsection 2C (b)).  

18. There is no suggestion in this case that the distortion in the rear window was specifically drawn to the attention of the claimant. The defendants – and the second defendant in particular - do however continue to rely upon the provisions of subsection (2C) (b). The facts relied upon for this purpose are pleaded by the second defendant at paragraph 5 of his defence:

“On the 9th of July 2005 prior to the date of the agreement, the claimant examined an identical vehicle which was in the 2nd Defendant’s premises. The chassis number of the vehicle examined by the claimant was (number given), its registration number was (number given).This vehicle had a rear windscreen identical to that of the Vehicle. After inspecting the identical vehicle, the claimant then test drove a standard Vanquish. The final sentence of paragraph 5 is admitted”.

19. The defendants rely now only upon the examination of the vehicle there pleaded for the purposes of the application of subsection 2C (b) and not upon any test drive of the standard Vanquish. The admission to the final sentence of paragraph 5 of the particulars of claim is an admission to the fact that a standard Vanquish had one significant difference in design compared with the Vanquish S which the claimant acquired, namely that the rear brake light on the standard Vanquish is mounted in the lower section of the rear window whereas on the S it is mounted on the boot. As emerged in evidence in the first trial the effect of the mounting of the light in the lower section of the rear window is to obliterate from the driver’s view that part of the rear screen which carries the distortion effect. Hence any such test drive of the standard model could never have revealed the distortion to be found in the S model ordered by the claimant.

20. The claimant does not dispute that before he placed his order he and his partner were given an opportunity to look inside what was said to be an identical Vanquish S, although there is a fundamental dispute between the claimant and Mr Hill on behalf of the second defendant as to the nature of the examination which was afforded to him. The claimant says the vehicle in question was a customer’s car being serviced at the dealers and which at the time was in the valet bay at the rear compound. He says that he was only ever able to view the car internally by opening the door and looking inside; that the car was in the process of being jet washed and hence it was not possible to sit in; his interest was confined to the finish and overall look of the car – which was in the same colour scheme as that which he was ordering – and the overall examination was short - at most 5 minutes - and inevitably cursory. He had no reason to look in the rear view mirror. 

21. Mr Hill’s recollection is that the vehicle was reversed out of the valeting bay and parked about 20 feet away from the grey rear shutter doors of the Bentley garages outside the compound, enabling the claimant to sit inside for some 10 minutes.

22. I do not find it necessary to resolve this factual dispute since in my judgment on any view of the evidence, the reliance upon subsection (2C) (b) must fail. I say this for two reasons. 

23. First even on the opportunity for examination as attested to by Mr Hill, I do not consider that this ought to have revealed the distortion defect more fully described in my first judgment on the preliminary issue. As demonstrated by the expert evidence, it would in my judgment require a test drive in which the rear view mirror is consciously brought in to play in conditions of traffic and road furniture in order for the revelation to be made. 

24. Secondly in any event, this was not a sale by sample, and, by the very terms of the subsection, namely; 

                  “(2C) The term implied by subsection (2) above does not extend to any matter making the quality of the goods unsatisfactory – ……………..
……………..(b)   where that person examines the goods before the agreement is made, which that examination ought to reveal.”.
                         
for subsection 2C (b) to be triggered, the examination has to be of the very goods which are to become the subject matter of the agreement. As I stated in my first judgment, the evidence before me did not allow me to find that the distortion defect in the original or replacement window of the Vanquish S supplied to the claimant, was to be found in identical fashion on all other such model vehicles. I should record that I did in the course of the trial on the grounds of unfairness to the claimant, refuse a very late application by the second defendant to call evidence of the state of the rear screen of the vehicle examined by the claimant, the second defendant having apparently tracked down that car to its current owner and carried out a unilateral inspection with no opportunity to the claimant to carry out a like inspection. 

25. I accordingly find that the term relating to satisfactory quality implied into the hire purchase agreement did extend to the distortion defect and that the first defendants were thereby in breach of the hire purchase agreement.

Rejection

26. I turn to the question of rejection.

The legal principles 

27. By virtue of section 10(7) of the 1973 Act, the implied term that the goods are of satisfactory quality is a condition as distinct from a warranty. This means that any breach of the term amounts to a repudiatory breach of contract entitling the innocent party – if he so chooses – to accept the repudiation by rejecting the goods. However, he loses this right to reject and thereby treat the contract as repudiated if he elects to affirm the contract and acts upon that election.  Once an election to affirm has been made and communicated to the other party, then it is irrevocable. “Waiver by election is final and so has permanent effect” (Chitty on Contracts  30th ed. vol.1., para 24-008 citing Motor Oils Helles (Corinth) Refineries SA v Shipping Corp of India [1990]1 Lloyds Rep 391, 398);

28. It is common ground that such an affirmation can be made expressly or impliedly. There was much discussion in the course of this trial as to the circumstances in which an affirmation will be implied. However for present purposes it is sufficient in my judgment  if I record that I agree with the analysis of the applicable legal principles emerging from the Court of Appeal decision in Peyman v. Lanjani  [1985] Ch 457, contained in the judgment of  the court in Alpha Chauffeurs Ltd v. City Gate Dealership and Lombard North Central Plc  2002, namely that unless the party in breach can mount  some sort of estoppel, the innocent party will not be treated as having elected to affirm the contract unless he has knowledge not only of the facts giving rise to his right to elect (knowledge of the facts amounting to the breach) but also of the right itself  and even then he will not be treated as having elected to affirm the contract unless he has unequivocally (my emphasis) demonstrated to the other party that he intends to affirm. 

29. The doctrine of estoppel is a different animal from that of affirmation. See Chitty supra, at 24-008. It does not require in the innocent party knowledge as above, but rather a clear and unequivocal representation by words or conduct by the innocent party to the party in breach that he will not exercise his strict legal rights to treat the contract as repudiated, followed by a reliance by that party upon it in circumstances where it would be inequitable for the representor to go back on his representation.  Estoppel in this sense, with its requirements of representation, reliance and detriment, has not been relied upon in this case by either defendant. 

30. It is important to note that as between the claimant and the first defendant this is a case concerning not a contract for sale of goods but a hire purchase agreement. It follows that the statutory provisions of the Sale of Goods Act (section 11(4)) removing the right to reject  goods for breach of condition if the buyer has accepted the goods and circumscribing what amounts to acceptance (see section 11(4)) and section 35), have no application. In particular the provisions of section 35(4) relating to deemed acceptance by lapse of time ((4)“ the buyer is also deemed to have accepted the goods when after a lapse of a reasonable time  he retains the goods without intimating to the seller that he has rejected them”) have no application. Mere acceptance of the goods under a hire purchase agreement does not in itself preclude the remedy of rejection. (See also Chitty supra ,vol 2  at para 38- 367: “a refusal by the creditor to remedy the defects in goods bailed constitutes a continuing breach of the agreement and the hirer may refuse to continue with the agreement as the creditor will not honour his obligations”, citing Yeoman Credit Ltd v. Apps [1962] 2 QB 508). I accept however that lapse of time, once the innocent party is aware of the breach, may have a role to play in determining whether it has impliedly affirmed the contract under the principles already discussed.

 The application of the legal principles to this case.

31. I turn then to consider in the light of these principles the issues arising under this head of rejection. These are essentially two fold. First did the claimant as a matter of fact ever purport to communicate to the first defendant an election to reject the vehicle, the subject of the hire purchase agreement, and if so when? Secondly however was any such purported rejection of no avail because by then the claimant had lost his right to reject by reason of affirmation?

Rejection as a matter of fact 

32. The factual issue for me to resolve – subject to issues as to affirmation – is when, if at all, did the claimant as against the first defendant effectively reject the vehicle and thereby communicate his election to treat the HP agreement as repudiated. There are in effect only two candidates on the evidence, namely January 2006 or October 2006. As will be seen below, it is now conceded by both defendants that there was at least a purported rejection of the vehicle effective against the first defendant – (subject always to the question of affirmation) - in October 2006 by virtue of the claimant’s solicitors’ letter to the first defendant dated 11th October 2006.

Was there a rejection prior to October 2006? 

