Garside v Black Horse Ltd & Ors

A hirer’s acceptance of goods under a hire purchase agreement does not, by itself, remove the right to reject goods for breach of the implied condition of satisfactory quality. Affirmation requires knowledge of the breach and the right to elect, together with an unequivocal communication of an intention to affirm. Continued payments do not necessarily amount to affirmation, particularly where the finance company has advised that payments should continue pending resolution of the dispute.

For damages following termination, payments made during the agreement may be recoverable subject to a deduction for the use of the goods, offset by trouble and inconvenience. A finance company’s damages against the supplier must also reflect the retained value of the vehicle.

The claimant acquired an Aston Martin Vanquish S under a hire purchase agreement with Black Horse Limited. The vehicle was supplied by JCT 600 Limited. The claimant alleged that distortion in the rear window breached the implied term of satisfactory quality under the Supply of Goods (Implied Terms) Act 1973.

After an earlier preliminary ruling in the claimant’s favour, the court considered whether the statutory term extended to the defect, whether the claimant had validly rejected the vehicle, whether he had affirmed the agreement, and the resulting remedies. The court also determined the claimant’s separate price-agreement claim against the dealer, the dealer’s storage-charge counterclaim, and the finance company’s Part 20 claim against the dealer.

1. The reliance on section 10(2C)(b) of the Supply of Goods (Implied Terms) Act 1973 failed. The examination of an allegedly identical vehicle ought not to have revealed the distortion, and section 10(2C)(b) required examination of the very goods which became the subject of the agreement. The implied term therefore extended to the defect.
2. The implied term was a condition under section 10(7). Breach entitled the claimant to accept the repudiation and reject the vehicle. Under the principles in Peyman v Lanjani and Alpha Chauffeurs Ltd v City Gate Dealership and Lombard North Central Plc, affirmation required knowledge of the relevant facts and the right to elect, followed by an unequivocal demonstration to the other contracting party. Estoppel was distinct and was not relied upon.
3. The January 2006 communications to the dealer did not reject the hire purchase agreement against Black Horse. The claimant’s first effective rejection against Black Horse was the solicitors’ letter of 11 October 2006. The claimant had not affirmed the agreement before then. Continued payments did not amount to unequivocal affirmation, particularly because Black Horse had advised him to continue payments while the dispute continued.
4. The claimant recovered the payments made up to rejection, less £8,500 for use of the vehicle, and all payments made after rejection. No separate award for loss of use or inconvenience was made because those matters were reflected in the deduction.
5. The dealer’s alleged price-agreement claim failed. No binding prior agreement of the alleged kind was established, and the proposed implied term was not necessary to give business efficacy. The storage-charge counterclaim also failed because the dealer proved no expenses incurred in storing the vehicle.
6. Black Horse’s Part 20 claim succeeded in principle. Under section 14 of the Sale of Goods Act 1979, its damages had to reflect its actual loss, including credit for the vehicle’s value. Credit was assessed at £119,650 as at October 2006.

First instance decision. No appellate history was stated in the judgment.