Procter & Gamble (Health and Beauty Care) Ltd. & Ors v Carrier Holdings Ltd. & Anor

A contractual warranty about the performance of goods is ordinarily breached when the non-compliant goods are delivered, where the warranty is closely connected with their subsequent supply. An earlier inability to comply may amount only to an anticipatory breach, which does not displace the innocent party’s right to sue on the later actual breach if the renunciation was not accepted.

Claims in negligence and negligent misrepresentation accrue when the claimant suffers actual and relevant loss. Specifying defective goods, or holding a supposedly less valuable building contract, does not necessarily constitute that loss. The relevant loss may arise when the claimant acquires a property interest in the defective goods.

The claimants sought damages in contract and tort concerning air-conditioning units installed at their headquarters. They alleged breach of a collateral warranty, negligent misrepresentation and negligence concerning representations about the units’ performance.

The court determined three limitation issues: when each cause of action accrued in relation to two limitation dates. It also considered applications concerning the addition or substitution of parties and amendments to add a collateral warranty claim.

1. Preliminary issues. The answers to all questions were “No”. The contractual cause of action accrued when delivery of the non-compliant units was complete, on the assumed facts 21 February 1995. The warranty was sufficiently connected with the supply of the units to justify a sale-of-goods approach.
2. If the warranty was incapable of performance when made, that could constitute an anticipatory breach. Since the claimant had not accepted any renunciation or treated the contract as discharged, it could sue on the later actual breach when defective units were supplied.
3. A cause of action in negligence accrues on actual and relevant loss. The court rejected the submission that loss occurred when the units were specified, through a reduction in the value of the building contract. The relevant loss was suffered when the claimant acquired a property interest in units less valuable than compliant units. It was unnecessary to decide the precise date of acquisition, which was later than both dates in issue. The same conclusion applied to negligent misrepresentation.
4. The amendments made on 16 February 2001 were valid under CPR 17.1(1) and CPR 19.4(1), because the limitation periods remained current and the claim form had not been served. The application to disallow those amendments under CPR 17.2(1) was dismissed.
5. The judge held that substitution of Carrier for Toshiba was a substitution within CPR 19.5, notwithstanding the separate claim retained against Toshiba. Section 35(6)(a) of the Limitation Act 1980 expressly contemplated substitution in respect of any claim. The proposed collateral-warranty claim arose from the same or substantially the same facts as the negligence claim and permission would have been granted under CPR 17.4(2), had it been necessary.

The court dismissed the application to disallow the amendments and would have granted the other applications if formal determination had been required. Further submissions were directed on the form of order.