33. It is important to observe that the material contract here which the claimant says he elected to treat as repudiated by rejecting the vehicle, was with the first defendant and not the second defendant dealer. It follows that for any rejection of goods to be effective in this case it would have had to have been communicated to the first defendant and I accept that for this purpose the second defendant dealer is not to be treated as the agent of the first defendant for receiving such a communication.  In other words it is not enough in order to establish a rejection in January 2006 as against the first defendant, for the claimant to establish he made clear his rejection to the dealer (which on the evidence, he undoubtedly did in my judgment). Letters which the claimant’s then solicitors (Hudson and Taylor) wrote in January 2006 – in particular that of the 16th of January 2006 – to the second defendants are of no effect for this purpose. 

34. The letter of the 16th of January undoubtedly would qualify as a letter of rejection and acceptance of a repudiatory breach of a contract of sale as between the claimant and the second defendant dealer if one had existed. It says in terms:

“our client understands from Aston Martin Lagonda that the defect is incurable. If this is the case then our client does not want the vehicle and we expect you to return the purchase price to him together with £3,726.77 in respect of finance costs”.

On any view however it cannot qualify as a communication to the first defendant of an election to treat the material contract of hire purchase as repudiated.

35. I should say at once that one of the problems which has bedevilled the question of whether the claimant effectively made a rejection as against the first defendant, is that those originally acting on his behalf persistently behaved as if the material contract was one of sale made with the second defendant.  The claimant himself in evidence to me appeared muddled in his thinking as to the nature of the finance agreement which he had entered into with the first defendant. It is pleaded on his behalf in paragraph 11 of the Particulars of Claim (a pleading preserved in subsequent amended versions) that “at this point in time (a reference to January 2006) he (the claimant) still considering he had purchased the vehicle from the dealer, the Second defendant”. In oral evidence he first said he had not originally known it was a hire purchase agreement, then he conceded that that which he had signed was headed a hire purchase agreement, and his ultimate position appeared to be that he thought he had a 2/3 and the finance company a 1/3 interest in the vehicle, yet there again he appeared to be saying he had not known the ultimate title was with the finance company. Certainly however the behaviour and words written on the claimant’s behalf by his original solicitors strongly suggest that they were acting under the (false) impression that any finance agreement with the first defendant had not involved a hire purchase as such.

36. The first time the claimant made any written communication with the first defendant concerning the vehicle defects was in June 2006 by a letter from those solicitors dated 2nd of June 2006. That letter by its terms cannot however in my judgment amount as against the first defendant to a valid rejection of the vehicle or to any communication of an election to treat the HP agreement as repudiated. It is to be observed that a rejection by virtue of this communication is not part of the pleaded case, although Mr Vickers on behalf of the claimant did raise such a contention by way of final submissions. It is unnecessary to set out the entirety of this letter. It is sufficient to record that it is written on the premise that the claimant had purchased the car from the second defendant (“our client purchased an Aston Martin Vanquish S …from JCT ltd ….our client has asked us to instruct counsel to prepare his claim which will be for the return of the purchase price …the vehicle was subject to a Finance Agreement with you and you will therefore be a party to the proceedings …”.).

37. On the other hand, as indicated, it is now accepted by the defendants that subject to the contention that by October 2006 the right to reject had been lost, the letter finally written by the claimant’s new solicitors (Napthens) in October 2006 dated the 11th of October 2006, did amount to a valid communication of such an election and rejection of the vehicle as against the first defendant. 

38. This letter enclosed previous correspondence passing between the claimant’s previous solicitors and the first defendant of June 2006 and that from the first defendant to the claimant of 9th August 2006. It also enclosed the previous correspondence passing between the claimant’s former solicitors and the second defendant dealers in January 2006. The letter of the 11th of October then concluded:

“As set out in that correspondence we confirm that our client did exercise his right to reject the Aston Martin vehicle which is available for collection at the address of your agent, JCT 600 Limited. We would be grateful if you could make contact with your Agent in order to arrange collection and confirm that you have done so. However please do not dispose of the vehicle as we are in the process of making arrangements for an appropriately qualified expert to examine the vehicle and prepare a report compliant with the Civil Procedure Rules”.

Was there a rejection in January 2006?

39. I turn to what turned out to a pivotal issue before me namely whether there was an effective rejection of the vehicle as against the first defendant in January 2006. This depends upon my resolving an all important issue of fact whether in a telephone conversation with the first defendant’s Mr Makepeace, then a Corporate Recoveries Executive employed by the first defendant, on the 9th of January 2006 the claimant, as he now asserts, expressly told him he had rejected the vehicle. I accept however that as a matter of principle for an election to be effective the innocent party does not have to use the express words “reject” or “rejection”. It would be sufficient if the claimant used other words which nonetheless evinced an unequivocal intention to treat the hire purchase agreement as repudiated. 

40. I should record that it is accepted by both defendants that if the claimant did tell Mr Makepeace in terms that he had rejected the vehicle that would be sufficient to amount to a communication to the first defendant of an election to treat the HP agreement as repudiated.

41. Mr Makepeace gave evidence before me. He is now a credit underwriter with the first defendant. His witness statement is dated the 1st of December 2008 shortly before the commencement of the first trial. He in reality had no independent recollection of the exact words of any telephone conversation in January 2006, nearly three years before, although he claimed to be confident in his recollection of the gist of any conversation. He spoke to and refreshed his memory from system notes relating to this particular hire purchase agreement which had recently (November 2008) been disclosed to the claimant by service of a supplemental disclosure list.

42. These notes contained material records entered into the system by Mr Makepeace of communications involving himself. They include his notes of a conversation he had with the claimant Mr Garside on the 9th of January 2006 and a subsequent communication on the 24th of January from the then accounts manager of the first defendant, one Jonathan McGuinness. 

43. Mr Makepeace’s evidence was that he personally had had no further dealings with the claimant’s account after the 24th of January 2006 and although the notes themselves continued with entries in June 2006  - (recording the claimant’s solicitors’ letter of the 2nd of June enclosing the first expert report obtained on the claimant’s behalf from one Albert Jones, and an entry on the 20th of June recording “DEALER WILL NOT RESOLVE SAY MANUFACTURING DEFECT ) -  they ceased as at the 20th of June. Mr Makepeace’s evidence was that there would have been no further disclosure of records of communications after that date, because any such notes of communications regarding the account would have gone onto a file for which privilege would have been claimed.

44. The notes also include reference to Mr Makepeace giving the claimant an oral quotation of a settlement figure which is reflected in a letter written to the claimant by the first defendant dated the 9th of January 2006. This letter thanks him “for your request for a settlement figure relating to your agreement”.

45. The entry for the 9th of January reads as follows. The italics are the entry of this curt giving the meaning of the references as explained by Mr Makepeace’s evidence.

“O90106: CALL FROM OC (our customer) TRANSFERRED - ADVISED SERIOUS PROBLEMS WITH VANQUISH -DEFECTED (sic) ACCEPTED BY ASTON MARTIN AS MANUFACTURING FLAW IN REAR WINDOW WHERE LIGHT WAS FOR PREVIOUS SAT. OC CONFIRMED JCT 600 HAVE REPLACED REAR WINDOW TWICE AND THAT IS PROBLEM WITH NEW MODEL. OC HAS NOW INVOLVED HIS SOLS AND SEEKING RESOLUTION.
              EMAIL TO ACCOUNT MANAGER FOR THOUGHTS AND DLR (dealer) COMMS. (comments).

09016 ………..SETTLEMENT QUOTE …..£49408.29   12:55:05 ORAL”

46. The entry for the 24th of January 2006 reads:

“240106   CALL FROM AM (accounts manager) CONFIRMING THAT DLR (dealer) FULL APPRAISED OF SITUATION AND CONSIDER THAT LITIGATION BY OC  ONLY OUTCOME   S ALL VANQUISH ARE LIKE THIS.
SOLS FOR JCT – MR NIGEL BROADBENT      LUPTON FAWCETTS (telephone number set out)
SOLS FOR MR GARSIDE - MR MILLER   HUDSON AND TAYLOR (telephone number set out ).

