BDW Trading Limited v Lantoom Limited

The court held that a contract for supply of stone was formed on BDW's Purchase Order and incorporated BDW's Standard Conditions by reference. The supplier, Lantoom, accepted the order by commencing delivery and the Delivery Note did not operate as a counter-offer. The court concluded that the stone delivered was not fit for the notified purpose of forming external walling (in particular the external leaf of cavity walls) and/or was not of satisfactory quality under section 14 of the Sale of Goods Act 1979 and the contract terms (notably clauses 6.1.1, 6.1.2, 6.1.3 and 6.1.5 of BDW's terms).

The judge preferred the evidence of BDW's geology expert, Mr Richardson, to that of Lantoom’s expert, Mr Hunt. A range of laboratory and durability tests (including wetting/drying, freeze/thaw and salt crystallisation), petrographic examinations and site observations supported the conclusion that the material supplied performed poorly and showed variability and a propensity to crack, spall and delaminate. The court found Lantoom in breach of warranty and liable under the indemnity in clause 10.5; quantum and detailed remedial accounting were reserved.

Background: The dispute concerned Phase 1 of the Penndrumm Fields housing development in Cornwall. BDW (the claimant) ordered Lantoom stone for external walling. After houses were completed householders reported cracking, spalling and pieces falling from the stone leaf. BDW investigated, instructed experts and replaced the stone with material from another quarry. Proceedings were issued in 2018.

Nature of the claim and relief sought: BDW pleaded contract and alternative simple-contract claims, implied terms under the Sale of Goods Act 1979 (s.14) and misrepresentation. BDW sought damages/indemnity for defective stone and sought to recover the cost of replacing the stonework; it relied on incorporation of its Standard Conditions by reference in its Purchase Order (including clauses on specification, fitness for purpose and indemnity).

Issues for decision: The court identified a long list of issues which it reduced for decision. Key issues were (i) contract formation and incorporation of BDW's standard terms, (ii) the meaning and relevance of the term "slate" (true slate v locally called "slate"), (iii) whether BDW had notified the supplier that the stone was to be used as the external leaf of a cavity wall, (iv) whether the stone met the Specification or was of satisfactory quality and fit for its notified purpose, (v) causation (including alleged workmanship or design failings relied on by Lantoom), (vi) expert evidence and testing results, and (vii) the reasonableness and scope of remedial works (reserved for quantum in part).

Court's reasoning (concise): The judge concluded that BDW's Purchase Order, which referred to BDW's Standard Conditions and a website location, provided reasonable notice of those terms and that Lantoom accepted by beginning deliveries; the Delivery Note did not amount to a counter-offer or variation of the overall contract. The parties had agreed that the stone was to be used in the external walls and BDW had notified the intended purpose (external leaf of a cavity wall). The court analysed competing expert evidence and preferred Mr Richardson's measured and corroborated conclusions to Mr Hunt's extensive and, in the judge's view, less reliable reports. The petrographic and durability testing evidence (BRE testing, wet/dry, freeze/thaw, salt crystallisation and other laboratory work) showed that the stone supplied was better described as a mudstone/slaty mudstone with higher water absorption, variable porosity and a propensity to fail when exposed to wetting/drying cycles; those characteristics explained the observed failures. The court rejected Lantoom's primary causation case that failures were caused by contractors' workmanship, mortar quality, recessed joints, or the absence of backing as being insufficient to explain the scope and rate of failure shown on site and in the laboratory. The judge held Lantoom in breach of the express contractual warranties and entitled BDW to damages and to rely on the indemnity in clause 10.5. The question whether wholesale replacement of stone was reasonable was left to be revisited with quantum evidence.

Claim succeeded. The court held that the Purchase Order incorporated BDW's Standard Conditions and that Lantoom accepted that offer by commencing delivery. The stone delivered was not of satisfactory quality or fit for the notified purpose of use as external walling/the external leaf of a cavity wall. Lantoom breached express and implied contractual terms (including clauses 6.1.1, 6.1.2, 6.1.3 and 6.1.5) and BDW is entitled to damages and to rely upon the indemnity in clause 10.5. The judge preferred BDW’s expert evidence and the laboratory/durability testing over the defendant’s contrary expert evidence. Quantum and detailed remedial accounting were reserved where appropriate.