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LAMBERT AND ANOTHER
LEWIS AND OTHERS
COURT OF APPEAL, CIVIL DIVISION
24 MAY 1979
 1 ALL ER 978
BEFORE THEIR LORDSHIPS:
STEPHENSON, ROSKILL AND LAWTON LJJ
Roy Beldam QC and R F Nelson for the owner and the driver.
Michael Maguire QC and R Livesey for the manufacturers.
Michael Turner QC and Patrick Phillips for the suppliers.
Stevensons (for the owner and driver)
Hextall Erskine & Co agents for Laces & Co, Liverpool (for the manufacturers)
Young, Jones, Hair & Co (for the suppliers)
Mary Rose Plummer
COMMERCIAL LAW – CONTRACT:- Sale of goods – Warranty – Implied condition as to fitness – Defective trailer coupling supplied by garage to vehicle owner for use with trailer – Coupling unsafe for purpose for which it was designed by manufacturer – Continued use of coupling by owner after he ought to have known of defective condition – Defective coupling causing trailer to break loose from vehicle and cause damage to another vehicle resulting in death and injury to occupants – Whether continued use of defective coupling by owner in contemplation of parties at time of sale – Whether conduct of owner breaking chain of causation between suppliers’ breach of warranty in supplying defective coupling and the accident – Liability of owner, supplier and manufacturer inter se.
COMMERCIAL LAW – CONTRACT:- Negligent misrepresentation – Liability of manufacturer of good for breach of warranty – Absence of an express warranty – Whether the literature supplied by the manufacturers and the claims made in it were not intended to be such a warranty and were not acted on as such by the suppliers – Relevant considerations
TRANSPORT AND MOTOR VEHICLE LAW:- Contracts and warranties for sale and use of Vehicle accessories – Defective trailer coupling supplied by garage to vehicle owner for use with trailer –Continued use of coupling by owner after he ought to have known of defective condition – Defective coupling causing trailer to break loose from vehicle and cause damage to another vehicle resulting in death and injury to occupants – Whether continued use of defective coupling by owner in contemplation of parties at time of sale – How treated
TORT AND PERSONAL INJURY:- Fatal accident – Death arising from unhitching of a towed lorry due to defective trailer coupling – Determination of the liability of owner, supplier and manufacturer inter se – Negligence – By a third party notice, claim of indemnity/contribution by the owner and the driver against the suppliers in the event of judgment being entered against them – By fourth party proceedings, claim of an indemnity by the suppliers in contract and tort from the manufacturers in the event of being held liable to the plaintiffs, the owner or the driver – How treated
CHILDREN AND WOMEN LAW:– Women/Young persons and Security of Highways – Fatal Accidents – Mother and daughter who lost father/husband and son/brother due to the uncoupling of a lorry hitched to a tow-truck – Women/Young People and Justice Administration – Fatal accident and injury to survivors – Defective trailer coupling as cause of accident which injured woman and her daughter while killing the husband/father and son/brother– Determination of liability – How treated
CASES REFERRED TO IN JUDGMENTS
Anns v London Borough of Merton  2 All ER 492,  AC 728,  2 WLR 1024, 75 LGR 555, 141 JP 526, HL.
Ashington Piggeries Ltd v Christopher Hill Ltd, Christopher Hill Ltd v Norsildmel  1 All ER 847,  AC 441,  2 WLR 1051,  1 Lloyd’s Rep 245, HL, Digest (Cont Vol D) 785, 726a.
British Oil and Cake Co Ltd v Burstall & Co, Burstall & Co v Rayner & Co, Rayner & Co v Bowring & Co Ltd (1923) 39 TLR 406, 39 Digest (Repl) 828, 2896.
Burrows v March Gas and Coke Co (1870) LR 5 Exch 67, 39 LJ Ex 33, 22 LT 24; affd (1872) LR 7 Exch 96, [1861–73] All ER Rep 343, 41 LJ Ex 46, 26 LT 318, 36 JP 517, Ex Ch, 36(1) Digest (Reissue) 58, 196.
Carlill v Carbolic Smoke Ball Co  1 QB 256, [1891–4] All ER Rep 127, 62 LJQB 257, 67 LT 837, 57 JP 325, CA; affg  2 QB 484, 12 Digest (Reissue) 66, 342.
Compania Naviera Maropan SA v Bowaters Lloyd Pulp and Paper Mills Ltd  3 All ER 563,  2 QB 68,  3 WLR 894; affd  2 All ER 241,  2 QB 68,  2 WLR 998,  1 Lloyd’s Rep 349, CA, 41 Digest (Repl) 189, 259.
Dobell (GC) & Co Ltd v Barber and Garratt  1 KB 219, 100 LJKB 65, 144 LT 266, 36 Com Cas 87, CA, 2 Digest (Reissue) 163, 991.
Donoghue v Stevenson  AC 562,  All ER Rep 1, 101 LJPC 119, 37 Com Cas 350, 1932 SC (HL) 31, 1932 SLT 317, HL, 36(1) Digest (Reissue) 144, 562.
Driver v William Willett (Contractors) Ltd  1 All ER 665, 36(1) Digest (Reissue) 27, 90.
Hadley v Baxendale (1854) 9 Exch 341, [1843–60] All ER Rep 461, 23 LJ Ex 179, 23 LTOS 69, 18 Jur 358, 2 CLR 517, 156 ER 145, 17 Digest (Reissue) 101, 109.
Hadley v Droitwich Construction Co Ltd  3 All ER 911,  1 WLR 37, CA, 3 Digest (Reissue) 498, 3282.
Hedley Byrne & Co Ltd v Heller & Partners Ltd  2 All ER 575,  AC 465,  3 WLR 101,  1 Lloyd’s Rep 485, HL, 36(1) Digest (Reissue) 24, 84.
Home Office v Dorset Yacht Co Ltd  2 All ER 294,  AC 1004,  2 WLR 1140,  1 Lloyd’s Rep 453, HL, 36(1) Digest (Reissue) 27, 93.
Howard Marine & Dredging Co Ltd v A Ogden & Sons (Excavations) Ltd  2 All ER 1134,  QB 574,  2 WLR 515, CA.
Independent Broadcasting Authority v EMI Electronics Ltd (10 November 1978) unreported,  Court of Appeal Transcript 670.
Jackson v Watson & Sons  2 KB 193, 78 LJKB 587, 100 LT 799, CA, 17 Digest (Reissue) 140, 341.
Kate, The  P 100,  All ER Rep 912, 104 LJP 36, 154 LT 432, 18 Asp MLC 562, 51 Ll L Rep 321, 42 Digest (Repl) 1143, 9513.
Kendall (Henry) & Sons (a firm) v William Lillico & Sons Ltd  2 All ER 444,  2 AC 31,  3 WLR 110, sub nom Hardwick Game Farm v Suffolk Agricultural and Poultry Producers’ Association Ltd  1 Lloyd’s Rep 547, HL, Digest (Cont Vol C) 853, 781b.
Krüger & Co Ltd v Moel Tryvan Ship Co Ltd  AC 272, 76 LJKB 985, 97 LT 143, 10 Asp MLC 465, 13 Com Cas 1, HL, 26 Digest (Repl) 232, 1792.
Monarch Steamship Co Ltd v A/B Karlshamns Oljefabriker  1 All ER 1,  AC 196,  LJR 772, 82 Ll L Rep 137, 1949 SC (HL) 1, 1949 SLT 51, HL, 41 Digest (Repl) 362, 1549.
Morrison Steamship Co Ltd v Owners of cargo lately laden on SS Greystoke Castle  2 All ER 696,  AC 265,  LJR 297, 176 LT 66, HL, 41 Digest (Repl) 514, 2887.
Mowbray v Merryweather  1 QB 857; affd  2 QB 640, [1895–9] All ER Rep 941, 65 LJQB 50, 73 LT 459, 59 JP 804, 14 R 767, CA, 36(1) Digest (Reissue) 95, 365.
SCM (United Kingdom) Ltd v W J Whittall & Son Ltd  3 All ER 245,  1 QB 337,  3 WLR 694, CA, 36(1) Digest (Reissue) 28, 94.
Shanklin Pier Ltd v Detel Products Ltd  2 All ER 471,  2 KB 854,  2 Lloyd’s Rep 187, 39 Digest (Repl) 579, 1030.
Sims v Foster Wheeler Ltd  2 All ER 313,  1 WLR 769, CA, 7 Digest (Reissue) 437, 2575.
Spartan Steel & Alloys Ltd v Martin & Co (Contractors) Ltd  3 All ER 557,  QB 27,  3 WLR 502, CA, 17 Digest (Reissue) 149, 403.
Victoria Laundry (Windsor) Ltd v Newman Industries Ltd  1 All ER 997,  2 KB 528, CA, 17 Digest (Reissue) 103, 110.
Vogan & Co v Oulton (1899) 81 LT 435, 16 TLR 37, CA, 17 Digest (Reissue) 165, 478.
Weller & Co v Foot and Mouth Disease Research Institute  3 All ER 560,  1 QB 569,  3 WLR 1082,  2 Lloyd’s Rep 414, 36(1) Digest (Reissue) 45, 143.
Wells (Merstham) Ltd v Buckland Sand and Silica Co Ltd  1 All ER 41,  2 QB 170,  2 WLR 453, Digest (Cont Vol B) 632, 1078a.
SUMMARY AND HISTORY
The plaintiffs, a mother and daughter, were passengers, together with the son, in a car being driven by the father. As the car approached an on-coming Land-Rover towing a trailer the trailer became unhitched, slewed across the road into the path of the car, and caused an accident in which the father and son were killed and the plaintiffs injured. The Land-Rover was being driven by an employee of the owner of the Land-Rover and trailer. The unhitching of the trailer had resulted from the failure of the coupling connecting the trailer to the Land-Rover, the design of the coupling being defective. The plaintiffs brought an action in negligence against the owner of the Land-Rover, the driver, the suppliers who had supplied and fitted the coupling to the Land-Rover, and the manufacturers of the coupling. All four defendants denied negligence, and by a third party notice the owner and the driver claimed against the suppliers an indemnity or contribution in the event of judgment being entered against them, on the grounds that the suppliers had been guilty of a breach of the warranty of fitness for purpose implied by s 14 of the Sale of Goods Act 1893. In fourth party proceedings the suppliers claimed an indemnity in contract and tort from the manufacturers in the event of being held liable to the plaintiffs, the owner or the driver. At the trial the judge found that the coupling was unsafe for the purpose for which it had been designed and for which it was likely to be used. The judge also found that the owner ought to have noticed that a handle on the coupling was missing and ought to have appreciated the significance of it being missing. However, the judge further found that the owner’s negligence did not amount to recklessness. On those findings the judge awarded the plaintiffs £45,000 agreed damages, and apportioned liability on the basis of 75% to the manufacturers and 25% to the owner. The plaintiffs’ claim against the suppliers was dismissed. In the third party proceedings the judge dismissed the owner’s claim against the suppliers for an indemnity, holding that although the suppliers were in breach of the implied warranty of fitness and although the owner’s negligence, despite being a superimposed cause, had not broken the chain of causation from the manufacturers through the suppliers and the owner to the accident, nevertheless the owner’s negligence was too remote to have been within the contemplation of the parties (ie the owner and the suppliers) at the time the contract of supply was made as being a probable consequence of the breach of warranty. Although not required to decide the fourth party proceedings, the judge stated that he would have dismissed the suppliers’ claim against the manufacturers for an indemnity, on the ground that the suppliers had not relied on any express warranty from the manufacturers when purchasing the coupling and therefore could not recover for any negligent misrepresentations made by the manufacturers in their promotional literature or advertising material. On appeal, the court having held that the judge’s assessment of the owner’s liability at 25% was correct, the issues remained as to the rights and liabilities of the defendants inter se in the third and fourth party proceedings.