47. Mr Makepeace’s evidence - obviously based upon refreshing his memory from the notes - was that the claimant had telephoned him and explained that he had “issues” with the vehicle, meaning a problem with the design of the rear windscreen, and was in contact with the dealer to try to resolve these issues. Mr Makepeace was adamant however that at no point in the conversation did the claimant say he was rejecting the vehicle. His confidence that this could not have been said was on the basis that had there been any such purported rejection of the vehicle he would have insisted that Mr Garside put this in writing. However he did accept the possibility (my emphasis) that the claimant might have told him that the vehicle was left at the dealers and he did not want it back. Further, when asked what he understood by Mr Garside seeking “resolution” (to use the words of his note) he did say  that in his mind he understood that either Mr Garside was attempting to swap the vehicle for another or to give the vehicle back and get his money back.
 
48. As regards the record of the communication from the Account Manager giving details of the attitude of the dealer and of the respective solicitors by then acting on behalf of both Mr Garside and the dealer, he said he assumed there must by the 24th of January 2006 have been some direct communication between the account manager and the dealer (the second defendant) although he had no personal knowledge of the same.

49. Of course by the 24th of January 2006 the probabilities must be that the dealer had received the letter from claimant’s solicitor of the 16th of January asking for a return of the purchase monies.  And by letter dated the 25th of January 2006 Lupton Fawcett solicitors were writing to the claimant’s solicitors saying they had been instructed on behalf of the dealer.

50. Mr Makepeace confirmed that he must have been asked by Mr Garside for a settlement figure given the content of the note and the subsequent letter of the 9th of January. However he also agreed that he would have told Mr Garside to keep up the monthly repayments to the finance company whilst the dispute was going on and was in effect saying to keep them up pending resolution of the dispute. In this one respect at least therefore Mr Makepeace confirms the claimant’s evidence to the court in explanation for his keeping up the payments notwithstanding his having rejected the vehicle, namely:

“…..Mr Makepeace advised me that whilst the dispute was going on it was essential that I continued to make my monthly payments to Blackhorse Finance and he thanked me for bringing the matter to his attention. He also asked me to keep him advised as to further developments”.   

The claimant’s evidence on the January rejection  

51. The vehicle was taken back into the second defendant dealers in late December 2005 consequent upon the claimant’s complaint that the replacement rear window which had just been put in that same month, was in its distortion effect as bad if not worse than the original one and also to deal with a problem with the rear window heater. The claimant gave the court in oral evidence a coherent account of his dealings and communications from the Tuesday of the New Year (the 3rd of January 2006) onwards. These were first with the second defendant’s representatives - moving up from the service manager (Paul) who was the first to advise him that the heater had been repaired but that as regards the rear window there was nothing more the dealer could do, to Mark Hill the salesman who passed him onto Mr David Clapham the Brand Manager. Then on the 4th of January he sought advice from Trading Standards organisations, including VOSA, (corroborated by the claimant’s contemporaneous handwritten notes and a letter from the council fair trading officer to Mr Garside dated 5th of January). Then on the 5th of January he made contact with Aston Martin itself first through their Field Manager, Andy Hopkins, and then their Services Manager a Mr Tony Panayiotou (regional services manager) (“Mr P”) who on the Friday, (the 6th of January), reported back by telephone following a trip he had specially made to Newport Pagnall where the Vanquish S was built. Then there was a further telephone call, on his car phone, while on the Blackpool promenade, with the second defendant’s Mr Clapham. This sequence of events then culminated with his telephone call to the first defendant on the Monday (the 9th)  when having been put through by a lady called Marie to Mr Makepeace, the claimant said he told Mr Makepeace  that “I had rejected the vehicle”.

52. Meanwhile Mr Garside says he had already instructed solicitors, a Mr Miller of Hudson Taylor, since, as will be seen, they wrote a letter to the dealers dated the 9th of January. He thought he had instructed Mr Miller either on the 5th or the 6th but the likelihood was the 5th because he, the claimant, was occupied on the 6th with pre nuptials preparing for his civil partnership. He spoke with Mr Miller after he had spoken to Trading Standards but before matters had crystallised through his conversations with Mr P.

53. This account if reliable would establish that the claimant had indeed as against the first defendant rejected the vehicle. Its key feature is that the claimant was in a position to inform Mr Makepeace on the Monday that he had rejected the vehicle only because by that date matters had crystallised by virtue of the communication he had had from Mr P from Aston Martin on the Friday (the 6th). Mr P informed him of the results of his investigations at Newport Pagnall namely that the distorted rear window was a product of the glass manufacturing process and confirmed in effect that nothing more could be done.  Prior to that date (that is to say the 6th) Mr Garside said that his position had been, when told his vehicle was ready for collection, that he was not having the car back unless the car (meaning the rear screen) was sorted out. He said he had  not used the word “reject” as such to the dealer – but had made it very clear that if it could not be fixed he was not taking the car back and wanted his monies back. It was accordingly only on the Saturday when he spoke to Mr Clapham that  there was a conversation in which he had said “take the car back from me” and there was a discussion about the monies he could expect  back .Mr Clapham had said he would only give him £125,000. I should record that Mr Clapham did not disagree with these aspects of the claimant’s evidence.

My conclusions: the credibility/reliability problems facing the claimant on this issue.

54. I have no doubt that Mr Garside’s account to me of his dealings with both the second defendant, the dealer, and the Trading Officer and Mr P of Aston Martin are reliable and I accept it. As regards his communications with the dealer they are confirmed to large degree by the evidence of Mr Hill and Mr Clapham. Hence as against the dealer I have no doubt Mr Garside did purport in January 2006 to reject the vehicle. If written confirmation be required it is to be found in the solicitor’s letter of the 16th of January.  However as already explained such a communication to the dealer could not qualify as a rejection as against the first defendant.

55. I have however been driven to the conclusion that I cannot accept as reliable Mr Garside’s evidence of an express rejection as against the first defendant and in particular I cannot accept as reliable his evidence that he told Mr Makepeace he had rejected the car. I accept Makepeace’s evidence, as likely on the balance of probabilities to be correct, that had he been informed that the claimant was rejecting the car he would have insisted that such rejection be put in writing. And of course as already indicated, as against the first defendant such rejection never was put in writing until the 11th of October at the earliest.

56. I have reached this conclusion because in my judgment there are just too many features in the pleadings and the evidence which if Mr Garside’s now account on this issue be reliable and correct, are inexplicably inconsistent with this account.

57. I refer in particular to the following.

The claimant’s case as originally pleaded.

58. The original particulars of claim served when the claim was issued in September 2007, in paragraph 11 significantly omits to plead that in the conversation with Mr Makepeace in which the claimant requested a settlement figure, he expressly communicated a rejection of the vehicle as distinct from informing him of his dissatisfaction with the vehicle and requesting a settlement figure. Thus:

                “11. ……..The claimant refused to accept any redelivery of the said vehicle and rejected the same as set out below. At about the same time the claimant also contacted the First defendant (speaking to one Peter Makepeace)to inform it of his dissatisfaction with the vehicle and to request a settlement figure on the hire purchase agreement, he still, at this point in time ,as a lay person, considering he had purchased the vehicle from the dealer, the second defendant”.

59.  It is only in the amended pleading served over a year later on the 1st of December 2008 that the amendment is made to that paragraph to add between the words “dissatisfaction with the vehicle” and “to request a settlement figure” the all important averment “that he had rejected the same”.  I have in reality no satisfactory explanation for the way the matter was originally pleaded if Mr Garside’s recollection of his conversation with Mr Makepeace has always been as he now asserts it to be. I am persuaded by the defendants’ submission that Mr Garside’s present account is in reality a reconstruction after the event several years on, taking account of that which is now known to have been the true nature of the transaction between him and the finance company, and hence not a reliable account.

60. The original pleading also pleads (in paragraph 12) the conversation with Mr P as occurring after this conversation with Mr Makepeace (“The claimant then spoke to a Mr T. Panayiotou of Aston Martin who investigated the matter …..”) and pleads (in paragraph 13) that the claimant “ thereafter” rejected the vehicle by the letter of the 16th of January (which of course was a  letter from the claimant’s solicitors not to the first defendant but to the second defendant and wrongly assumed the vehicle had been purchased from the dealer). I accept that the pleading does in that paragraph 13 proceed to plead that this subsequent rejection had been orally communicated to Mr Makepeace as well as to the second defendant’s Mr Clapham but the only sensible reading of the entire pleading is that this is being pleaded as a second communication with Mr Makepeace taking place after the first. Of course it is now accepted there was only one. The amended pleading does again address this matter by (amongst other things) removing the “then” from the opening words of paragraph 12 and changing the tense of the “spoke” to the pluperfect.(“The claimant had, prior to speaking to the said Clapham, spoken to a Mr T….)

