Clegg v Olle Andersson (t/a Nordic Marine)

By an agreement in writing made in December 1999 the appellants, Mr and Mrs Clegg, agreed to buy from the respondent Mr Olle Andersson for £236,000 a new Malo 42 yacht (“the Yacht”) with a shoal draught keel “in accordance with the manufacturer’s standard specification”. Such specification prescribed, amongst other things, draught of 1.95m, displacement of 13.8 t. and “ballast (encapsulated lead keel) 5.5 t.”. The Yacht was delivered by the manufacturers, Malo, to Mr Andersson on 25th July 2000 and by him to the Cleggs on 12th August 2000.

Mr Andersson realised and informed the Cleggs at the time of delivery of the Yacht that the keel was substantially heavier than the manufacturer’s standard specification prescribed. Between 28th August 2000 and 1st March 2001 Mr Clegg and Mr Andersson corresponded on, amongst other matters, the overweight keel, its consequences and available remedies. On 6th March 2001 solicitors for the Cleggs wrote to Mr Andersson claimed that the Cleggs were entitled to reject the Yacht and thereby did so. Mr Andersson disagreed. These proceedings were instituted by the Cleggs on 16th May 2001. They claim the return of the purchase price and damages for breach of contract.

The claim was tried by HH Judge Seymour QC sitting as a deputy judge of the Queen’s Bench Division. He concluded that there had been no breach of condition under either s.13(1) or s.14(2) Sale of Goods Act 1979. In addition he held that if there had been such a breach the Cleggs had lost their right to reject the Yacht before 6th March 2001. The pecuniary claims failed because the Cleggs had, in the view of the judge, failed to mitigate their loss in respect of part of their claim and Mr Andersson was entitled to a set-off in respect of the balance. In the result the judge dismissed the claim and ordered the Cleggs to pay Mr Andersson the costs of the action to be assessed on the indemnity basis

On 6th August 2002 Rix LJ granted the Cleggs permission to appeal on five grounds only. They are:

Thus the issues for our determination are (1) whether there was a breach of condition, and if so (2) whether any consequential right to reject the Yacht had been lost before 6th March 2001, but in any event (3) whether the Cleggs were entitled to damages and if so how much. If the Cleggs are unsuccessful on all those issues then, if permission to appeal on that ground is given, the question will arise (4) whether Mr Andersson’s costs of the action should be assessed on the indemnity basis. Before dealing with those issues it is necessary to set out the facts in a good deal more detail.

Mr Clegg is engaged in insurance in London but lives on the island of Guernsey. He is a keen and, no doubt, skilled sailor. Over the last twenty years he has owned at least seven boats of varying types. Mr Andersson carries on business at Salterns Marina, Poole, Dorset under the style “Nordic Marine”. As such he deals in Malo yachts manufactured by a Swedish company Malo Yachts AB (“Malo”).

Malo produces yachts to various designs one of which is designated the Malo 42, so called because of its length of 42 feet. Malo’s standard specification for a Malo 42 in 1999 provided for the draught, displacement and ballast to which I have already referred. It was available in two versions one with a standard keel and one with a shoal draught keel. In the case of the latter the standard keel is truncated and a lead casting is bolted on to the bottom of the truncated keel. The ballast for both versions is the same, namely 5.5t, but is differently distributed. In the case of the model with the standard keel the ballast is provided by lead inserted into the hull. In the case of the shoal keel version the ballast is provided by the lead casting bolted onto the truncated keel.

By the contract made in December 1999 the Cleggs agreed to buy the Yacht from Mr Andersson with a number of specified extra items for the total sum of £236,000. The price was payable as to £131,000 by part exchange and the balance by instalments no later than 10 days before the scheduled delivery date on 5th August 2000. The Yacht to be supplied was

“One new Malo YACHTS 42, in accordance with the general conditions listed overleaf and in accordance with the manufacturers standard specifications and including extras as listed overleaf.”

One of those extras was a “shoal draught keel.” The general conditions provided that “the specifications may be altered if this is the result of manufacturer’s normal development and improvement of their products or if materials no longer available have to be substituted”. As I have said, the Yacht was delivered by Malo to Mr Andersson on 25th July 2000.

The Yacht was put in the water and the tanks were filled shortly thereafter. Mr Andersson thought that the Yacht was lying lower in the water than it should and reported this to Malo. Malo’s designer, Mr Leander, measured the freeboard and reported the results to Malo. At some stage, Malo carried out further investigations and discovered that the foundry which had cast the lead bolted on to the keel had charged for, and so presumably used, 607 kgs more than they should. Mr Andersson reported the fact of the overweight to Mr Clegg at the time the Yacht was delivered to him on 12th August 2000. The best contemporary evidence of what was reported is contained in a letter from Mr Clegg to Mr Andersson dated 28th August 2000 in which he mentions the figure of 1000 kgs as the extent of the overweight. It is this discrepancy which gives rise to the issue referred to in paragraph c) of the grounds for which Rix LJ gave permission to appeal.