(1) In the third party proceedings the suppliers were liable to the owner for the following reasons—
(a) On the principle that a seller of goods was responsible for all damage which flowed naturally and directly from a breach of a warranty or condition in the contract of sale or which was presumed to have been within the parties’ contemplation as the probable result of a breach, a seller or supplier who sold, in breach of a warranty of fitness, defective goods to a buyer who in turn became liable to pay damages to a third party as a result of the defect, was liable to indemnify the buyer for those damages if the buyer’s liability to the third party was damage flowing naturally and directly from the breach of warranty. Further, the seller remained liable notwithstanding any negligence by the buyer or some other person which may have been the immediate cause of, and which contributed to, the damage to the third party, if that negligence was reasonably deemed to have been in the contemplation of the buyer and seller as a probable result of the breach of warranty and had not broken the chain of causation between the breach and the accident or been so unreasonable as to have been beyond the contemplation imputed to the parties, that being a question of degree in each case. Having regard to the judge’s findings that there had been no break in the chain of causation between the manufacturers (and thus the suppliers) and the accident and that the owner had not been reckless, the suppliers were liable to indemnify the owner in respect of the latter’s liability to the plaintiffs because that liability was, for the purposes of s 53(2) of the 1893 Act, a direct and natural consequence of the suppliers’ breach of their implied warranty under s 14 of the 1893 Act to provide a towing hitch that was fit for the purpose for which they knew it was going to be used (see p 993 f to j and p 997 h j, post); Hadley v Baxendale [1843–60] All ER Rep 461, and Mowbray v Merryweather [1895–9] All ER Rep 941 applied; dictum of Winn LJ in Hadley v Droitwich Construction Co Ltd  3 All ER at 914 disapproved.
(b) (per Lawton LJ) The suppliers were liable to indemnify the owner because they were prima facie liable for their breach of warranty of fitness of the coupling under s 14 of the 1893 Act and that liability was not affected by the owner’s negligence, having regard to the judge’s findings that the chain of causation had not been broken and that the owner’s negligence was not a sufficiently substantial cause of the accident to make the suppliers’ breach of warranty no longer a cause (see p 997 a b and e to j and p 999 e f, post)
(2) In the fourth party proceedings the manufacturers were not liable to the suppliers for the following reasons—
(a) The suppliers could not succeed on a breach of warranty because in the absence of an express warranty the literature supplied by the manufacturers and the claims made in it were not intended to be such a warranty and were not acted on as such by the suppliers (see p 1002 e f, post); Carlill v Carbolic Smoke Ball Co [1891–4] All ER Rep 127, Shanklin Pier Ltd v Detel Products Ltd  2 All ER 471, Wells (Merstham) Ltd v Buckland Sand and Silica Co Ltd  1 All ER 41 and Howard Marine & Dredging Co Ltd v Ogden & Sons (Excavations) Ltd  2 All ER 1134 distinguished.
(b) The manufacturers were not liable to the suppliers for any negligent misrepresentation because merely making a statement with the serious intention that others will or may rely on them did not of itself establish the special relationship between the parties which was a prerequisite to liability for negligent misrepresentation (see p 1003 f to h, post); Hedley Byrne & Co Ltd v Heller & Partners Ltd  2 All ER 575 distinguished.
Nor were the manufacturers liable in negligence to the suppliers for their dangerous and defective design by virtue of being the distributors of a dangerous article, because the loss or damage caused to the suppliers by that negligent act was purely financial loss and on the grounds of common sense and authority it was not recoverable (see p 1005 g to p 1006 a, post); SCM (United Kingdom) Ltd v W J Whittall & Son Ltd  3 All ER 245 and Spartan Steel and Alloys Ltd v Martin and Co (Contractors) Ltd  3 All ER 557 followed.
By a writ dated 29 August 1973 and subsequently amended and re-amended, the plaintiffs, Iris Frances Lambert (on her own behalf and as administratrix of the estates of her husband George Charles Lambert and her son Kirby George Lambert both deceased, under the Fatal Accidents Acts 1846 to 1959 and on behalf of each of the said estates under the Law Reform (Miscellaneous Provisions) Act 1934) and Tracy Frances Lambert (an infant suing by her mother and next friend Iris Frances Lambert) brought an action against the defendants, Donald Richard Lewis (the owner of a Land-Rover and trailer) (‘the owner’), Hugh Francis Larkin (the driver of the Land-Rover at the material time) (‘the driver’), B Dixon-Bate Ltd (the manufacturers of the towing hitch or coupling by which the trailer was attached to the Land-Rover) (‘the manufacturers’) and Lexmead (Basingstoke) Ltd (the garage which supplied and fitted the coupling to the Land-Rover) (‘the suppliers’), claiming damages for personal injuries, loss and damage suffered by each of them by the negligence of the four defendants or any one or more than one of such defendants which gave rise to a road accident on 10 September 1972 in which the plaintiffs were injured and the deceased killed.
The accident occurred when the driver, as servant or agent of the owner, was driving the Land-Rover towing a trailer loaded with builder’s rubble and the trailer became detached from the Land-Rover and collided with a Reliant motor car owned and driven in the opposite direction by the first plaintiff’s husband now deceased. The plaintiffs and Kirby George Lambert now deceased were passengers in the Reliant motor car. All four defendants denied negligence. The owner and driver issued a third party notice against the suppliers claiming an indemnity, damages or contribution in the event of one or other or both of them being held liable to the plaintiffs. The suppliers issued a fourth party notice against the manufacturers claiming an indemnity or contribution from the manufacturers in the event that the third party was held liable to the owner and/or the driver.
On 11 November 1977 Stocker J gave judgment for the plaintiffs against the owner, the driver and the manufacturers for a total of £45,000 agreed damages in the proportions of 75% against the manufacturers and 25% against the owner and driver. He dismissed the plaintiffs’ claim against the suppliers and the third party proceedings brought by the owner and driver against the suppliers. He stated that he would have dismissed the fourth party proceedings brought by the suppliers against the manufacturers if on his judgment the question had arisen for decision.
The owner and driver appealed from so much of the judgment in the main action as adjudged that they were 25% to blame for the accident and asked that that judgment should be set aside and judgment entered for the plaintiffs against the manufacturers and for the owner and driver against the plaintiffs. By a respondent’s notice the manufacturers admitted liability but contended that the owner and driver were more to blame for the accident than they were and they asked that judgment against them in the main action should be varied to reflect that. The owner also appealed against the dismissal of the third party proceedings. It was conceded on the appeal that judgment should not have been entered against the driver because the negligence alleged against him was quite distinct from the negligence found and proved against his employer, the owner.
The suppliers appealed against the dismissal of their claim for an indemnity against the manufacturers in the fourth party proceedings and asked for an order that the judgment should be set aside and judgment entered for them against the manufacturers for an indemnity in respect of all sums which the suppliers might be held liable to pay to the owner in the event of the owner’s appeal in the third party proceedings succeeding.
The facts are set out in the judgments of Stephenson LJ below and at p 999, post.
30 April 1979. The following judgment was delivered.
We will give judgment in the action and in the third party proceedings, but we have not yet heard the arguments in the fourth party proceedings, and they will depend on the judgments which we now give.
This appeal arises out of a fatal road accident which took place on 10 September 1972; in that accident the first plaintiff and her daughter were injured and her husband, who was driving his motor car perfectly properly, was killed, and their son was also killed.
On 11 November 1977 Stocker J gave judgment for the plaintiffs for £45,000 agreed damages against three out of the four defendants. He gave judgment for the fourth defendants. He dismissed third party proceedings brought by the first defendant against the fourth defendants and although on his findings the question did not arise he stated that he would have dismissed fourth party proceedings brought by the fourth defendants against the third defendants.
The accident, injuries and deaths were caused by a trailer becoming detached from a Land-Rover and slewing across to the offside of the road and into the oncoming car driven by the first plaintiff’s husband, containing him and her and their two children.
The defendants were: first Mr Lewis (‘the owner’), a farmer who owned the Land-Rover and the trailer; second, Mr Larkin (‘the driver’), who was employed by him driving the Land-Rover at the time; third, a company called B Dixon-Bate Ltd (‘the manufacturers’), who were the manufacturers of the towing hitch which was found to have failed; fourth, another company, called Lexmead (Basingstoke) Ltd (‘the suppliers’), who were the company running the garage which had supplied the owner in January or February 1971 with the Land-Rover and with the towing hitch manufactured by the manufacturers.
There were formulated by the learned judge, in an admirably careful and comprehensive judgment, three issues for him to decide. The first was: why did the trailer become detached from the Land-Rover? His judgment contains a detailed description of the hitch or coupling, and the way in which the trailer was attached to the Land-Rover. I cannot emulate or improve his exposition of the mechanics of it, so I will not repeat it. Suffice it to say that there was supplied by the supplier and fixed to the Land Rover a dual-purpose towing hitch. It consisted in outline of a towing pin which ended at the top in a ball; that ball could be and was locked to the cup attachment on the only trailer which the owner had at the time when he bought this towing hitch, and that was the trailer which became detached and caused the injuries to the Lambert family.
That towing pin was not only locked at the top by the ball and the cup, but it was locked at the bottom by a brass spindle and spiral pin with a handle. The towing hitch was a dual-purpose towing hitch and recommended to the owner as such. He wanted it for two purposes, namely to carry stuff about his own farm land, and also for carrying building materials and rubble in connection with a building business in which he was engaged; but that was not the dual purpose for which this Dixon-Bate towing hitch was specifically designed.
The advantage of this particular towing hitch was that it could be coupled to a cup-type attachment on a trailer, as this one was, but it could also be coupled to a ring-type trailer attachment; and if it had ever come about that the owner had invested in a ring-type trailer, then he would have been able to attach it to this towing hitch manufactured by Dixon-Bate if, making use of the handle, he removed the pin and then re-inserted it through the ring. But he never had occasion to use it in that way, and he did not intend at the time he bought it to use it in that way.
What happened, apparently, on 10 September 1972 was that the towing pin, securely locked at the top, rose out of the jaws of the towing assembly to which it should have been securely locked at the bottom, and that caused the trailer to become detached from the Land-Rover and to slew across the road with the fatal consequences I have described.
On examination after the accident, it was found that the brass spindle and the handle were missing, and the hitch was very dirty. When the dirt was cleared away, it was found that only the dirt was keeping the towing pin in position, and expert evidence showed that submission to a steady upward thrust of 1·05 tons would be enough to bring the pin out of the jaws once the locking of them had become imperfect, and indeed a pressure of 0·87 tons would have brought this pin out because the tongue of the locking part was substantially worn, and also the protuberance at the bottom of the pin had been deliberately chamfered to reduce chattering.
That was how the accident had happened according to the judge, and it really was not disputed. It may be that in passing over a pot-hole or a manhole cover, or something of that kind on the road the towing pin was forced up and as there was nothing to retain it but the dirt, it came out and so the trailer became detached from the Land-Rover.