The chronology of events.

61. I of course accept that mistakes as to chronology can be innocent and should not in themselves be determinative of a party’s credibility, and it may well be that it was only the late disclosure of the Makepeace system notes that enabled the claimant precisely to date the day of his conversation with Mr Makepeace as Monday the 9th, but this is a matter which inevitably must go into the overall mix of a court’s assessment as to whether the claimant has established (and the onus is on him) that he did as against the first defendant purport expressly to reject the car in conversation with Mr Makepeace. And these pleaded errors in relation to what is now known to be the true chronology of events (namely the one conversation with Mr Makepeace came after the communications with Mr P) are repeated in the claimant’s witness statement dated the 16th of July 2008 which puts (in para.36) the contact with Black Horse and Mr Makepeace “on or about the same date” as the claimant says he spoke with Mark Hill, namely “on or about the 4th or 5th of January 2006” and expressly (in the subsequent paras. 37 and 38 ) speaks of the claimant “then” complaining directly to Aston Martin and being contacted by Mr P.

The contemporaneous correspondence.

62. The contemporaneous correspondence passing between the claimant (or rather those acting on his behalf) and the second and then the first defendant, does not support the proposition that the claimant had communicated a rejection of the vehicle to the first defendant finance company (as distinct from  the second defendant dealer). I have already set out the terms of the letter to the dealer of the 16th of January 2006 and the terms of the first letter ever written on the claimant’s behalf to the first defendant in June 2006 (that of the 2nd of June) none of which suggest that a rejection had been communicated to the first defendant back on the 9th of January. Moreover it is not without significance that as late as the 21st of December 2006 in a letter of instruction to the expert Mr Bristow, the claimant’s new solicitors (Napthens) were stating the way in which the claimant had elected to reject the vehicle in the following terms which singularly do not mention any material communication with the first defendant. Thus at paragraph 8 of the letter:

“ …….but given the defect ….our client refused to accept the return of the vehicle and elected to reject the vehicle. He did so on telephone to JCT 600 Limited on or about 3 January 2006 and requested a full refund. He also did so in writing as set out in the copy correspondence on or about 9 of January 2006.”

I should record however that I do not hold the terms of the letter written by his then solicitors to the dealer dated the 9th of January 2006 in themselves adverse to the credibility or reliability of the claimant. That letter is not a letter of rejection but merely one that asks what “you are going to do to rectify the defect and when it will be done. Your early response will oblige”.  I accept that this letter may have been dictated in ignorance of the “crystallising” information which Mr P. had communicated to the claimant on an occasion which is likely to have been after the claimant first instructed Mr Miller.

63. Finally, the behaviour of the first defendant is not consistent with a communication to it by the claimant in January 2006 that as against them he was rejecting the vehicle and treating the HP agreement as at an end. Certainly one might have expected some written communications emanating from the first defendant in January 2006 both internally and externally to the claimant if this were so, recording whether the first defendant was accepting the purported rejection. The only contemporaneous letter is of the 9th of January written to the claimant but this simply sets out the details of the requested settlement figure.

64. I have in this context considered carefully the forceful submission of Mr Vickers on behalf of the claimant that the contents of the first defendant’s Makepeace system notes for the 24th of January strongly suggest that notwithstanding Mr Clapham’s evidence that he knew nothing about any such contact between his company and Black Horse, there had been some kind of communication directly from the dealer to the finance company, - after the sending to the dealer by the claimant’s solicitors of the purported  letter of rejection dated the 16th of January -  in which it was made clear to Black Horse that the claimant was saying to the dealer that  he did not want the vehicle back (hence the reference to the inevitability of litigation). 

65. However ultimately this submission even if well founded cannot in my judgment be determinative of the issue I have to resolve, namely whether the claimant ever communicated a rejection to the first defendant in January 2006. Absent any special evidence establishing the contrary, the dealer is not to be treated as being the agent of the claimant for the purpose of communicating to the finance company the claimant’s election to treat the agreement with the finance company as at an end. And I observe no such agency has ever been pleaded in this claim.

66. I should also record I did not find of assistance in determining this issue the further submission of Mr Vickers that I should conclude in effect that the first defendant has been in breach of its obligations of disclosure, in particular in relation to documents relating to the Accounts Manager, and/or has been obstructive to the court in not calling evidence from for example the Accounts Manager of what contact there had been between the dealer and  itself in January 2006 and subsequently. It has been pointed out that the contents of the disclosed internal memorandum dated the 20 of June 2006, enclosing the June letter to the first defendant from the claimant’s solicitors, and sent within the first defendant from the Quality Assurance Advisor, Mr Williams, to Jonathan McGuiness, the possible Accounts Manager referred to in the system notes of January 2006, is apparently written on the premise that this is the first time the first defendant had known anything of the “the issues which the customer has raised”. It asks the recipient to contact the dealer to obtain their comments, their proposals for resolution, and their reasons for any refutation of the customer’s claim or refusal to offer a resolution. This apparent inconsistency between the contents of the system notes and this memorandum is however a very thin base upon which to mount a submission that I should as a result find the claimant did communicate his rejection directly to the first defendant.  

67. Furthermore I can find no substance, on the material before me, in the charge - if it be relevant - that the first defendant has been less than diligent in fulfilling its disclosure obligations. In this regard I should record that I did receive a letter from the first defendant’s solicitors dated 24 of July 2009, after the hearing before me had been concluded, responding to the criticisms on disclosure made in the claimant’s final submissions to the court. 

68. For all these reasons I cannot find that the claimant did communicate any rejection of the vehicle to the first defendant in January 2006. My overall judgment is that Mr Garside’s intention in telephoning Black Horse on the Monday was not formally to reject the car as against it or to communicate to it  a decision by him  to treat  the HP agreement with it  as at an end  but  simply (as he told the court when asked why he had asked for a settlement figure) to get to know his indebtedness to the finance company and “to keep them in the loop” as to his dissatisfaction with the vehicle, and as to what was happening between him and the dealer. This is entirely consistent with the understanding which is pleaded on his behalf in the particulars of claim and which he, to begin with at least, in oral evidence maintained, that he considered he had purchased the vehicle from the second defendant, the dealer, and had not acquired it from the finance company. The request for a settlement figure is in truth inconsistent with an intention on the part of the claimant to communicate a decision to accept the agreement with the first defendant as having been repudiated and as at an end.

My conclusions on rejection as a matter of fact 

69. I accordingly find there was no rejection of the vehicle as against the first defendant in January 2006. Nor, for the reasons already given, was there one in June 2006. However again for the reasons already set out, I do in these circumstances find there was an effective rejection as a matter of fact by the letter of 11th of October 2006.  

70. Accordingly the hire purchase agreement came to an end in October 2006 and the claimant must be entitled to the appropriate remedies flowing from his election communicated to the first defendant upon that date, to accept the repudiatory breach and to treat the agreement at an end - unless by that date he had already lost his right to elect by reason of prior affirmation, to which issue I now turn.

Had the claimant lost the right to elect by October 2006?  

71. I state my conclusions under this head in short form. I have already set out my understanding of the applicable legal principles. In my judgment the claimant had not lost his right of election by October 2006.

72. My reasoning is as follows.

73. I divide the history of events prior to October 2006 into two periods. First, the period before the claimant was aware that the distortion effect in the rear screen was not going to be rectified by the defendants, that is to say the period from the day of delivery (the 1st of August 2005) and the first week of January 2006. Secondly, the period after that date. 