Thus when the Cleggs took delivery of the Yacht on 12th August 2000 they knew that the keel weighed more than it should. They sailed her for a day in mid-August, returned her to Mr Andersson for modifications and then sailed her again for seven or eight days at the end of August. On his return from the second cruise Mr Clegg told Mr Andersson that he liked the Yacht and the way it sailed.

Mr Clegg wrote to Mr Andersson on 28th August 2000 drawing to his attention a long list of problems and complaining of the lack of quality control. He continued:

“What also concerns me is the extra weight in the keel and the ‘casual’ way this was mentioned after completion. I will need to know when this information was communicated to you by the yard and why such a fundamental point was not advised to me in writing immediately if prior to completion. Can you please have the yard fax to me the revised specification and new draft measurements bearing in mind the additional weight. What effect does this have on the EU weight requirements and would this effect [sic] a resale? I do not have the expertise and for this reason I would like an independent surveyor to be appointed. Hopefully we can agree on an expert perhaps appointed by the “British Marine Industry”. Do you wish me to contact them or will you?”

Mr Andersson replied on 2nd September 2000. He indicated that he needed to talk to Mr Clegg about the keel issue quite urgently and then dealt with the items raised by Mr Clegg. With regard to the keel he wrote:

“We have carried out a new stability test on the boat and Malo’s designer has recalculated the stability to accurately establish the ballast needed for this actual boat in its real-life trim. The result of these calculations show that the boat has too much righting moment (essentially too much stability). This will effect [sic] not only the static waterline and sailing performance but also the rig loads, which have been calculated for a boat with less righting moment. To correct this the keel needs to be reduced in size/weight and Malo are sending two of their staff over to us next week with a view to effect this correction. The end result will be a boat approximately 1000Kg lighter and with the same, or greater stability as a boat with standard keel. She will also float 40mm higher when at rest.

To confirm the new and correct stability, Malo Yachts propose to instruct IMSI, the CE certification agency in question, to carry out new and independent stability tests and to issue an updated CE-certificate for your boat. This should then cover your requirement for an independent survey as well as Malo’s wish to know that the stability is correct on this particular boat.”

On 4th September 2000 Mr Clegg replied:

“I have asked John [Katenkamp] to contact you as I would like an independent opinion/advice on the keel as to the merits of keeping the weight as opposed to just removing 1000 kilos. He will be in contact with you. Surely we can leave any decisions to after the boat show now?”

On the same day Mr Clegg wrote to Mr Katenkamp, a marine surveyor asking him to contact Mr Andersson and Mr Andersson replied to Mr Clegg’s letter. He wrote:

“Regarding the keel, Malo Yachts have, following their various investigations, decided that the keel needs to be adjusted to its correct weight in order that stability corresponds with figures against which the rigging dimensions have been calculated. In this respect, I therefore think we do not have any choice, although it is important to stress that the boat will be re-measured and new CE documentation issued to assure that the boat has no less stability than a standard Malo 42.

Malo Yachts have also now arranged for the work to be carried out before the boat show – this is the main reason I have been trying to get in touch with you. They have already sent the tools and materials needed for the job and two of their boat builders are going to arrive here tomorrow morning to carry out the work.”

Mr Clegg’s response was:

“I appreciate that you want to get moving with things but I really do not see the urgency before the Boat show. I would like to explore all avenues and have professional advice before I decide.

Please submit all the necessary calculations and I will take up all the advice I need. Photographs of the keel would be helpful if the boat is lifted to enable the Yard to inspect.

I personally do not think it will make much difference at the boat show and it will give me time to discuss this with others.”

On 5th September 2000 Mr Andersson wrote to Mr Clegg:

“I am very sorry you feel we are trying to rush the job to get it done before the show. I should make it clear that it doesn’t matter at all as far as the show is concerned, but Malo offered to send two of their staff to come and carry out the required work and I could see no reason to delay this further, so I accepted this. These two men are now here and the special tools etc. which they need have arrived today at lunchtime.

In the meantime, I have also spoken to John Katenkamp and explained to him what we propose to do. I have informed him that we really do not have a choice, except adjusting the keel so as to achieve a righting moment which will not exceed the maximum calculated for the rig which is fitted to the boat.

I have also explained to Mr. Katenkamp that the documentation for your boat will be corrected to include the changes we are making, and in view of the fact that yours is the only 42 with shallow draught keel which has a CE-certificate, this design will be lodged as being the standard design for a shoal-draught 42. In other words, were we to get an order for another shoal-draught 42, she will be built to the specifications of your boat after the proposed keel modifications. Original drawings which are required by law to be kept at the yard for a period of some 10 years, and which will be kept by the official “Notified Body”, will all be showing this special design.