The second issue formulated by the judge was: which, if any, of the defendant parties was liable for the detachment of the trailer and the consequent accident? The judge found that the manufacturers were responsible. He had to ask himself: was their design or manufacture of this coupling defective or dangerous? If it was, ought they to have appreciated the defect and foreseen the dangers in view of the history put before him of failure of this type of coupling, and in view of the expert evidence put before him by I think at least three of the parties?
The history of the failure included ten incidents, only disclosed at the start or near the start of the trial, in none of which had there ever been a complete loss of the handle or spindle but in at least one of which there had been damage to this handle which was so near the ground as almost inevitably, one would have thought, to come into contact with the ground when the Land-Rover and the trailer were driven over rutted farm land.
The judge answered this question in this way: he held that the coupling was unsafe for the use for which it was designed and which it was likely to receive, and he concluded that the designers ought to have realised that the adaptation of a coupling of this sort for this dual purpose, so that it could be used with the cup-type attachment, did result in a fundamental change in its function and in the stresses to which it was subjected: it became subject to vertical stresses to which it would not have been subject when coupled to a ring attachment, and that made the handle, and through it the spindle on which the integrity of the lock depended, vulnerable. He therefore found the manufacturers responsible in negligence for the plaintiffs’ loss and damage, and that finding was not challenged by the manufacturers.
He assessed and apportioned their responsibility at 75% because he went on to find that the owner was also responsible in negligence and responsible to the extent of the remaining 25%. That finding is challenged by counsel on behalf of the owner in the first part of his appeal.
The third issue which the judge had to decide was the rights of the defendants inter se, both in contract and as tortfeasors, and before I come to the first of those, I shall deal with the judge’s findings against the owner.
The judge found that the owner could not have known that the integrity of the lock
depended on the undamaged spindle. That was a concealed mechanism inside the towing hitch which was supplied, but he should have known, and did know, first, that the safety of the trailer on the highway depended on the effectiveness of the coupling, second, how the towing pin could be removed by the handle being depressed and releasing the lock, and, third, that the security of the towing pin depended on the lock being operated by the handle.
It is said by counsel for the owner that in this part of his judgment the judge put the evidence of Mr Huntb in giving his opinion too high. I do not refer to the details of that because it is undoubtedly true that the opinion of Mr Hunt, the owners’ expert, was not as unqualified a statement as was attributed to him in the judge’s summary.
It is also said that the judge misunderstood the test which the owner said he applied, and which his employees were instructed to apply, every time they coupled the trailer to the Land-Rover. The evidence was that he and his men stood on the tow-bar facing the Land-Rover coupled to the trailer, locked the cup onto the ball at the head of the towing pin, and then moved the coupling up and down rapidly in order to make sure that it was secure. But the owner’s evidence was that he never removed the towing pin; he never had the curiosity to discover how it was removed and would require to be removed if he should ever want to fit it to a ring type trailer; and he carried out that test in order to make sure that the locking of the ball to the cup was secure, and that was all that concerned him.
It is also pointed out by counsel for the owner that the Land-Rover with the towing hitch (but without the trailer) had recently been into the supplier’s garage for servicing, and had been serviced on a ramp by a competent mechanic named Walker, and that competent mechanic had not noticed, when he was doing the servicing, that this handle, on which the security of the locking device depended, was missing, although he was a skilled man and although he had a better opportunity of looking at it from below to notice the missing handle than the owner, who was only looking down on it from above as he stood on the tow-bar, rather low down between his legs. But the judge acquitted Mr Walker and his employers of any negligence in that respect and gave judgment for the suppliers, holding that their job was only to service in certain respects which did not include the handle or the locking device.
The judge went on to hold that the owner ought to have noticed that the handle was missing on one of the many occasions when he stood on the tow-bar and rapidly moved it up and down, and he ought to have appreciated the significance of the handle being missing because the evidence was that it had been missing for anything from three to six months at the time when the accident happened; and if he had noticed the handle being off, as the judge thought he must have done, he ought to have examined the coupling or had it examined by an expert, to see if it was safe to use. The judge acquitted the owner of recklessness; he did not think he was reckless but he thought he was insensitive to the public safety and to the condition of the vehicle. No doubt he reached that conclusion relying to some extent on the very poor maintenance of the trailer itself, which had nothing directly to do with the accident.
Counsel for the owner has forcibly asked: ought this owner of a Land-Rover and trailer, a farmer, to have noticed that the handle was missing and to have been put on enquiry? Ought a reasonably prudent farmer in his position, coupling and uncoupling this trailer to this Land-Rover once or twice a week, to have noticed that the handle was missing in the three to six months when it was, on the evidence, proved to have been missing and to have done something about it?
The judge answered those questions Yes. Perhaps the owner was somewhat unfortunate, but despite counsel’s persuasive and able argument, and despite some sympathy which I feel for the owner, who had been, as I will indicate, supplied with this towing hitch from reputable manufacturers by his garage who, under the Sale of Goods Act 1893, warranted it to be safe and suitable for the purpose for which it was known to be used, I do not see my way to holding that the judge was not justified in finding the owner negligent in the respects in which he did find him negligent and responsible to the extent to which he did find him responsible. I would therefore dismiss the owner’s appeal in the action and leave the liability of the owner where the judge put it.
I come next to the appeal in the third party proceedings. The judge found that the suppliers, Lexmead (Basingstoke) Ltd, supplied a coupling which was not fit for the purpose for which it was to be used within s 14 of the Sale of Goods Act 1893, and also not merchantable within that section; and he also found that it was likely to cause a serious accident because it was unfit in the respects which I have tried, shortly, to indicate. But he found that the owner’s negligence was a concurrent, superimposed and added cause. He found that that negligence, that continued user of the coupling when he knew or ought to have known that the handle was missing and the towing pin might be insecure (the judge thought he did know and was not impressed by his denial that he ever removed the pin or had been interested enough when working on it to know that the handle had some connection with the integrity of the lock) did not break the chain of causation between the plaintiffs’ accident and the negligence of the manufacturer, Dixon-Bate, in designing and marketing a coupling unfit for the purpose and that their negligence still continued. Nevertheless, he found that this superimposed and added cause in the continued use of the coupling on the road by the owner, when he realised or ought to have realised it was damaged or broken, was an action which would not have been in the contemplation of the parties at the time the contract was made; and he went on to apply a statement of Winn LJ in Hadley v Droitwich Construction Co Ltd, which I have had some difficulty in understanding, and held that the facts of this case fell within the principle stated by Winn LJ and therefore that the suppliers were not liable to the claim made against them by the owner in the third party proceedings.
The statement of principle on which Stocker J admittedly relied was in these terms ( 3 All ER 911 at 914,  1 WLR 37 at 43).
‘The principle [of Mowbray v Merryweather), as HARMAN, L.J., has already stated, is this: that in a case where A has been held liable to X, a stranger, for negligent failure to take a certain precaution, he may recover over from someone with whom he has a contract only if by that contract the other contracting party has warranted that he need not—there is no necessity to—take the very precautions of the failure to take which he has been held liable in law to the plaintiff.’ (Emphasis Winn LJ’s.)
That led the judge to take the view that, as he put it, the duty owed by the owner to the Lamberts was co-extensive with the contractual duty relied on by the owner against the suppliers; that, as expounded, and I think rightly expounded, by counsel appearing for the suppliers, means that the facts constituting the two breaches of duty, one the duty owed by the owner to the members of the public on the road like Mr and Mrs Lambert, and the other the contractual duty owed by the suppliers to the owner, were the same in each case and nothing more could be said against the owner than his continuing to use the coupling for the purpose for which it was supplied by the suppliers.
That in its turn has led to detailed submissions on Mowbray v Merryweather and the cases in which it has been applied and distinguished, including Hadley v Droitwich Construction Co Ltd. The other cases in which it has been applied by this court and to which we have been referred are Vogan & Co v Oulton and Sims v Foster Wheeler Ltd where, as Stocker J rightly said, this court dismissed the suggestion that the introduction of an apportionment of responsibility between joint tortfeasors by the Law Reform (Married Women and Tortfeasors) Act 1935 affected in any way the principle laid down in Mowbray v Merryweather.
Counsel for the owner submits that that decision applies to decide these third party proceedings in favour of the owner against the suppliers. He submits that a purchaser owes no duty to a seller who gives him a warranty, even if the purchaser breaks his duty of care to a third party, whether one of his own servants, as in many of the cases, or a stranger; he can still rely on the breach of warranty and recover from the seller or supplier who gives the warranty the damages he has had to pay for his negligence or breach of duty to that third party as part of the damage, part of his loss, resulting naturally in the ordinary course of events from the breach of warranty. Counsel for the owner further submits that if the negligence of a purchaser (or hirer) amounts to recklessness, it may break the chain of causation and constitute a novus actus or make him volens, a person who willingly undertakes the risk of that damage, and such recklessness may be conduct beyond the reasonable contemplation of the parties and make the damages which result from it too remote.
That last submission rests on the obiter observations of Devlin J in Compania Naviera Maropan SA v Bowaters Lloyd Pulp and Paper Mills Ltd, The Stork, where the judge, having referred to novus actus interveniens and volenti non fit injuria, said ( 3 All ER 563 at 569,  2 QB 68 at 78):
‘If I may return to the case of the sale of goods, from which I have already drawn an analogy, in a proper case in which sub-sales are contemplated, a plaintiff may recover as part of his damages his liability to a third party: but if he passed on to a third party goods which he knew to be dangerous or defective, or if he incurred damages himself by recklessly using such goods, he could not claim to be reimbursed,’
and then he referred to what Lord Halsbury said in Kruger & Co Ltd v Moel Tryvan Ship Co Ltd ( AC 272 at 278).
Counsel for the owner went on to submit that Stocker J was here rejecting recklessness in favour of insensitivity and he found that the negligence of the owner was only one third as great as that of the manufacturers, and he has positively stated that there was no break in the chain of causation between their negligence in designing an unsuitable coupling and the damages which he has been ordered (and I would hold rightly ordered) by the judge to pay to the plaintiff in the action.
There being no break in the chain of causation, says counsel for the owner, these damages are not too remote; they must be deemed to be within the contemplation of the parties who bought and sold the coupling; put another way, the defective design remains remote in one sense as a cause, but not too remote because without the breach of warranty these damages would not have been incurred; and although the owner, by the negligence found against him by the judge, has added an immediate cause which has contributed to his liability to pay these damages, they none the less remain attributable as between him and the seller to the breach of warranty on which he is entitled to rely.
I would make it plain that no counsel has suggested that this court should apportion the damages as between the owner and the suppliers. Either the suppliers are liable to indemnify the owner, or, as the judge has held, they are not liable to him at all; so that, if Mowbray v Merryweather does apply to achieve the former result and to make the suppliers liable to the owner, it is a harsh doctrine because if, as one hopes is not the case, the manufacturers were for any reason unable to satisfy the judgment obtained against them by the plaintiffs, the owner might have to satisfy the whole of the plaintiffs’ judgment against him and the suppliers might find themselves liable for £45,000 and presumably costs, whereas if the owner had escaped any liability to the plaintiff altogether, they would of course escape also, as the judge has found, but for a different reason.
1 May 1979. The following judgment was delivered.
STEPHENSON LJ continued delivering his judgment.