The period prior to January 2006

74. There are a number of factual disputes as between the claimant and the second defendant in relation to this period:

                        -as to precisely when the claimant first notified it of his dissatisfaction with the  distorted effect of the rear screen window, (was it on the day of delivery, as the claimant says, or the day after as Mr Hill says and as recorded in the claimant’s solicitor’s letter of the 9th January  2006?);

                         -as to whether – as the claimant says - when he took the vehicle in for its first 1,000 miles service on the 14th of September 2005 it had already been arranged that a replacement window would be put in or whether, as the second defendant says through the evidence of Mr. Hill and its service manager Rochelle Corp, the need for a replacement was a matter to be investigated while the vehicle was in for its service and other matters were being dealt with, specifically a misfire problem;

                           -whether when the claimant came to collect the car by arrangement on the 20th of September (his case being that he had been expressly advised by Rochelle that the dealer would need the car for at least four days as replacement was not a straight forward process, and the evidence of his witness Mr Reader, not seriously disputed by Rochelle, was that she told them on the 14th that “the window to be changed, is due in”) he was given inconsistent accounts by first the service manager for the non replacement of the window and then by the Brand director Mr Clapham (the one suggesting that the replacement had proved faulty on inspection, the other apologising that the replacement rear window had never actually been in stock);
   
                 -whether the reason the vehicle was not immediately ready on the 20th was that the claimant had arrived too early;

                 -  the precise reason a replacement window was ordered by the dealer  after the 20th of September: Mr Clapham in effect said it was a gesture of goodwill only and he had decided to take a gamble in ordering one in order to placate the claimant although he did not believe it was likely to make any difference and told the claimant this: the claimant’s evidence was that the dealer was doing no more than that which Mr Hill said the dealer was going to do back in August 2005 following the claimant’s complaint about the distortion, namely that the dealer would arrange for the distorted rear window to be replaced;
                
                    -the precise details of the events of 2nd of December when the vehicle, while being driven by the claimant out of a roundabout with a sharp return in the early evening with a road moist with drizzle, left the road and stopped down a grassy slope from where it was rescued (the claimant would say “eased”) by an emergency service arranged by the dealer whom the claimant had contacted; - could this be described as a crash? was there any consequential damage? - the claimant says neither and the defendants do not in reality disagree. Was the vehicle taken back to the second defendant’s premises by the emergency service on the day of the incident or by the claimant (as he says) the next day, he having first driven the vehicle home?

75. I find it wholly unnecessary to resolve these particular disputes since regardless of where the truth lies on any particular one, the basic facts relevant to this period and material to the issue of whether the claimant during this time had in some way so conducted himself as to lose the right of election, are in reality not in dispute. On any view the claimant complained very soon after delivery, of the distortion effect in the rear window; on any view the claimant was told by the dealer to wait until the first service before the matter could be looked at.  It is accepted by the defendants that the car was with the dealer for this purpose between the 14th and 20th of September 2005 and that when the claimant came to collect the car on the 20th he complained to Mr Clapham that the vehicle had been with the dealer for the window replacement which had not been done. It is further accepted by the defendants that thereafter the claimant was told that a replacement window would be ordered and for it to be so replaced once it was in and at a mutually convenient time. On any view when on or about the 3rd of December 2005 the claimant took the car in for the tracking to be inspected, it was left with the dealer also for the specific purpose of the window being replaced and it is not in dispute that the vehicle was not then returned to the claimant until the 22nd of December 2005 with the replacement in place. I accept the claimant’s evidence that on its return, the vehicle was reversed by the dealer’s representative into his home garage and he did not thereafter drive the car until Boxing Day when he discovered, as already set out, that the rear screen was still distorted of which matter he made timely complaint to the dealer sometime between Christmas and New Year and which resulted in it being taken in again to the dealers. 

76. If it be relevant, it is clear on the evidence that up to this time the claimant had not driven the vehicle many miles (the dealer’s documents record a mileage of 1,174 miles as at the 14 of September 2005; 1,716 as at the 22nd of December 2005; and 1,840 when it was taken back to the dealers sometime after Boxing Day). The claimant’s evidence which I accept was that he had only used the car spasmodically throughout September, October and November because of the seasonal weather. To quote the words of his witness statement at paragraph 25 “I was not intending to use the car during bad weather months in order to refrain from damaging it …It is common for people to regard this kind of car as having a seasonal use to avoid inclement weather which is typically from April to November”

77. On these basic facts, I find that the claimant was throughout this period under the reasonably held belief that the distortion effect in the rear window of which he had timeously complained, was going to be replaced so as to remove the effect, in other words that that which the claimant regarded as a defect in the vehicle was going to be rectified by the dealer. In these circumstances it cannot possibly be said in my judgment that during this period the claimant with the requisite knowledge, did anything which could amount to an affirmation of the contract or that the right to reject had been lost by the mere passage of time. 

The period after January 3rd 2006 until October 2006 

78.  This is the period which begins with the claimant acquiring knowledge, by the 7th of January at the latest, that the distortion was not going to be rectified. This was  consequent upon his returning the car to the dealer after the replacement window had proved no better than the previous one, and being told by both the dealer and Mr P of the manufacturers that nothing more could be done. I accept that on the evidence during this second period the claimant can be said to have had the requisite knowledge both of the facts giving rise to the right to elect and of his right of election. However as already indicated this is not enough in order to demonstrate affirmation.  There has to have been an unequivocal demonstration by the claimant to the other party to the contract, in this case the first defendant, that he intends to and has decided to affirm. The only conduct relied on by the first defendant to this effect is that now pleaded in the re-amended defence at paragraph 9, namely “the claimant having affirmed the agreement in continuing to make payments from January 2006 to October 2006”. However in my judgment in the light of the concession by Mr Makepeace of the first defendant that he in effect told the claimant to continue the payments until the dispute concerning the window was resolved, it does not lie in the mouth of the first defendant to contend that such continuing payments were such an unequivocal demonstration of an intention to affirm the hire purchase agreement. Indeed the correspondence passing between the first defendant and the dealer, and between the first defendant and the claimant in June 2006 and August 2006, including the first defendant having sight of the rival expert reports, demonstrated that the first defendant well knew that the claimant had not accepted the status quo as regards the condition of the window (see for example his refusal of an offer from the dealer, relayed to the claimant by the first defendant by letter of the 9th of August, to replace the “S” rear window with that from the standard model where the rear light obscured the distortion), even if by then he had not actually communicated a rejection to the first defendant.

79. I also find on the evidence that up to October 2006 the claimant had certainly never formed an intention to elect to affirm the hire purchase agreement.

My conclusion on the alleged loss of the right to reject

80. Accordingly I find that there had been no loss of the right to reject by reason of affirmation. No other basis for such a loss has been put forward by the first defendant. As I have already indicated no question of waiver of the right to elect by estoppel, arises in this case. Again the mere passage of time cannot be sufficient. On any view the time between January and October 2006 was occupied with the claimant refusing to take the car back from the dealers and the first defendant at the very least having knowledge of an ongoing dispute between the claimant and the dealer as to the condition of the car. 

The claimant’s remedies against the first defendant.

81. It follows that I have now found that there was an effective rejection of the vehicle as against the first defendant both in fact and as a matter of law by the letter of 11th of October 2006. I turn accordingly to consider the appropriate remedies to which the claimant is entitled as against the first defendant flowing from his election communicated to the first defendant upon that date to treat the agreement as repudiated and thereby at an end.

82. I accept that in principle, as contended by Miss Pennifer on behalf of the first defendant, that in the context of a repudiated hire purchase agreement which was not rescinded immediately, the appropriate remedy is not one of restitution but one of damages (as now sought in the re-amended particulars of claim) equal to a return of all the monies paid by the claimant under the agreement up to the time of the termination on the 11th of October 2006, subject to a potential  deduction for the use of the hire goods during the period they were in the hirer’s possession. See Charterhouse Credit Co Ltd v  Tolley [1963] 2 QB 683.  See too Chitty supra, vol 2. at para 38- 269.

83. These monies total £147,122.54 made up of the £110,000 total deposit and 14 monthly instalments of £2,651.61 (£37,122.54).

84. In addition it is now accepted by all parties that the claimant is also entitled by way of restitution to a return of all the monies paid by him to the first defendant since the date of rejection and the effective date of the termination of the agreement – whether this is put on the basis of unjust enrichment or as money had and received or as monies paid for which no consideration has been given.

85. On my findings these total £26,604.23 made up of 9 monthly payments of £2,651.61 (£23,864.49) and the final payment of £2739.74.