In view of the fact that Malo have reacted so quickly and positively to our request for help to put you [sic] problem right, I feel it would be both unfair to them and a terrible waist [sic] of time and money not to proceed with the work now. I hope you will agree with this and I would be most grateful if you could contact me so we can discuss any outstanding issues.”

On the same day Mr Clegg replied to Mr Andersson with copies to Mr Katenkamp and to Malo. He wrote:

“Until yesterday evening I was not aware anyone from Malo was coming over. I have not pressurised anyone to rectify the keel preferring to seek both professional and legal advice. You must appreciate that on such a fundamental matter I listen to my professional advisors.

It is highly commendable that Malo have reacted so quickly but I didn’t request it and most certainly do not wish them to carry out any remedial work without my Advisors having approved the revised calculations, the methodology and checked their ability to carry out such work. After all 1000 kg is a lot of weight to take off.

Surely the sensible approach is to wait until after the Southampton Boat Show but in the meantime supply me/my advisors with

(A)

Copies of the existing drawings/calculations together with copies of the CE Certificate and Lloyds certificates/EU equivalent issued on the present certification

(B)

The drawings/calculations of what exactly is now proposed.

I cannot understand given the fact that the keel was manufactured in early 2000 from [what] I was told an existing mould (that you had manufactured a previous 42 shoal draught) that such an error could have been made and not noticed subsequently. You said that the sub-contractor charged by weight! Why was the information not communicated to me earlier and in fact left until after the handover and transfer of funds?

I can assure you I am not deliberately trying to be obstinate but with a £250,000 investment I am entitled to be informed of what went wrong, why it was not discovered.

Authority to proceed with the work is unlikely to be given in the immediate future as I too am very busy and do not have the time for an in depth meeting with my advisors. So it really is a waste of time the Malo staff waiting for a decision.”

Then on 8th September 2000 Mr Andersson wrote to update Mr Clegg. He wrote:

“Having spoken to John Katenkamp after you were in touch with him earlier this week, we did not lift the boat to carry out any alterations to the keel. I understand from Mr. Katenkamp that you would prefer to leave the keel as it is and for us to re-calculate the rigging and stability accordingly. The intention in this case would again be to issue a new CE-certificate to reflect the changes from the standard boat and also to cover all legal requirements. We obviously come back to you with further information following further tests carried out by IMSI, the Notified body.”

There matters rested until 13th January 2001 when Mr Clegg wrote to Mr Andersson:

“We really must get cracking on the o/s keel question. Do you now have all of the calculations, certificates etc? My timetable is to be able to move the boat early May to Portugal/GIB and I would like to be sailing and testing during end of March/April. So it doesn’t leave too much time for the experts to pontificate!”

On 19th January 2001 Mr Andersson replied:

“Unfortunately, and despite endless efforts to get someone to assist us in carrying out the new stability measurements, we have not yet got any new calculations. Following your fax, I have again been in touch with Sweden and with the RYA here in the UK (they are IMSI’s representatives here). As I had not been able to get in touch with the person in charge of RCD measurements, Malo Yachts have decided to send a Swedish measurer across to carry out the stability test. Again we have had a problem with this, since the person who does IMSI’s work in Sweden has been unobtainable the last few days. The silly thing about all of this is that the work probably only takes one hour! When I last spoke to Malo before they closed for the weekend, they were still trying to get this person to fly over here this weekend.

However, I have just now – 17.00 – had a phone call from the RYA and they now say they will contact me on Monday with a view to coming down here to do the measurements for us. So we will have to wait and see who can get here first.

The test figures we are after is to have our own tests confirmed by an independent authority and to enable us to properly evaluate the boats stability performance in its current state. (I think it is fair to say that I still believe you would have a better performing boat if we were to have corrected the keel to its originally intended weight.) Any way, I sincerely hope someone will be able to carry out these tests at long last.”

On 13th February 2001 Mr Clegg wrote to Mr Andersson to ask if he had any news on the stability test and asking for a copy so that he might obtain professional advice as soon as possible. The stability tests were carried out on 29th January 2001 and recorded in a report of that date from Mr Beggs, a surveyor and RCD Evaluator, to Mr Andersson. The contents of the report were evaluated by Malo and the maker of the masts used in the Yacht, Selden Masts of Sweden. The report, the evaluation and four graphs were sent to Mr Clegg under cover of a letter to him from Mr Andersson dated 14th February 2001. Mr Andersson explained:

Graph 1

This graph shows the stability of the boat in its current state as measured.