Counsel’s submission on behalf of the suppliers, the third parties, appear to have been accepted by the judge. I begin with what I understand counsel to accept. He first concedes, in this court at any rate, that the suppliers were in breach of contract and that the owner is entitled, therefore, to nominal damages. He also concedes that the suppliers’ breach of warranty was a causa sine qua non, and that no duty was owed by the owner to the suppliers.
I also understand him to concede that there is no difference between the position of the manufacturers and the suppliers, except that the suppliers were not negligent; they were the innocent distributors of the towing hitch negligently designed by he manufacturers. But as far as causation and damage is concerned, there is no difference between the operation of the manufacturers’ negligence and the suppliers’ breach of warranty. He also concedes that a serious accident was the likely result of the towing pin coming out with or without manifest damage, such as the missing handle, having already occurred; and one of the other incidents concerning the towing hitch of Mrs Deweyc shows that damage to the handle not resulting in its disappearance altogether could produce the same sort of result in the detachment of the trailer as was produced in this case.
But he submits that the normal measure of damages is the difference in value between the article contracted to be sold and that which was in fact supplied. He submits that there is no finding by the judge that the suppliers’ breach caused the damage incurred by the owner in paying the plaintiffs; that there is no finding by the judge of no break in the chain of causation from the suppliers’ breach to that damage, but only from the manufacturers’ negligence to that damage. He also submits that the judge has found that the owner was independently negligent: he not merely used the towing hitch negligently in the defective condition in which he obtained it, but with knowledge actual or imputed of its defective and potentially dangerous condition used it and permitted it to be used with the disastrous results which ensued.
He submits further, that the cases show that if the buyer of defective goods had actual or imputed knowledge of the defective goods, the damages suffered by the buyer by reason of his decision to use them do not flow from the breach of warranty that they were suitable; or if knowing of the defect, a buyer elects to use the goods, whether for purposes of resale or for his own personal use, either (a) he does not rely on the warranty or, (b) he has not acted reasonably, that is to say within the reasonable contemplation of the parties.
So he says that he comes within the principle of Mowbray v Merryweather as correctly stated in the judge’s judgment and in Hadley v Droitwich Construction Co Ltd as correctly understood and applied by the judge in this case. He goes on to submit that to hold otherwise would be to make the seller, who is in breach of contract, an insurer of the buyer’s tort where the tort consists of acts other than those relied on to establish the breach of contract.
Finally he submits that, if he is wrong in that, if the judge wrongly distinguished Mowbray v Merryweather, and was misled by Winn LJ’s ( 3 All ER 911 at 914,  1 WLR 37 at 43) interpretation of it, the facts which the judge found nevertheless brought this case within the true principle of Mowbray v Merryweather, and the owner was guilty of independent unreasonable conduct outside the contemplation of the parties, and the judge was justified in so finding and dismissing the third party proceedings.
I start with the statutory provision as to the measure of damages for breach of warranty by a seller which is to be found in s 53(2) of the Sale of Goods Acts 1893. That well-known subsection provides: ‘The measure of damages for breach of warranty is the estimated loss directly and naturally resulting in the ordinary course of events from the breach of warranty.’ Then the section goes on, by sub-s (3), to provide:
‘In the case of breach of warranty of quality such loss is prima facie the difference between the value of the goods at the time of delivery to the buyer and the value they would have if they had answered to the warranty.’
It would appear from counsel’s argument for the suppliers in this court that that difference must be presumed to be nominal, although I know that, according to the judge’s judgment, he argued in the court below that the owner was entitled to the cost of repair to the spindle and the handle and the replacement of the towing hitch in good and working order under this prima facie rule. Nevertheless, the judge has not given the owner anything.
From s 53 of the Sale of Goods Act 1893 I go to Hadley v Baxendale, and I quote the relevant passages in that case quoted in the judgment of this court in Victoria Laundry (Windsor) Ltd v Newman Industries Ltd ( 1 All ER 997 at 1001,  2 KB 528 at 537):
‘Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.’
Asquith LJ, giving the judgment of the court in the Victoria Laundry case ( 1 All ER 997 at 1001,  2 KB 528 at 537), went on: ‘The limb of this sentence prefaced by “either” embodies the so-called “first” rule; that prefaced by “or” the “second”.’ I am not sure that both rules are not now embodied concisely in the phrase more familiar in past times in a criminal connection, ‘the natural and probable consequences’ of the breach.
I next adopt what Lord Wright said in Monarch Steamship Co Ltd v A/B Karlshamns Oljefabriker ( 1 All ER 1 at 14,  AC 196 at 224):
‘… the question in a case like the present must always be what reasonable business men must be taken to have contemplated as the natural or probable result if the contract was broken.’
The judge rightly held that the owner must prove not only the breach of warranty, which there is no doubt he did, but damage, the £45,000 or that proportion of it which he was ordered to pay, resulting from the breach. Did he prove that his liability to pay that was caused by the breach of warranty? Well, he found that there was no break in the chain of causation from the negligence of the manufacturers, and I think it follows from that finding that the suppliers’ breach of warranty was a cause, at any rate, of his liability to pay damages to the plaintiffs.
The judge, correctly in my judgment, set out the effect of the decision of Charles J (affirmed by this court) in Mowbray v Merryweather. He said:
‘… a chain supplied by the defendants was defective and caused an accident to the plaintiff’s servant, who recovered damages from the plaintiff. It was held that the plaintiff’s liability to pay damages to the servant was a natural consequence of the defendants’ breach of contract and was such as might reasonably have been supposed to have been in the contemplation of the parties when the contract was entered into and that accordingly the damages were not too remote.’
That seems to me to be an accurate rendering of what was decided in that case.
In his judgment Charles J said ( 1 QB 857 at 859):
‘… the only question I have to determine is whether the damage done to the workman, and which he could only recover from the plaintiffs by shewing want of care in them, may nevertheless be regarded as the natural consequence of the defendant’s breach of contract; or, in other words, a consequence which might reasonably be supposed to have been within the contemplation of the parties.’
That statement was approved by Lord Esher MR ( 2 QB 640 at 643) in the report of the case in the Court of Appeal:
‘What is the rule of law on the subject? The test is rightly laid down by Charles J. when he says that the question is whether the damages “can be regarded as the natural consequence of the defendant’s breach of contract, or, in other words, the consequences which might reasonably be supposed to have been within the contemplation of the parties”.’
Kay LJ ( 2 QB 640 at 645) put his conclusion in this way:
‘I think the damages claimed by the plaintiffs must be regarded as the natural result of the breach of warranty and one which must be deemed to have been within the contemplation of the parties as likely to spring from the breach.’
Rigby LJ said ( 2 QB 640 at 647): ‘The only question here appears to be whether the damages claimed can reasonably be supposed to have been within the contemplation of the parties when the contract was made.’
The judge, in this case, went on rightly to hold that the decision of this court in Simms v Foster Wheeler Ltd and a later decision of Rees J in Driver v William Willett (Contractors) Ltd showed that the principle in Mowbray v Merryweather applied despite the introduction of the right of contribution between tortfeasors and despite the fact that an apportionment in tort may have been made under the Law Reform (Married Women and Tortfeasors) Act 1935.
So the question for the judge, as for this court, is in my judgment this: were the owner’s liability to the plaintiffs and his loss incurred by discharging that liability the direct and natural consequences in the ordinary course of events, or within the reasonable contemplation of the parties as consequences of the breach of warranty, notwithstanding the negligent conduct of the owner which was found by the judge to have contributed to causing that liability and loss? That is the question which was rightly asked by Sir Boyd Merriman P, applying Mowbray v Merryweather, in The Kate ( P 100 at 113,  All ER Rep 912 at 915), where he said: ‘The question in either case is whether the damage sustained is the natural consequence of the breach of contract, notwithstanding some independent negligence on the part of the plaintiff.’ That was a case where a company, which had leased a defective berth from a corporation, were held not to be disentitled by their negligence in accepting assurances that the defect had been repaired and in not warning the master that the berth might still be defective from recovering from the corporation damages paid to the owner of a ship damaged by the defect.
A purchaser, who resells goods which are not as warranted by the seller with notice that they are not as warranted, has been held by this court in G C Dobell & Co Ltd v Barber and Garratt, following Rowlatt J’s decision in British Oil and Cake Co Ltd v Burstall & Co, to be disentitled from recovering damages paid to a sub-purchaser from the seller who is in breach of his warranty. A purchaser cannot resell defective goods sold with a warranty of fitness with knowledge on his part of the defect which makes them unfit for the purpose, and then claim damages that he has to pay a sub-purchaser from the seller who is in breach. Those damages, as Scrutton LJ said ( 1 KB 219 at 231), would result from his unreasonable conduct and be too remote a consequence of the original breach of warranty, or, as Greer LJ ( 1 KB 219 at 246–247) put it, ‘Those damages would neither be the natural nor the probable result of the breach, or such as would in the events that happened have been within the contemplation of the parties’, and Lawrence LJ ( 1 KB 219 at 238) pointed out that the purchaser cannot increase his damages in this way.
So in the context not of the sale of goods but of a berth warranted safe the question was: did the shipowners act unreasonably in making use of the unsafe berth, or fail to mitigate their damage, or deliberately assume the risk of damage? See Compania Naviera Maropan SA v Bowaters Lloyd Pulp and Paper Mills Ltd ( 2 All ER 241 at 249, 252, 258,  2 QB 68 at 94, 99, 107), per Singleton, Hodson and Morris LJJ. There Devlin J ( 3 All ER 563 at 569,  2 QB 68 at 78) had referred to the analogy of the sale of goods in the passage I have already cited, and he had also suggested that the shipowners’ conduct must amount to a novus actus interveniens or a voluntary assumption of risk to disentitle them from relying on the warranty of safety. But the Court of Appeal contented themselves with finding no unreasonable conduct on the part of the shipowners without holding positively that unreasonable conduct would have been enough, and without having to decide how unreasonable the conduct of one party would have to be, to exonerate the other from liability.
I would agree with counsel for the suppliers that the use a purchaser may himself make of goods after notice that they are defective and not in accordance with a warranty of fitness may be just as unreasonable as reselling them after notice and without warning. That was Rowlatt J’sd view of the law, though it was inapplicable to the case he had to decide. The use by a purchaser either for his own purpose or for resale illustrates the general rule that a party to a contract should act reasonably even when the other party is in breach and may not increase the liability of the other party by acting unreasonably: see Chalmers on the Sale of Goodse, a passage on which counsel for the suppliers relies.
But it is remarkable that in all the cases on which counsel for the suppliers relies, except Hadley’s case, the promisee to whom the warranty was given did recover from the promisor who gave the warranty damages which the promisee had become liable to pay to a third party; and in the passage in McGregor on Damagesf on which he also relies the learned editor states: ‘There appear to be no cases in which the buyer’s action failed on the ground that he ought to have examined the goods before using them or reselling them.’ Where I part company with counsel for the suppliers is at the point where he submits that any unreasonable conduct on the part of the promisee disentitles him from recovering from the promisor damages resulting from his own conduct, as not resulting also from the promisors’s breach of warranty. That submission seems to me to ignore human nature and common sense, which the law applies to require, for instance, road users to expect a certain amount of negligence on the part of other road users and which would treat unreasonableness in relation to other persons who are in law neighbours in the same way as unreasonableness in relation to the other party to a contract.