Deduction for use

86. The issue remains in dispute as to whether any deduction should be made  from the damages and if so in what amount, for the use the claimant has had of the vehicle during the period it was in his possession during the currency of the agreement. This period must as a matter of principle include the entirety of the period while the agreement was continuing, that is until the date of rejection as this court has found it to be, namely 11th of October 2006, a period of some 14 months or so. Up until that date the claimant was free to use the vehicle if he so chose, albeit in the period prior to January 2006 he chose to use it only sparingly (a total of 1,840 miles or so), treating it as a seasonal car, (see above), and in the period following he chose not to use it at all and to leave it at the dealer. In that sense he had the benefit of its use throughout the period for which in principle I accept some deduction should be made. 

87. However I also accept the competing principle as exemplified by the decision of the Court of Appeal in Farnworth Finance Facilities Ltd. Attryde [1970] 1 WLR 1053 that in determining whether to make any deduction and if so the amount of it, the court should off set an amount to reflect the trouble and inconvenience through loss of use and the like caused to the hirer during the same period arising out of the problems with the vehicle.   In Farnworth at 1059H to 1060A, Lord Denning MR so applied this principle to the facts of that case as to exclude any deduction at all:

                          “There is one other point and that is on damages. Mr Hamilton said that Mr Attryde ought to be given credit for the use he had of the bicycle for some 4,000 miles. He relied on Charterhouse Credit Co v. Tolley ….where such a credit was allowed. But it seems to me that the value of any use had by Mr Attryde is offset by the great trouble he had. So no credit need be given for its use”. 

88. The facts of the present case however are very different from those in Farnworth. The troubles caused to the present claimant by the continuing problem with the distorted rear window are not of the same order of magnitude as those caused to Mr Attryde by the large number of faults arising in his motor cycle. The fact the present claimant has used the car for so few miles is for the most part related to his free choice as already indicated. Although I have found the vehicle not to be of satisfactory quality I have not found it to be thereby unroadworthy. On the other hand I accept there has been some loss of use arising out of the need to take the vehicle back to the dealer on more than one occasion for the rear window to be dealt with. These occasions embrace at least 5 days of the period between the 14th and 20th of September 2005 and the period between the 3rd of December and the 22nd of December (some 22 days), and the further days after Boxing day up to the 3rd of January when the claimant  returned the car to the dealer for the final time.  In the round this amounts to a month’s loss of use or thereabouts. In addition I accept there has been general trouble and bother caused arising out of the repeated discovery that the distortion defect had not been remedied and the need to go back to the dealer.

89. Miss Pennifer suggested to me that I should value the use the claimant has had of the vehicle by reference to the amount of the monthly instalments applied to 13 out of the 14 months. Another suggestion was by my taking an annual rate equivalent to 5% of the total purchase price (£8,500) to be applied to the same period.

90. Ultimately this issue of the amount of any deduction for use and the amount to be offset for trouble and inconvenience must be a jury question for the court. My conclusion is that justice will be done, taking all matters into account including the need for some offset, if I make a deduction of £8,500.This in effect applies the annual percentage calculation suggested by Miss Pennifer to only 12 of the 14 months in question.

91. The claimant did plead a discrete claim for damages for loss of use and inconvenience arising out of the repudiatory breach and there was attempt in final submission to persuade the court to award damages under this head applying the principles established in the  line of authority explained in Farley v. Skinner [2002]AC 732  whereby  damages can be awarded for disappointment, and loss of pleasurable amenity, where the provision of such amenity has been a major or important part of the contract, even if not its sole object.

92. I decline however to make any such award for the following reasons. First, I do not consider that the claimant has established by evidence any such loss of pleasurable amenity or disappointment. In any event however, there is no evidence before me which would begin to justify my finding the necessary feature of the contract to which I have referred. Secondly, as regards the more straightforward claim to loss of use and inconvenience this has already been accounted for in my quantification of the damages already made in respect of the monies paid by the claimant during the currency of the hp agreement and the credit he must give for the use he has had. As a matter of principle there can be no claim to loss of use in respect of the period after the agreement was terminated.

93. I should record that the claimant did not pursue his pleaded claim to damages in respect of insurance premiums paid on the car during the period of the dispute.

The claim against the Second Defendant for beach of the alleged Price Agreement.

94. I turn to the discrete claim against the second defendant for the sum of £8,209.00 being the difference between the £113,209.00 which the claimant says the second defendant originally agreed to give by way of part exchange allowance on the DB9 to be set off against the price to be paid for the new Vanquish “S”, and the £105,000 which was ultimately allowed as set out in the order form agreement of the 12th of July to which I have already referred. This sum is claimed to be payable by virtue of an implied term in an alleged agreement “to reduce the documented sale and part exchange price from that previously agreed” ( referred to as “the Price Agreement”). 

95. As already explained, it is the claimant’s case that his position when negotiating with the second defendant for a new car in July 2005 which ultimately led to his acquiring the Vanquish S, was always that in any new deal he wanted to be reimbursed for the full value of the DB9 at the price he had previously paid for it some months earlier in the January, it being said that at this time the DB9 was selling for premium values above list price. It indeed appears that the second defendant did thereafter put the DB9 up for sale at £115,000. It is pleaded (at paragraph 20 of the particulars of claim) that when the claimant originally negotiated with the second defendant to purchase the Vanquish ‘S’ it was priced at £185,000 and the second defendant offered to make a part exchange allowance at the price the claimant had originally paid for the DB9, namely £113,209.00. This would of course have meant a balance to be found by the claimant of a little under £72,000. It is then pleaded that the second defendant agreed in effect to reduce the price of the  Vanquish to £178,209.00 while still maintaining the part exchange price given for the DB9, leaving a balance to be found of  £65,000 (“The second defendant agreed with the claimant that the price of the Vanquish S could be reduced so that it would be a total of the part exchange of £113,209.00, a deposit of £5,000 and £60,000 finance from the first defendant ( a total of £178,209.00))”.

96. The so called “price agreement” is then pleaded in these terms:

		“21. However shortly before the contractual documentation was completed, the second defendant asked the claimant whether provided his obligations in relation to the deposit and finance remained unchanged he would consent to both the sale price and the part exchange price being shown as lower than agreed, and seeing no reason not to agree this proposal, the claimant agreed and thus the sale price and the part exchange price were shown as £170,000 and £105,000 in the contractual documentation”.

97. I have to say at once however that this precise account of what the agreement had been as regards the price to be paid for the Vanquish “S” before the price agreement was made (namely £178,209) and of the express terms of the so called price agreement, is not reflected in either the witness statement of the claimant or a letter written on his behalf by his solicitors dated the 10 of July 2007. 

98. Paragraph 15 of the witness statement reads:

                   “before the contractual documentation was complete, Mark Hill of JCT 600 asked me whether I would be willing to consent to the sale price on the Aston Martin Vanquish S being reduced on the basis that the sale price of my part exchange DB9 was also reduced. Mark Hill suggested the price of the Vanquish S should be reduced from £185,000 to £170,000 and the part exchange of the DB9 reduced from £113,209.86 to £105,000. Mark Hill also confirmed to me that there was no loss to me and that it was normal to carry out the transaction in this way. He confirmed that my obligations in respect of the deposit and the finance remained unchanged. I therefore agreed to this as requested although I have since become aware that the real reason for the reduction in the sale price was to reduce JCT 600’s liability  to pay VAT on the sale price of the new Vanquish ‘S’.

99. On this version of events the dealer in making the price agreement was, one might have thought somewhat remarkably, agreeing to reduce the sale price by £15,000 although the part exchange price was being reduced by only just over £8,000.

100. The solicitors’ letter reads in its material part:

                      “Our client agreed to pay the purchase price of the vehicle on the forecourt which was £186,000. JCT …also agreed to pay the reimbursement of £113,209 in respect of the part exchange of our clients DB9.

                      However, following our client’s verbal agreement to purchase the ..Vanquish S at £186,000 and the agreement of JCT to purchase by part exchange our client’s DB9 for £113,209.00, the purchase price of £186,000 was ‘written down’ to £175,000 and the part exchange allowance was also ‘written down’ to £105,000..Our client had also paid a deposit of £5,000 which was then deducted from the ‘written down’ purchase price leaving a balance of £170,000.” 