Of course, the promisor does not give the promisee a licence to be as careless as he likes with the goods sold or to act as unreasonably in relation to them as he chooses, secure in the knowledge that the promisor will pay for the consequences of the promisee’s carelessness however great; but any failure by the promisee to take reasonable care in relation to the goods and his use of them is unreasonable, yet it, and its consequences, may be within the contemplation of both promisee and promisor and its consequences may flow from the original breach of warranty.
Mowbray v Merryweather demonstrates that some unreasonable action on the part of the promisee causing liability to pay damages is no bar to recovering those damages as a consequence of the breach of warranty deemed to be contemplated by the promisor, who is not exonerated by that tortious action. Mowbray was held to have relied on Merryweather’s waranty and to be entitled to do so, notwithstanding his own negligent failure to inspect the chain.
Counsel for the suppliers says that the owner was rather more careless than Mowbray because he let the goods warranted suitable suffer damage and either did not notice the damage or noticed it and ignored it and went on using it after the latent defects and dangers of the design had become patent.
I do not think the defects and the dangers had become patent to the owner’s comparatively inexpert eye. On the judge’s finding, he was put on enquiry, but that seems to raise a question of degree. Did that extra carelessness take the owner’s conduct, as the judge has held, outside the reasonable contemplation of the parties and the principle of Mowbray v Merryweather? The judge seems only to have felt himself able to regard it as outside both by limiting the principle of Mowbray v Merryweather in accordance with Winn LJ’s interpretation of it in Hadley v Droitwich Construction Co Ltd. I cannot agree that Hadley’s case touches this case or decides the question which we have to decide.
In Hadley’s case, Pugsley Ltd hired a mobile crane to Droitwich Construction Co Ltd and in a letter confirming the hiring they thanked Droitwich for their promise to put a competent man in charge of the crane who would carry out the servicing properly. Droitwich in fact put a 1year-old youth in charge of the crane who operated it for three months. During that time he never inspected it and no servicing was carried out. Three months after the hiring, the plaintiff, an employee of Droitwich, working on the site, was injured when the superstructure of the crane broke away from its base and fell on him. He sued both Pugsley and Droitwich for personal injuries. In third party proceedings against Pugsley, Droitwich claimed that they were entitled to be indemnified by Pugsley in the event of their being held liable to the plaintiff, on the ground of their being negligent and in breach of contract in providing them with a defective crane. The judge found that the accident was caused because there was an excessive clearance between the rollers which hooked the slewing wheel on the superstructure onto the base of the crane, and found Droitwich and Pugsley equally liable to the plaintiff for negligence and he gave judgment for Droitwich in third party proceedings and held that Pugsley were in breach of the implied term of the contract that the crane would be fit for the purpose for which it was required and free from defect.
It is plain from the report ( 1 WLR 37 at 39–40) that the judge was satisfied that the crane driver was negligent in failing to observe that there was excessive clearance and in failing to adjust the rollers and failing to make weekly inspections of the crane. He found, further, that Droitwich never serviced the crane or inspected it, in spite of Pugsley’s letter. He stated that the damage flowing from such a breach was that which could be regarded as a natural consequence of Pugsley’s breach of contract, or, in other words, a consequence which might reasonably be supposed to have been within the contemplation of the parties. Applying Mowbray v Merryweather, he held that Droitwich were entitled to be indemnified by Pugsley in the manner sought in third party proceedings. He therefore applied the correct interpretation, in my judgment, of Mowbray v Merryweather, but he was held by the Court of Appeal not to be entitled to apply it, as I read, at any rate, two of the judgments, to the facts of the case. Both Sellers and Harman LJJ decided that the contractual warranty of suitability of this crane for the purpose for which it was used by the Droitwich company was qualified by the letter, and that letter, as is plain from what Sellers and what Harman LJJ said ( 3 All ER 911 at 913, 914,  1 WLR 37 at 41, 42), was read by those two Lords Justices as imposing two conditions (1) that Droitwich should put an experienced man in charge of the crane and (2) that they should service it properly. Harman LJ said ( 3 All ER 911 at 914,  1 WLR 37 at 42):
‘Any warrant that the owners may have impliedly given as to fitness of the machine for its task was undoubtedly, as I see it, qualified by those two conditions. Neither condition was performed: the warranty disappears, as the conditions were broken.’
Then he went on to say ( 3 All ER 911 at 914,  1 WLR 37 at 42):
‘Mowbray v. Merryweather was quite a different case … Here, owing to the presence of the letter [imposing these two qualifications], the boot is on the other leg, so it seems to me.’
Where did Winn LJ get from that judgment of Harman LJ the statement of the principle in Mowbray v Merryweather which he attributes to him in his judgment, which I have already read and which the judge sought here to apply and follow? I have no doubt that the decision in Hadley v Droitwich Construction Co Ltd was right, but I cannot derive from it any justification for qualifying a warranty of fitness where it is not expressly qualified, as it was in Hadley’s case or for reducing it to a warranty that goods are suitable for use for the contemplated purpose provided that there is no negligence in employing incompetent servants or in failure to maintain. We are not, I think, entitled by what this court decided in Hadley’s case or for any other reason to whittle down what it decided in Mowbray v Merryweather or to devalue the statutory condition or warranty or a purchaser’s right to rely on it, as it seems to me Winn LJ’s interpretation of Mowbray v Merryweather would whittle down the decision and devalue the warranty and the right. It is one thing for A to promise that a crane is safe if B promises to employ a competent driver to maintain it, and quite another thing for A to promise either expressly or impliedly that the crane is safe and to imply some such promise by B as a condition precedent to liability for breach of A’s apparently unconditional promise.
On the evidence in this case, the owner had not seen the leaflet in which the manufacturers called their dual-purpose towing hitch foolproof and such as required no maintenance; but it would be indeed ironic if in such a case the warranty or condition implied by s 14, or any of the warranties or conditions implied by s 14, were qualified by an implied condition that the purchaser should maintain the towing hitch properly, keep it clean and make sure that it was undamaged.
If the judge was wrong in his interpretation of Mowbray v Merryweather, can his dismissal of the third party proceedings be supported, without a respondent’s notice, on other grounds? I do not regard the absence of a respondent’s notice as fatal, but I have come to the conclusion that the dismissal cannot be supported. The question in my judgment is not whether the defect in this towing hitch was patent or latent either at the time of sale or at the time of the accident. Nor is it whether the purchaser actually knew or ought to have known of the defect; nor is it whether his negligence was independent, in the sense that it added something to the user of the defective goods in the way contemplated; nor whether his conduct was not merely careless but reckless or amounted to a voluntary assumption of risk. The answers to these questions are all helpful but none of them is conclusive in answering the real question, which is whether, in all the circumstances, the owner’s carelessness was so unreasonable as to be beyond the contemplation of the suppliers, or such as to break the chain of causation between their breach of warranty and the accident which resulted in the owner’s liability to pay the plaintiffs damages.
Put another way, was his conduct such as to disentitle him from relying on the warranty given by the suppliers as still playing an effective part in causing the particular damage which would not have occurred without his own negligence contributing? Was it still a causa causans, if you like to use the Latin term?
On the evidence, and on the judge’s findings, on his assessment of the owner’s conduct and on his apportionment of the responsibility between him and the manufacturers, the owner’s negligence in my judgment falls on the right side of the line for the owner and the wrong side of the line for the suppliers. The suppliers, warranty does not disappear, the breach of it is not spent, as a result of the owner’s intervening and contributing negligence. The question is simply one of causation. If the effect of the manufacturer’s negligent design was still continuing on 10 September 1972, as the judge found, why was not the effect of the retailers’ breach of warranty still continuing at that date? If the owner’s conduct did not break the chain, his liability and consequent loss by discharging it were natural and probable results or consequences of the breach still operating alongside it, and must be deemed to have been within the contemplation of the suppliers. The judge was, in my opinion, right to say that the chain of causation was not broken but wrong to say that the owner’s conduct would not have been within the contemplation of the parties at the time the contract was made between them.
He was, therefore, in my judgment wrong to dismiss the third party proceedings and I would hold the suppliers liable to indemnify the owner against the damages which he has to pay to the plaintiffs.
As regards the appeal by the owner against the learned judge’s judgment holding that he was 25% to blame for the tragedy which resulted in two deaths in this young family, I agree with everything that has fallen from Stephenson LJ and beyond expressing my appreciation of the argument of counsel for the owner, I do not find it necessary to add anything. One cannot help, as Stephenson LJ has said, a certain feeling of sympathy with the owner, but on the material before the judge he was entitled to reach the conclusion which he did and, for my part, on that evidence I think that I would have reached the same conclusion.
So far as the appeal on the third party proceedings is concerned, I also agree with what has fallen from Stephenson LJ, but as here we are differing from Stocker J, and not only differing from him but also from the dictum of Winn LJ in Hadley v Droitwich Construction Co Ltd ( 3 All ER 911 at 914,  1 WLR 37 at 43), and also out of deference to the argument of counsel for the suppliers, I add to what has fallen from Stephenson LJ.
At the opening of his address two days ago, counsel for the suppliers said that it was because of the owner’s independent negligence that the owner incurred liability to the plaintiffs, in respect of which the owner now sought indemnity from the suppliers, and he contended vigorously (and supported that contention with a mass of authority) that the fact that there was what he called independent negligence freed his client, the suppliers, from liability to pay to the owner that 25% of the global figure of damages which the owner has to pay to the plaintiffs. He went on to submit that a seller is not the insurer of the independent negligence of his buyer. I entirely agree; he is not. But a seller of goods remains responsible for all damages which flow naturally and directly from any breach of condition or warranty contained in his contract with his buyer.
Stephenson LJ, at the outset of his judgment this morning, referred to s 53 of the Sale of Goods Act 1893. That section, as is well known, merely reproduces the old common law and, as I pointed out to counsel for the suppliers yesterday afternoon when he urged that the relevant measure of damages here was governed by s 53(3), sub-s (2) comes before sub-s (3) and the basic rule is that the measure of damages for breach of warranty is the loss directly and naturally resulting in the ordinary course of events from that breach of warranty. Subsection (3) goes on to declare that in the case of a breach of warranty, with which we are concerned, such a loss is prima facie the different between the value of the goods when delivered and the value they would have had if they had then answered to the warranty.
It was by reference to sub-s (3) that counsel for the suppliers argued that the sole damage for which his clients were liable, was the difference between the sound and damaged values of this coupling. He contended that that was the sole measure of their liability and that nothing beyond that was recoverable. But with respect, that is simply not the law. One has only to look at some of the illustrations in Chalmers on the Sale of Goods, to see that there are many cases (the illustration of Jackson v Watson & Sons is perhaps the best example) where a buyer who has suffered damage beyond the getting of poor goods rather than sound contract goods is able to recover his further additional loss. The decision in Jackson v Watson & Sons is summarised thus: ‘A, a grocer, sells tinned salmon to B which is unfit for food. B’s wife is poisoned and dies. B may recover the reasonable expenses of medical attendance and the funeral, and also a reasonable sum for the loss of his wife’s services.’ But if counsel’s basic submission be right, he ought only to have recovered the difference between the value of the poisoned and an unpoisoned tin of salmon.