101. The implied term of the alleged price agreement under which the present claim is said to arise is pleaded, in paragraph 23 of the Particulars of Claim, as being implied in order to give business efficacy to the agreement. I was referred to a number of statements of principle, (for example in Liverpool City Council v. Irwin [1977] A.C.239), on when a term will be implied into a contract in order to give it business efficacy. It is sufficient if I record for present purposes that such a term will not be implied simply because it might be thought to be a reasonable or a sensible one. It must be necessary in a business sense to give efficacy to the transaction, with the touchstone being one of necessity. The basic concept is that although there is an apparently complete bargain, without the implied term the contract will not work, although it is true that in Equitable Life Assurance Society v. Hyman [2002] 1 AC 80,408, Lord Steyn spoke of an “implication” which “is essential to give effect to the reasonable expectations  (my emphasis) of the parties”. 

102. The term to be so implied is pleaded in these terms:

                “23. In the circumstances, it was an implied term (such term being implied to give business efficacy) of the agreement to reduce the documented sale and part exchange price that if the Vanquish was not of satisfactory quality and fit for purpose such that the claimant was entitled to and did reject it, the claimant would be able to recover the said sum of £8,209.00 from the Second defendant (the second defendant having had the benefit of that sum by paying less to the first defendant for the DB9 than that car was actually worth as well as reducing its VAT liability in relation to the sale of the Vanquish S).”

103. The circumstances relied upon in support are pleaded in the prior paragraph as follows:

                       “ 22. Nevertheless the reality is that while the said agreement to reduce the sale/part exchange prices had no effect on the claimant as long as the car was of satisfactory quality, when it was not and the claimant was entitled to reject it, the effect of the said agreement (which was never for the benefit of the claimant) became detrimental to him in that he can only recover from the first defendant the price actually paid by him for the Vanquish ‘S’ of £170,00 leaving him in real terms £8,209.00 worse off than when he purchased the Vanquish on rescission of the contract (having actually put £5,000 plus £60,000 plus £113,209.00 into the purchase).”

My conclusions on the price agreement claim.

104. I am driven to reject this claim as pleaded. There are in my judgment a number of insuperable difficulties with this part of the claim notwithstanding Mr Vickers’ forceful submissions that the court should not allow the second defendant dealer to benefit from an unjust enrichment.

105. First, for the claim to begin to succeed it must be shown there was initially a binding agreement on the part of the claimant to buy and on the part of the dealer second defendant to sell the Vanquish ‘S’ at a certain price and a binding agreement on the part of the dealer to buy and the claimant to sell the DB9 at a certain price, which was then varied as regards what would be shown on the documents, by the pleaded price agreement in the way alleged. I note that the solicitors’ letter referred to an oral agreement to this effect. However, having heard the evidence of both the claimant and the salesman, Mr Hill, with whom the claimant was negotiating for the purchase of the new Vanquish ‘S’, I am quite unable to accept that this was the case.  It is patently obvious to me that right up until Mr Hill sent the fax dated the 11th of July and the claimant returned the signed Order Form on the 12th, the parties were simply negotiating terms, and prior to the signing of the Order Form (on both sides), no agreement was ever entered into by the two parties intending to create legal relations.

106. Further, in any event, as already demonstrated, the evidence relied on by the claimant as to what took place in these negotiations does not reveal a consistent picture to support the pleaded case of what was agreed as to the respective prices of the two vehicles prior to the alleged price agreement. It is true that Mr Hill accepted that he understood that in any deal the claimant wanted to be allowed the £113,209 he had paid for his DB9, but he also made the point that the claimant was just as interested in the balance he was going to have to fund out of his own pocket (whether by cash or financing).What Mr Hill did in the course of the negotiations was to offer to reduce the balance the claimant was going to have to find from £72,000, to then £70,000 and then £65,000. I accept Mr Hills’ evidence that he himself never agreed that in any overall deal the part exchange allowance would be £113,000. His position was that the standing price of the part exchange vehicle in the books of the company had to be much less and the only way a discount could be given to the customer to reduce the overall cost of the deal to him, was by the dealer reducing the price at which the new car was sold.

107. Further in any event I cannot accept that even if there were a binding price agreement as alleged by the claimant with an intention by both parties to create legal relations thereby (which I do not consider there was), that it was necessary to give business efficacy to that agreement to imply the suggested term. As Mr Popplewell on behalf of the second defendant submitted, the agreement will work just as well without such a term. It must not be forgotten that the original written agreement between the dealer and the claimant was a contract of sale between the two of them which did not include the first defendant, albeit it contemplated by its terms that the position might change.

108. For all these reasons I reject the claim under this head referable to the alleged price agreement.

The Part 20 Proceedings

109. I turn to the issues raised in the part 20 proceedings brought by the first defendant against the second defendant. It is common ground that the court having found the vehicle was not of satisfactory quality for the purposes of the term implied into the hire purchase agreement, the first defendant must succeed in establishing liability and is entitled to damages against the second defendant who supplied it with the vehicle, for breach of the like term implied into that contract of sale by section 14 of the Sale of Goods Act 1979. The damages sought to be recovered are pleaded by the first defendant in paragraph 5 of its particulars of claim in these terms: 

                 (a) such sums as the Part 20 claimant may be ordered to pay the claimant in respect of the claim.

                 (b) in the event that the court orders rescission of the hp agreement …..the sums which the part 20 claimant would have been entitled to receive from the claimant but for the rescission; 

                (c) such sums as the Part 20 claimant may be ordered to pay or may reasonably pay to the claimant in respect of his costs of the action;

                (d) such sums as the Part 20 claimant may reasonably incur by way of its own costs of this action and generally in relation to the claimant’s Claim.

110.  In its final prayer, the part 20 claimant seeks “damages for breach of contract to the extent of an indemnity for the sums in paragraph 5 above.”  In principle the entitlement to recovery of damages measured by reference to these heads of loss is not controversial.

111. The sole controversy is that the second defendant contends that the first defendant is not entitled to the full measure of damages because it should give credit for the value of the vehicle whose unencumbered title in possession returned to it following the termination of the hire agreement consequent upon the claimant’s rejection and election to treat it as repudiated on 11th of October 2006. If such credit is to be given, there is then controversy as to the date at which the value is to be assessed. The second defendant says this should be the date of rejection. 

112. The first defendant objects to this contention of credit as a matter of principle. It asserts that as regards it having title of the vehicle as from the 11th of October 2006 consequent upon the early termination of the hp agreement, it is in fact in no different position from that in which it would have been if there had been no breach of the contract of sale - since had there been no breach the first defendant would in any event have retained title in the vehicle unless and until the claimant exercised his option to purchase the same. The only effect of the early termination was to return to the first defendant a right to possess the vehicle before it might otherwise have done, a right said to be of no value to the first defendant. 

113. The question  it said should then be approached as a question of mitigation of damage, by reference to the question whether the first defendant has failed to mitigate its loss in not taking immediate steps to sell the vehicle following the claimant’s rejection. The loss which was amenable to mitigation is defined as the first defendant’s financial loss taking into account its liability to the claimant on the claim against it. The first defendant then relies on a body of evidence to support the contention that it has not acted unreasonably in not selling, given the circumstances – which undoubtedly did exist – where the second defendant itself did not accept that the vehicle was of unsatisfactory quality and disputed whether the claimant was entitled to or did reject the vehicle as against the first defendant.

114. This evidence is in the form of correspondence passing between the  parties after the rejection date, showing that first the claimant up until it disclosed its further expert report in February 2007 had been asking that the vehicle should not be disposed of (in order to enable the obtaining of the report) and that thereafter the second defendant was asking that there be no disposal, notwithstanding the claimant’s suggestion by letter of the 20th of April 2007 that the vehicle be sold given its nature as a depreciating asset, because of its view (set out in a letter to the claimant and forwarded to the first defendant by letter of 14th May 2007) that the trial judge in order to determine liability would need to be driven in the car, a stance it maintained right up to the trial in December 2008. The second defendant’s Mr Clapham in evidence conceded that they, the dealers, had felt it “would be beneficial to us if Black Horse did not sell”. Post that trial and my judgment on the preliminary issue, reliance is then placed on an email communication from the first defendant dated 8th of December 2008, to both the other parties in which it was proposed that the car be sold (“this will mitigate any loss due to the depreciation of the vehicle”), to which proposal the claimant agreed in principle but to which, up until the date of the current trial, the second defendant never responded. The position is that as at the date of the current trial in July 2009 the vehicle remained unsold. The first defendant’s position is that in these circumstances, although it has still not sold the car, if its value is to be taken into account, it should be its value at the very earliest after the date of my first judgment or the date of the current trial in July 2009.