Now in the real world, when parties make a contract whether for the sale of goods or for anything else, they do not usually contemplate a breach of that contract; they contemplate its performance and their efforts are more directed towards ensuring its fulfulment than towards providing for compensation for its breach. When a breach occurs, the law therefore has to impute to them an agreement as to what is to happen in the event of a breach, so that they are, in such circumstances, deemed to have contemplated certain consequences, to use Asquith LJ’s phrase as being ‘on the cards’ as damage flowing naturally and directly from the breach. That is what I venture to think that Kay LJ had in mind in the passage of his judgment in Mowbray v Merryweather, to which Stephenson LJ drew attention that the damage claimed by the plaintiffs must be considered as being the natural result of the breach of warranty, and one which must be deemed to have been within the contemplation of both parties as likely to spring from that breach.
If further authority be required for that proposition it is to be found in Burrows v March Gas and Coke Co; it is to be observed that it was the judgment of Martin B (LR 5 Exch 67 at 72) which had the approval of this court in Mowbray v Merryweather.
The basic rule is as Stephenson LJ has indicated and is, I venture to think, now plain: it is clearly expressed in Mowbray v Merryweather, a decision binding on this court. Of course to all rules there are qualifications. There are the qualifications to which attention was drawn during the argument mentioned in Chalmers on the Sale of Goods, on the liability of a seller to pay damages where he is admittedly in breach. After setting out certain propositions it is said:
‘These propositions are probably illustrations of the general rule that a party to a contract should act reasonably even when the other party is in breach, and may not increase the liability of the other party by acting unreasonably. There may well be circumstances in which a buyer could reasonably use defective goods even with the knowledge of the defect. Thus, if no alternative goods were available and there was a reasonable prospect that the defective goods would fulfil the purpose of which they were bought, it may sometimes be reasonable to use them for that purpose, and if in such a case the buyer in fact suffered additional loss, such loss might be recoverable from the seller.’
That passage, curiously enough, does not refer to Mowbray v Merryweather; indeed, Mowbray v Merryweather is not referred to anywhere in the present edition of Chalmers on the Sale of Goods. True strictly it is not really a sale of goods case, but it was a claim for damages for breach of a condition indistinguishable from the condition implied in contracts for the sale of goods by s 14(1) of the Sale of Goods Act 1893.
The same problem was considered by Devlin J and by this court in Compania Naviera Maropan SA v Bowaters Lloyd Pulp and Paper Mills Ltd. The most relevant passage is in Devlin J’s judgment ( 3 All ER 563 at 569,  2 QB 68 at 78). The case concerned an unsafe berth; the argument was that the master had disentitled the owners from recovering damages because of the action which he took going there with the knowledge of its condition at the time he entered and reentered. Devlin J said:
‘To deny the defendants’ proposition does not mean that a master can enter ports that are obviously unsafe and then charge the charterers with damage done. The
damages for any breach of warranty are always limited to the natural and probable consequences. The point then becomes one of remoteness of damages; or, if it is thought better to put it in Latin, the expressions novus actus interveniens and volenti non fit injuria are ready to hand. There is also the rule that an aggrieved party must act reasonably and try to minimise his damage. A master who entered a berth which he knew to be unsafe (and which perhaps the charterer had nominated in ignorance of its condition) rather than ask for another nomination and seek compensation for any time lost by damages for detention, might find himself in trouble … If I may return to the case of the sale of goods, from which I have already drawn an analogy, in a proper case in which sub-sales are contemplated, the plaintiff may recover as part of his damages his liability to a third party: but if he passed on to a third party goods which he knew to be dangerous or defective, or if he incurred damage himself by recklessly using such goods, he could not claim to be reimbursed.’
Devlin J referred to a number of cases with which it is not necessary to deal. In passing I would only make this observation. The learned judge there uses the adverb ‘recklessly’: that adverb does not occur in any of the judgments in the cases which he cites; probably he was only using that word to illustrate one of the extreme cases which he mentioned in the immediately following passage. In my judgment there does not have to be recklessness and nothing less than recklessness on the part of the buyer before a seller can disclaim liability for damage in respect of which the buyer claims an indemnity. It is, as Lawton LJ said yesterday during the course of argument, always a question of degree at what point the damage claimed for ceases to flow naturally and directly from the breach.
The only statement of the law which, to my mind, is out of line with this impressive list of authorities is the dictum of Winn LJ in Hadley v Droitwich Construction Co Ltd ( 3 All ER 911 at 914,  1 WLR 37 at 43). As Stephenson LJ has already said, the decision is plainly right if it is treated as a decision on the construction of the rather curiously worded letter there in question. Both Sellers and Harman LJJ said that a condition of this kind implied by s 14(1) could not possibly stand alongside the terms of that letter. In my judgment both Sellers and Harman LJJ were looking at the matter simply in the light of the particular contract there in question and pointing out that the contract in Hadley’s case was totally different from the contract in Mowbray v Merryweather.
But Winn LJ ( 3 All ER 911 at 914,  1 WLR 37 at 43) went much further. He seemingly sought to invoke something which Harman LJ had said as supporting his (that is, Winn LJ’s) view. With all respect I cannot find in the report of Harman LJ’s judgment anything which gives any such support. Winn LJ went on to discuss the Mowbray v Merryweather principle. He said ( 3 All ER 911 at 914,  1 WLR 37 at 43) it was—
‘that in a case where A has been held liable to X, a stranger, for a negligent failure to take a certain precaution, he may recover over from someone with whom he has a contract only if by that contract the other contracting party has warranted that he need not—there is no necessity to—take the very precautions for the failure to take which he has been held liable. It does not go farther than that … ’ (Winn LJ’s emphasis.)
With very great respect to Winn LJ, I cannot agree with that proposition or that that proposition correctly states what was decided first in Burrows v March Gas and Coke Co, and secondly, in this court in Mowbray v Merryweather.
The law is, as Stephenson LJ has said, that the damage which is recoverable by a buyer from a seller for the seller’s breach of warranty in a case such as this is the damage which follows naturally and directly from that breach and such damage does not cease to be recoverable merely because the act which ‘triggers off’ the casualty giving rise to the liability may be some act, albeit a negligent act, of some other party, or indeed of the buyer himself. That seems to me to be plain. The relevant law was discussed in the House of Lords in Monarch Steamship Co Ltd v A/B Karlshamns Olejefabriker ( 1 All ER 1 at 16, 17,  AC 196 at 227–230). In the present case we are concerned with damages for bad design; in that case the court was concerned with the unseaworthiness of a ship. There are, to my mind, certain analogies between physical unseaworthiness of the ship and bad design of a towing coupling; unseaworthiness of a ship will rarely of itself cause a loss. As Lord Wright pointed out, something else usually has to happen before that unseaworthiness has any causative effect. So, in cases of bad design, the breach is usually committed at the moment delivery takes place. But the breach remains inoperative in most cases until it manifests itself because something else happens (as in this case namely the owner’s negligence) which ‘triggers off’ an accident which but for the initial breach would not have occurred.
Here the learned judge apportioned liability as to 25% for the owners negligence and as to 75% to bad design by the manufacturers. The learned judge rightly said that there were two concurrent causes: unsuitability of the coupling, and the fact that the owner continued to use the coupling for a period of months when it was manifestly defective. I do not consider this failure by the owner broke the chain of causation between the breach of conditions by the suppliers in supplying a coupling which by reason of bad design was unfit for the purpose required.
In my judgment the judge ought to have given judgment for the owner against the suppliers for damages for breach of contract for the full 25%. But the learned judge did not do so because of that dictum of Winn LJj. With profound respect to the judge whose judgment in the first two parts of this complicated case appears to me faultless, on the last point he allowed himself to be misled by that dictum which, for the reasons given, I do not think can be supported. It seems to me that these damages did flow naturally and directly, and for my part I cannot see how it can be said the 25% negligence by the owner can free the suppliers from all responsibility. Of course, counsel for the suppliers was not slow to make the point that if the owner had been acquitted of all negligence, then there would have been no liability on the suppliers for damages for breach of contract, except perhaps nominal damages for the difference between the value of the coupling in the condition in which it was and in the condition in which it ought to have been.
But if that were enough to enable the suppliers to escape liability, the decision in Burrows v March Gas and Coke Co and, indeed, in the Monarch Steamship case should have been different.
I think that the liability for the owner’s negligence to the extent of 25% must fall on those who were in breach of the implied condition under s 14(1), as damages naturally and directly flowing from their breach. For those reasons, as well as those which Stephenson LJ has given, I agree with Stephenson LJ that the appeal in the third party proceedings should be allowed.
I agree with the judgments which have been delivered by Stephenson and Roskill LJJ. I add a few comments because I have been disturbed by the length of the arguments which have been put before the court in this case. In saying that, I do not criticise counsel; they felt it necessary, because of the way the law has developed, to spend the time they did inviting the court’s attention to a long line of cases.
Their submissions lasted four days. Stephenson and Roskill LJJ have had to deliver long judgments analysing in detail the various cases to which we have been referred. This has led me to consider whether it might not be possible to find a short cut through this morass of case law.
I find it advisable to look for a short cut because cases of this kind are, unfortunately, not all that uncommon. When the damage is slight, or comparatively slight, cases of this kind are dealt with in the county court. When the damage is more serious, they are dealt with in the High Court, and occasionally, the issues which have been considered in this court, have to be considered by magistrates and, in the Crown Court, by juries. It would be a pity if, in this kind of case, subtleties entered into the law which might make it difficult to apply.
It seems to me that it is possible to find a short cut. I start with the proposition that when a garage sells a towing hitch to a customer, the probabilities are that there will be a warranty of fitness under the provisions of s 14 of the Sale of Goods Act 1893, as amended. Both the garage proprietor and the customer must surely envisage that, if the towing hitch is not reasonably suitable for towing, then an accident is likely to happen on the highway when the towing hitch is used. What the consequences of the accident will be are unpredictable. There may be nothing more than scratched paintwork on another vehicle, or, as in this case, people may be killed. It follows, therefore, that both the garage selling the towing hitch and the customer buying it should take care to ensure that accidents do not happen.
In the circumstances of this case, no moral blame of any kind attaches to the suppliers as the garage owners. They bought from reputable wholesalers who, no doubt in turn, bought from reputable manufacturers; but the fact remains that what the garage sold was liable to cause, and did cause, an accident.
It follows, therefore that prima facie the garage are liable for their breach of warranty. They excuse themselves by alleging that their breach of warranty did not cause the accident because their customer, the owner, was also negligent. That was an argument which was put before Charles J in 1895k, and rejected by him, and was repeated in this court later that year, and rejected by this court. So the law undoubtedly is that negligence on the part of a customer which was a cause of the accident and which triggered it off, to use Roskill LJ’s phrase, is not always an answer to an allegation of breach of warranty. What the court has to consider is: what was the substantial cause or causes of the accident? There may be two or more causes of an accident. That is what the trial judge found there were in this case. There were two concurrent causes, one was the bad design for which the manufacturers were responsible, and the second was the negligence of the customer, the owner, in not behaving in relation to the towing hitch as the judge found he should have done.
The trial judge then had to ask himself whether the negligence of the customer was of such degree that the breach of warranty by the suppliers could no longer be said to be a cause of the accident. This is the sort of problem which, at the turn of the century, would have been left to a jury had the judge decided to take a general verdict from them. The jury would have used their common sense and their knowledge of the world in deciding whether the owner’s negligence was such a substantial cause of the accident so as to excuse not only the garage proprietors but the designers of the towing hitch as well.
Stocker J decided that the chain of causation had not been broken. He said, in relation to the negligence of the owner:
‘He would not have known nor could he have been expected to have known that the integrity of the locking mechanism depended on the continued undamaged existence of the spindle, nor that a blow on the handle, sufficient to cause deformation of the spindle might affect the proper working of the spring-loaded lock. What I find the [owner] should have known and by his evidence he did in fact know was that the safety of the trailer on the highway depended on the effectiveness of the coupling.’
A little later he said:
‘I find that he [that is the owner] ought to have ascertained the physical nature of the lock on which the security of the tow depended. I am not making a finding that he should have known or enquired as to the unseen nature of the lock mechanism within the casting or the materials of which it was composed. He was entitled to assume that both were suitable but he ought, however, to have seen and ascertained that the security of the towing pin depended on the spring-loaded lock operated by a handle.’
Later still he said:
‘I do not think the [owner] was in any way reckless of the public safety. I think he was insensitive to it and never really turned his mind to the risks involved in the use of a trailer on the highway.’
The judge, acting as a jury, came to the conclusion that negligence of that kind did not break the chain of causation. In his judgment the design of the towing hitch was a substantial cause of the accident, and as Stephenson and Roskill LJJ have pointed out, he went further and said it was the major cause because he attributed 75% of the blame to the bad design.
Most unfortunately for the suppliers, they must be held responsible for the bad design having regard to the implied warranty of fitness.
As to the judge’s finding about causation, no appellate court in my judgment could say that it was unreasonable or perverse or that the consequences of the bad design were so remote as to have played no part in the accident. Essentially, this was a matter of fact for the judge to decide and there was evidence on which he could decide as he did.
Accordingly I would hold, like Stephenson and Roskill LJJ, that the appeal against the fourth party should be allowed.
Appeal by the owner in the main action dismissed. Appeal by the owner against the suppliers in the third party proceedings allowed, and judgment entered for the owner against the suppliers for repayment of damages, interest and costs, and interest on such sum since payment. Suppliers’ application for leave to appeal to the House of Lords refused.
The court then heard argument in the appeal in the fourth party proceedings.
Michael Maguire QC and R Livesey for the manufacturers.
Michael Turner QC and Patrick Phillips for the suppliers.
Cur adv vult
24 May 1979. The following judgments were delivered.
read the following judgment of the court. From the judgment we have already given in the third party proceedings allowing the owner’s appeal and holding the suppliers liable to indemnify the owner arises the necessity to decide the fourth party proceedings brought by the suppliers against the manufacturers. The necessity for taking those proceedings arose simply from the fact that the suppliers were unable to identify the stockist or distributor who sold to them the particular Dixon-Bate towing hitch (or trailer coupling) which they sold to the owner.
If they could have identified that party they could, in the absence of special contractual terms, have obtained an indemnity from that party for his breach of contractual condition or warranty, or perhaps for negligent misrepresentation under the Misrepresentation Act 1967, and that party could in turn have been indemnified by the seller of the hitch to him, probably the manufacturers themselves, but without that identification the suppliers must have recourse direct to the manufactures, with whom they had not contract of sale, but who may be considered in part responsible because they do not identify each coupling by a serial number.
Counsel for the suppliers have addressed to us an ingenious argument that they are none the worse off for that lack of identification. The argument was put before us, as it was put before Stocker J, in three different ways. Having dismissed the third party proceedings it was not necessary for him to consider the argument or pronounce on it; but he did so for the sake of completeness should it be held on appeal, as it has been, that he was wrong to dismiss the third party proceedings, and after considering the argument he rejected it and stated that he would have dismissed the fourth party proceedings.
We agree with him that they should be dismissed and in deference to the interesting arguments of counsel for the suppliers, and also because the judge did not expressly deal with the third way in which they put their case, we shall state our reasons more fully perhaps than we need.
We take their pleaded claim from the judge’s judgment with a few additions:
‘By their fourth party notice the [suppliers] claim by sub-para (4) of para 3 that the [manufacturers] owed a duty to distributors, garages, sellers and/or users, of whom they were one, to exercise reasonable care in the design of the towing hitches to ensure that they were safe to be fitted to vehicles such as Land-Rovers, and were suitable for use when so fitted. The duty is alleged to arise from the matters pleaded in sub-paras (1), (2) and (3) of para 3 of the fourth party notice, namely: (1) The [manufacturers] represent themselves by selling such and other towing hitches on a world-wide scale by promotion and otherwise, being experienced and competent manufacturers of towing hitches which are safely fitted to vehicles such as Land-Rovers and were suitable to be used when so fitted for the purpose of safely towing a trailer. (2) Further the [manufacturers] supply such towing hitches to distributors with the expectation that such distributors will sell them to others, including garages, or are likely to sell them to customers for their use. (3) Yet further the [manufacturers] so pack and sell their said towing hitches to be ready for immediate easy attachment to another vehicle and accordingly knew or ought to have known no intermediate distributor seller garage or user would test, examine or otherwise appraise the qualities of any such towing hitches, or any of them. Alternatively it is claimed that the [manufacturers] by the fact of their manufacture, packing and selling of the hitches, warranted to each distributor who might handle, sell or fit one of their towing hitches, that the same was safe to be fitted to vehicles such as a Land-Rover and was suitable to be used when so fitted for the purpose of towing trailers.’
Then para 4(1) and (2) reads:
‘(1) The towing hitch which the [suppliers] fitted to the [owner’s] Land-Rover they acquired from such a distributor who had acquired the same directly or through another from the [manufactures].
(2) At the same same time, when the [suppliers] came to fit the said towing hitch to the said Land-Rover the said towing hitch was in the same condition and packing as was manufactured and sold by the [manufacturers].’
The suppliers relied on the manufacturers’ representations, reputation and warranties and carried out no test or examination and fitted the towing hitch to the owner’s Land-Rover in such reliance. The suppliers therefore claim under the heads above specified: (1) damages for negligent misrepresentation, and/or (2) damages for the breach of the warranty alleged to have been given to them as distributors. They also alleged (in para 6) a breach of the duty alleged in para 2(4) and claimed damages for that.
The judge dealt first, and so will we, with the argument that the suppliers could succeed on a breach of warranty. The allegation of implied collateral warranty, he said—
‘… is based on a submission that the following facts are established: 1. The [manufacturers] were well known in the trade as manufacturers of a variety of towing hitches. 2. [They] had justly acquired not only a good trade reputation but also a reputation for quality and safety. 3. [They] sought to improve their reputation by obtaining approval of certain of their products from Messrs Rovers, the Ministry of Defence, and so on. 4. To the trade and to the public [they] expressly claimed in relation to the safe towing trailer coupling that it requires “no maintenance”, is “foolproof” “once the pin is pushed home it is locked—absolutely”. They also claimed that the pin “locked positively and automatically” “no metllic springs to break or rust”. 5. [They] were thus making these claims seriously and intending that any purchaser should rely on them. It is said that Mr Dixon-Bate said in his evidence “Such claims were intended to be serious and to be acted on by users”. 6. The [manufacturers] did not consider or publicly claim that any instruction or warning in relation to a hitch was necessary, nor did they give any indication with regard to restrictions of user in relation to the suitability for that purpose of their coupling. 7. [They] expressly or by implication claimed no instruction or warning was necessary.’
The evidence of the suppliers’ witnesses, Mr Baldwin, their parts manager, Mr Curtis, their salesman, and Mr Wallace, their storeman, was mainly related to documents put out by the manufacturers in 1960, 1963 and 1966, which were not concerned with the dual-purpose towing hitch, or put out in 1973 after the purchase of this hitch by the suppliers. But it was rightly assumed that there was a document put out by the manufacturers after the manufacture of the dual-purpose hitch in 1968 and before this purchase by the suppliers and in the same terms as the 1973 literature. The judge rightly acted on that assumption and found that Mr Wallace read the claims then made and relying on the manufacturers’ reputation rather than on them believed them to be true.
Counsel for the suppliers relied before the judge, and also before us, on the evidence of Mr Dixon-Bate himself that the manufacturers intended these claims to be taken seriously, and on the decisions of this court in Carlill v Carbolic Smoke Ball Co and of McNair J in Shanklin Pier Ltd v Detel Products Ltd.
We accept counsel for the suppliers’ submission that not much is needed to conclude that when a warranty of suitability for a particular purpose is expressed or implied in a contract of sale that warranty has been relied on by the purchaser: see Henry Kendall & Sons Ltd (a firm) v William Lillico & Sons Ltd ( 2 All ER 444 at 457, 483,  2 AC 31 at 84, 115) per Lord Reid and Lord Pearce; Ashington Piggeries Ltd v Christopher Hill Ltd ( 1 All ER 847 at 876–877,  AC 441 at 495) per Lord Wilberforce. But the difficulty is to show that what the manufacturers stated in the literature advertising and accompanying their products as to their safety and suitability was intended to be a contractual warranty or binding promise. It is one thing to express or imply it in a contract of sale, another to treat it as expressed or implied as a contract, or a term of a contract, collateral to a contract of sale. There may be cases where the purchase from an intermediate seller may be regarded as fortuitous and the original supplier or seller can properly be held liable for breaches of warranty given by the intermediate seller as well as for those given by him: see Wells (Merstham) Ltd v Buckland Sand and Silica Co Ltd. But that is not, in our judgment, this case.
In the Carbolic Smoke Ball case this court had no difficulty in holding that the suppliers of the ball made a binding promise to pay £100 to any users of the ball on the stated conditions if it failed to prevent them from getting influenza. Their statement that they had deposited £1,000 with a bank showed that their statements were of a mere ‘puff’ but a sincere promise, and we cannot agree with counsel for the suppliers that the promise to pay £100 merely showed that they were serious and quantified the damages which they would have been liable to pay to an unsuccessful user of their ball as the loss naturally and directly resulting from their breach of contract. It appears from the report of the argument before Hawkins J ( 2 QB 484 at 486) that the plaintiff there put her case as a claim for liquidated damages for breach of a contract of warranty of prevention of disease; but it could have been put as a claim for a debt. That case is no authority for holding that the manufacturers were saying to the suppliers: ‘If you acquire our product we promise it is safe and merchantable and if it is not we will pay you such damages as the law requires.’
A statement relating to the marketed product may be more than a puff and less than a warranty: it may be so important that it may induce a contract, may now amount to a negligent misrepresentation, and may nearly amount to a warranty: see Howard Marine and Dredging Co Ltd v Ogden & Sons (Excavations) Ltd, where Lord Denning MR and Bridge LJ (Shaw LJ dubitante) held that oral statements made in pre-contract negotiations as to deadweight capacity were not warranties (though, as Roskill LJ pointed out in the course of the argument, any terms as to deadweight capacity in the charterparty, which was the resulting contract, are not given in the reports of the case). But whether the statement is oral or written, made contemporaneously with the contract or earlier, the question is whether it is intended to be binding. When it is written, as here, we doubt if parol evidence of the intention of the person who made it is admissible, though here admitted without objection, but the intention must, we think, be inferred from the construction of the writings against the background of all the circumstances. The construction of these documents in the circumstances of this case leads us to the same conclusion as the judge, that the claims in them ‘were not intended to be, nor were they acted on as being express warranties and (though this further finding, if it adds anything, is not strictly necessary) the [suppliers] did not purchase the coupling in reliance on such warranties’.