My conclusions

115. On the principle of the need to give credit, I agree with the analysis of the second defendant on this issue. In accordance with normal principles relating to the measure of damages for breach of contract, the first defendant is entitled to be put in the position it would have been in financially had the contract of sale with the dealer been performed and there had been no breach, (together with compensation for any additional losses it has incurred though its liability to the claimant), but it is not entitled to be put in any better position.  Had this contract of sale been performed, the hire purchase agreement itself would not have been terminated early, the claimant would have exercised his option to purchase, and the first defendant would have received the entirety of the payments due under the agreement. However, it would not have also retained title in the vehicle. The effect of the breach and the claimant’s consequential rejection of the car by reason of  the matters giving rise to that breach,  is that the first defendant  has lost the benefit of the  payments which it  would otherwise have received under the agreement (the entirety of the  monthly  payments including the total credit charge). This in principle is its loss for which it should be compensated by the second defendant (together with its additional losses in respect its liability to the claimant), and this is the loss which has to be assessed. However if in assessing that loss the court were to ignore the fact that the first defendant continues to have title in the vehicle, it will undoubtedly in my judgment be in a better position than it would have been had there been no actionable defect in the rear screen and therefore no breach. Hence I agree that in principle in any assessment of the damages credit must be given for the value of the vehicle. This is not an issue of mitigation of damage.  It is simply part of the proper assessment of the loss suffered by the first defendant arising out of the breach.

116. I then turn to the date when the value of the car should be assessed. Since its valuation  is part of the court’s assessment of the first defendant’s loss arising out of the second defendant’s breach, the appropriate date ought in principle to be that appropriate for the assessment of damages for breach of contract which normally is as at the date the cause of action against the second dealer arose, viz the date of the breach, although I accept that the court has power to fix some other date as may be appropriate in the circumstances if to follow it would give rise to injustice. See Johnson v. Agnew [1980] AC 367,401; Chitty, supra, vol 1 para 26-064. In theory in this case, given my findings, the breach of contract of sale arose at the time of the vehicle supply in August 2005 but that date undoubtedly would cause injustice, since up until the claimant’s rejection the first defendant had no unencumbered title to the car in possession enabling it to sell. However I do not consider there to be injustice if I take as the date of assessment, the date of the claimant’s rejection since that is the date when the hire purchase agreement was terminated, and when the first defendant was in a position to dispose of its interest in the car if it so chose.

117.  I do not regard the reasonableness or otherwise of the first defendant not selling the car pending the outcome of the court’s determination of liability on the claim, as being of any true relevance to the justice of the date of assessment. The decision of the first defendant not to sell as in October 2006 flowed from it’s – on my findings – wrongful failure not to accept that the claimant was entitled to and did reject the car as against it as at that date. The decision to postpone sale flowed not from any exercise concerned with the mitigation of its loss flowing from breach of contract, but from – what has on my findings turned out to be – a wrong decision to fight the claimant on liability. This was a decision which the first defendant was of course entitled to take but in doing so it took the attendant risk of the consequences which might flow to it, if that decision did not lead to a successful outcome on liability. I agree with the second defendant that on my findings it had always been open to the first defendant to have protected itself as at October 2006 against the risks of depreciation in the vehicle, by rejecting the vehicle as against the second defendant dealer. I do not accept that it would have lost the right to reject because of the applicable provision in section 35(4) of the 1979 Act relating to deemed acceptance after a reasonable lapse of time. The facts and lapse of time here are not dissimilar to those in Clegg v. Anderson [20030 EWCA Civ 320 where deemed acceptance was not found established. But even if I were wrong about that, it  had always been open to the first defendant to sell the car any time after the date of the claimant’s rejection as I have found it to be and to protect itself in that way.

118. Thus I have concluded that credit must be given for the value of the Vanquish S motor car as at October 2006. Such valuation must take into account the distorted condition of the rear window, but not the fact that as at that date there was an ongoing dispute as to whether the claimant had validly rejected the car, given my finding that as at that date there was a valid rejection. I heard evidence from Mr Willis, a forensic automobile consulting engineer and motor claims assessor, called by the first defendant. Although he had not inspected the vehicle as such, he had access to my findings of December 2008 as to the vehicle’s condition. His expert opinion was that the market retail price of this vehicle in October 2006, assuming that the distortion effect was drawn to the attention of the buyer, would have involved an £8,000 reduction from the published retail price for the vehicle as per Glass’s Guide for that date, which was £127,650. I accept this basis of valuation as a reasonable one for me to adopt. 

119. This leads me to find that credit must be given in the assessment of the damages or indemnity to which the first defendant is entitled as against the second defendant in the part 20 proceedings, in the sum of £119,650. I do not consider that any further reduction should be made, as suggested by Mr Willis for the fact that  the Glass’s Guide cost new price was higher than that actually paid by the claimant since that could not be a factor relevant to the price the vehicle would command in the retail market as a second hand vehicle. 

120. As I have indicated subject to the issue of credit, the extent of the remedy to which the first defendant is entitled in the part 20 proceedings is not a matter of dispute.

The Second Defendant’s counterclaim for storage charges 

121. I turn finally to the second defendant’s counterclaim against both the claimant and the first defendant for storage charges referable to the period after 3rd of January 2006 when it has been storing the vehicle at its premises. The claim is put on the basis that for the period up to the date of rejection as found by the court (October 2006) those charges are the responsibility of the claimant, and thereafter they are the responsibility of the first defendant.

122. This claim to storage charges is misconceived. In principle I accept that the second defendant would be entitled to recover against the appropriate party such expenses it is able to prove which it has incurred in fulfilling its duty of care under the gratuitous bailment imposed upon it through the failure to collect, by one or other of the other parties. See China Pacific SA v Food Corp. of India [1982] AC 939 (HL). However there can on this line of authority be no claim to storage charges as such.

123. Although the second defendant did call evidence describing how and where the vehicle had been stored on its premises (in a polytunnel) and the sort of charges which might be recovered in the market place for vehicle storage, it in fact called no evidence to establish whether it had incurred any expense in so storing the vehicle at its dealership facility.

124. I accordingly reject this counterclaim to storage charges in its entirety.

Overall Summary

125. I accordingly find as follows:

On the Claim against the First Defendant 

126. I find that there was a valid rejection of the vehicle and a communication by the claimant of an election to treat the HP agreement as repudiated, in October 2006 by the letter of 11th October 2006.

127. The claimant is entitled to damages equal to a return of all the monies paid by him under the agreement to the first defendant up to the date of rejection. I calculate these to be £147,122.54 (made up of the £110,000 total deposit and 14 monthly instalments of £2,651.61), less however the deduction for the claimant’s use of the car which I have assessed at £8,500 making a net award of £138,622.54. 

128. In addition the claimant is entitled to a return of all additional payments made to the first defendant after the date of rejection. I calculate these at £26,604.23, made up of 9 monthly payments of £2,651.61 and a final payment of £2,739.74.

129. On the handing down of this Judgment I will invite submissions of the parties on the form of the order to be made on the claim and in relation to the claim to interest on these damages and other sums and as to costs.

On the claim against the Second Defendant 

130. The claim for £8,209 under the alleged price agreement fails. Again I will invite submissions on costs.

On the counterclaim of the Second Defendant

131. The counterclaim fails and is dismissed. On the handing down of this judgment I will invite submissions as to costs.

The Part 20 proceedings 

132. On the claim by the first defendant against the second defendant, in principle this succeeds and in principle the first defendant is entitled to the indemnity in the terms it has pleaded save that in any calculation of the losses in respect of which the indemnity lies, credit must be given in the sum of £119,650 representing the value of the vehicle.  

133. The counterclaim of the second defendant in the part 20 proceedings fails and is dismissed.

134.  On the handing down of this Judgment I will invite submissions from the parties as to the precise form of the order to be made in the Part 20 proceedings and as to costs.