Nor do we think that the development of the law in the Shanklin Pier Co case (and, it may be, in the unreported case of Independent Broadcasting Authority v EMI Electronics Ltd) helps the suppliers to a different result. The effect and ratio of the former decision are correctly stated by the judge in his judgment in these terms:
‘In that case the defendant paint company made certain express representations as to the quality of its paint and its suitability for use on the plaintiffs’ pier which was then to be repaired by contractors. On the strength of that representation the plaintiffs caused the specification for their works to be carried out by contractors to be amended by substituting the defendants’ paint for that previously specified. The contractors bought and used the paint, which was unsatisfactory and unsuitable for use on the pier. It was held that the plaintiff company could recover damages on the warranty from the defendant paint company despite the fact that there was no contract other than a collateral one between the plaintiff pier company and the defendant paint company. In my judgment the basis of this decision was that consideration for the representation was the procurement by the plaintiffs of a contract of sale by their contractors with the defendants.’
There the express representation was clearly an express warranty, for which the consideration was the procurement of a particular contract, as the judge pointed out; but here was no warranty and we find it unnecessary to consider whether that decision could be extended to the contract of purchase made by the suppliers, or the contract of resale made by them, and to hold that in consideration of either of those contracts, both in fact unknown to the manufacturers, they are promising or warranting, either expressly or by implication, that their claims for their hitch are true, and they are prepared to stand by their warranties and pay the suppliers and any other distributors in their position damages for breach of them, as long (could for the suppliers was constrained to add) as the user of the hitch is reasonable.
The judge went on to hold that this finding that the manufacturers’ claims were not warranted precluded the suppliers from recovering damages from the manufacturers in tort for negligent misrepresentation. The basis of his finding against counsel’s second submission was that the House of Lords in Hedley Byrne & Co Ltd v Heller & Partners Ltd, had ‘limited the ambit of those entitled to sue in respect of negligent misstatement to the person to whom [we add the words ‘the answer to’] ‘the enquiry was directed and for the purposes for which the enquiry was made’. And he appears to have held that even if the ambit could have been extended to the suppliers they would be defeated by the fact that they did not rely on the manufacturers’ misstatements.
Counsel for the suppliers does not dispute that a special relationship is necessary between the maker of the misstatement and the person who suffers damage by acting on it before the former can be liable for the damage to the latter on the Hedley Byrne principle. He concedes also that it is easier to prove that relationship and the consequent duty of care if the information or advice contained in the statement is asked for. But he submits that if the statement is made seriously, not casually, and is intended to be acted on and is in fact acted on and it is negligent, it is actionable at the suit of him who acts on it notwithstanding the maker has forestalled an enquiry for the information or advice it contains by volunteering the one or the other.
This may sometimes be so. A doctor who goes to the help of an unconscious patient will be liable to him if he injures him by negligent treatment. But we cannot regard the manufacturer and supplier of an article as putting himself into a special relationship with every distributor who obtains his product and reads what he says or prints about it and so owing him a duty to take reasonable care to give him true information or good advice. Bearing in mind what, for instance, Lord Reid and what Lord Pearce said in the Hedley Byrne case ( 2 All ER 575 at 580, 616–617,  AC 465 at 482, 539), we consider that cases of liability for statements volunteered negligently must be rare and that statements made in such circumstances as these are not actionable at the suit of those who have not asked for them. To make such statements with the serious intention that others will or may rely on them (and here parol evidence of intent may be admissible) is not, in our opinion, enough to establish a special relationship with those others or a duty to them.
So we are again in agreement with the judge’s rejection of leading counsel for the suppliers’ argument and we turn to his last submission on which the judge is silent, probably because at the trial it was no more than a makeweight thrown into the scales after his two main arguments. That submission is that the suppliers can recover what they have to pay the owner from the manufacturers as damages for their negligence not in words but in deeds, not in what they stated untruly and carelessly but in what they designed defectively and dangerously. What is sought is an application of the principle in Donaghue v Stevenson to the distributor of a dangerous article in the condition in which it was originally supplied and to the financial loss which the distributor has suffered under his contractual liability to reimburse the ultimae user of the article for the financial loss which he has incurred from the injury and damage its uses has done to third parties. On the judge’s finding that this hitch or coupling was a trap, all that counsel for the suppliers says he has to prove is that the manufacturers contemplated its passing through the suppliers’ hands on its way to causing injury and damage of the kind that ultimately resulted to the first plaintiff and her family. The damage which the suppliers have suffered in meeting their liability to the owner for his liability to the plaintiffs is not too remote because that commercial consequence of the defective design manifesting itself was reasonably foreseeable by the manufacturers as a direct and immediate result of marketing the coupling as they did.
The way to this argument is opened by what has been said by Lord Reid and Lord Pearson in Home Office v Dorset Yacht Co Ltd ( 2 All ER 294 at 297, 319,  AC 1004 at 1026, 1052), and by Lord Wilberforce, with the assent of Lord Diplock, Lord Simon of Glasisdale and Lord Russell of Killowen, in Anns v London Borough of Merton ( 2 All ER 492 at 498–499,  AC 728 at 751).
In the Dorset Yacht Co case ( 2 All ER 294 at 297,  AC 1004 at 1026) Lord Reid said:
‘In later years there has been a steady trend towards regarding the law of negligence as depending on principle so that, when a new point emerges, one should ask not whether it is covered by authority but whether recognised principles apply to it. Donoghue v Stevenson may be regarded as a milestone, and the well-known passage in Lord Atkin’s speech [ AC 562 at 580,  All ER Rep 1 at 11] should I think be regarded as a statement of principle. It is not to be treated as if it were a statutory definition. It will require qualification in new circumstances. But I think that the time has come when we can and should say that it ought to apply unless there is some justification or valid explanation for its exclusion. For example, causing economic loss is a different matter; for one thing, it is often caused by deliberate action. Competition involves traders being entitled to damage their rivals’ interests by promoting their own, and there is a long chapter of the law determining in what circumstances owners of land can, and in what circumstances they may not, use their proprietary rights so as to injure their neighbours. But where negligence is involved the tendency has been to apply principles analogous to those stated by Lord Atkin ( AC 562 at 580,  All ER Rep 1 at 11) (cf Hedley Byrne & Co Ltd v Heller & Partners Ltd).’
Then in the same case Lord Pearson said ( 2 All ER 294 at 319,  AC 1004 at 1052):
‘It may be artificial and unhelpful to consider the question as to the existence of a duty of care in isolation from the elements of breach of duty and damage. The actual damage alleged to have been suffered by the respondents may be an example of a kind or range of potential damage which was foreseeable, and if the act or omission by which the damage was caused is identifiable, it may put one on the trial of a possible duty of care of which the act or omission would be a breach. In short, it may be illuminating to start with the damage and work back through the cause of it to the possible duty which may have been broken.’
Then in Anns v London Borough of Merton ( 2 All ER 492 at 498–499,  AC 728 at 751), Lord Wilberforce said:
‘Through the trilogy of cases in this House, Donoghue v Stevenson, Hedley Byrne & Co Ltd v Heller & Partners Ltd and Home Office v Dorset Yacht Co Ltd, the position has now been reached that in order to establish that a duty of care arises in a particular situation, it is not necessary to bring the facts of that situation within those of previous situations in which a duty of care has been held to exist. Rather the question has to be approached in two stages. First one has to ask whether, as between the alleged wrongdoer and the person who has suffered damage there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the latter, in which case a prima facie duty of care arises. Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may give rise (see the Dorset Yacht case [ 2 All ER 294 at 297–298,  AC 1004 at 1027], per Lord Reid). Examples of this are Hedley Byrne & Co Ltd v Heller & Partners Ltd where the class of potential plaintiffs was reduced to those shown to have relied on the correctness of statements made, and Weller & Co v Foot and Mouth Disease Research Institute and (I cite these merely as illustrations, without discussion) cases about “economic loss” where, a duty having been held to exist, the nature of the recoverable damages was limited (see SCM (United Kingdom) Ltd v W J Whittall & Son Ltd, Spartan Steel and Alloys Ltd v Martin & Co (Contractors) Ltd).’
It is right to note that the passing references of Lord Reid and Lord Wilberforce to economic loss are not expressions of considered judicial approval or disapproval, but nevertheless there are two decisions of this court which, in our opinion, bind us to reject the argument that economic loss is, generally speaking, recoverable, though there are exceptions, as damages for negligence of this kind. One is SCM (United Kingdom) Ltd v W J Whittall & Son Ltd; the other Spartan Steel & Alloys Ltd v Martin & Co (Contractors) Ltd, the cases mentioned by Lord Wilberforce. It is submitted that those cases decide only that ‘pure’ financial loss not consequent on physical damage is irrecoverable, and so decide because to hold otherwise would be to broaden the class of persons entitled to the benefit of the neighbourly relationship which founds the duty of care; here there are a limited number of contractors buying and selling, stocking and distributing this article of the manufacturers, and the manufacturers could expect any and all of these couplings which they manufactured (according to the evidence at least 35,000) to go through the chain of such contractors to the ultimate user with some such result of its use as happened in this case of physical damage and consequent legal liability. If Mowbray v Merryweather declares that legal liability to be a direct and foreseeable consequence of the suppliers’ breach of contract, why is it not a direct and foreseeable result of the manufacturers’ breach of duty?
The answer seems to us to be found in principle and on authority, in particular the authority of those two recent decisions of this court, not in a detailed examination of the cases nor in a logical analysis of the distinction between physical damage to the owner’s trailer and physical injury to the first plaintiff and her family, or between loss of profits and financial loss incurred by legal liability to pay damages, but in applying common sense to draw a line between circumstances where the financial loss can and cannot be held to be recoverable for a breach of duty owed to the party who incurs the loss. Whether we follow the first thoughts of Lord Denning MR in SCM (United Kingdom) Ltd v W J Whittall & Son Ltd, with which Winn LJ agreed, and consider remoteness, or his second thoughts in Spartan Steel & Alloys Ltd v Martin & Co (Contractors) Ltd, with which Lawton LJ agreed, and discard everything but policy in setting bounds to duty and damage, we reach the conclusion that the loss which the suppliers incurred by their liability to indemnify the owner against his legal liability to compensate the plaintiffs cannot be recovered from the manufacturers.
We should perhaps add (1) that the introduction by the Trade Descriptions Act 1968 of fresh provisions prohibiting false trade descriptions does not, in our judgment, advance the suppliers’ case under any of its three heads, nor do other statutory provisions for consumer protection and safety, and (2) that we read the decision of the House of Lords in Morrison Steamship Co Ltd v Owners of the cargo lately laden on SS Greystoke Castle) as providing no support for the suppliers’ claim, perhaps rather ammunition against it, because the decision rests on the existence of a common adventure between the party who negligently caused the collision and the party who had to pay as a result of it and there is no joint venture of the manufacturers and the suppliers here.
There comes a point where the logical extension of the boundaries of duty and damage is halted by the barrier of commercial sense and practical convenience. In our judgment, the facts of this case do not enable the suppliers to push that barrier back as far as to include themselves and their damage within the range of the manufacturers and the towing hitch they put into the market, or to surmount the barrier where we think common sense would place it.
Putting aside any sympathy we may feel for the suppliers, or their insurers, we would therefore reject all three grounds on which their appeal is put and dismiss it.
Appeal by driver against plaintiffs allowed by consent. Appeal by owner in third party proceedings allowed. Appeal by owner against manufacturers in main action be dismissed. Appeal of suppliers in fourth party proceedings be dismissed. Suppliers application for leave to appeal to House of Lords refused.