Graph 2

This graph shows the stability after adjustments for position and weight of stowed items etc. and gives a corrected stability measurement using the same method as that used in the CE-certification of the yacht (STIX 63,7).

The resulting stability exceeds by a large margin that which was intended for the boat (which is already very stiff in its standard configuration) and would compromise the boat’s performance as far as sea-keeping, dryness, rolling, speed etc is concerned.

According to Selden, it would not be possible to modify the rig to safely cope with these loads in the long run and therefore modifications are needed as outlined below.

Graph 3

This graph shows the result of one alternative course of action and which would still leave the boat with considerably more stability than the standard boat and would include

a)

reducing the keel weight by 450Kg and

b)

modifying the rig so it is safe with the extra stability.

In this case, you would end up with a non-standard boat with a non-standard rig and which would not perform as well as standard Malo 42.

Graph 4

The graph shows the result of reducing the weight in the keel by 800Kg. This would result in a boat that has identical stability to that of the standard boat up to 38-40 degrees of heel.

This modification would not require any alterations to the rigging and you would end up with a boat that performs exactly the same as a standard boat (except the small amount of extra lee way always associated with reduced draught).

Having looked at the various reports and discussed the results with Malo’s designer and with Lars Olsson, Malo’s owner, I feel the option of reducing the keel weight by 800Kg is the only correct way forward. Not only would this give you a better performing boat for your own use, it would also give you a “standard” shoal draught version of the 42 which would not be too different, were you to sell her some time in the future.

In fact, having had the opportunity to correct the boats stability taking into account the extra equipment such as In-mast furling, the extra forestay, generator and washing machine, the boat will be closer to perfect than would normally be possible to achieve with the standard keel.”

Mr Clegg replied on 15th February 2001

“As you know my intention has always been to employ professional advice before I make a decision. However, it rather looks as if the only option...available to me is to take the 800 Kg off the keel. Can you please therefore, get Malo to send to me the plans of the keel and their methodology in removing the weight. I wish to discuss this with a naval architect initially who will advise me.

I have also instructed Blake-Turner & Co. Solicitors to protect my interests should it be necessary to obtain warranties etc from Malo. They will be writing to you shortly. I assume you have authority to act on behalf of Malo in Sweden.”

Mr Andersson responded the same day:

“Thank you for your fax of 15/2/01. I have spoken to Malo Yachts and sent them a copy of your fax. As requested, they will prepare and send us the information regarding the keel modification and assist in any way we wish including supplying any written confirmation and/or authorisation.

Although I personally feel the best, and correct way forward would be to remove 800Kg, you could still opt for the alternative that reduces weight by 450Kg, and which includes some changes to the rigging, should you so prefer – this should ultimately be your choice and I do not wish you to feel I have decided this for you.”

On 1st March 2001 Mr Andersson sent to Mr Clegg drawings he had received from Malo regarding the shoal draught keel and the proposed alterations. He expressed the hope that they would enable Mr Clegg to give him approval for the work to be carried out. He pointed out that he had not heard from Mr Clegg’s solicitors. He did not have to wait long. By a letter dated 6th March 2001 the Cleggs solicitors wrote:

“We are instructed by Mr. and Mrs. R.W. Clegg... who on 7 December 1999 entered into a contract with you for the supply by you to our clients of a new Malo yacht 42 upon the terms and subject to the conditions of a contract of that date.

The additional equipment required and ordered included, among other things, a shoal draught keel. You acknowledged in your letter to our clients of 26 November 1999 the importance and cost of this shoal draught keel.

In the summer of last year our clients took provisional delivery of the vessel for the purpose of sea trials. Those sea trials identified a number of difficulties and in particular Mr. Clegg wrote to you on 28 August expressing concern at the way that extra weight in the keel had been casually mentioned when our client collected the vessel. You have acknowledged to our client that you did know about the problem with the keel on Friday 10 August, the day before the vessel was handed over.

Our instructions are that the vessel has been constructed incorrectly. The stability tests which were carried out and described by you in your letter of 2 September to our client, Mr. Clegg, indicate that in fact the keel is 1000 kg heavier than it should have been. You will know that our client has appointed Mr. John Katenkamp as a ships surveyor to assist him in this matter and our client has been corresponding with you since September.

Immediately following the sea trials, when it was clear that there was something drastically wrong, the vessel was returned to your guard and to your custody, where it has been ever since awaiting detailed calculations and suggestions from you. These were not produced until 14 February and immediately afterwards our clients asked this firm to advise them.

We have advised our clients that as the boat has not yet been perfected and delivered as such, and as the sea trials produced the very matters about which complaint is now made, our clients are entitled to reject the boat and they do so. Please confirm that arrangements can be made for our clients to collect such personal effects as there may be on or around the vessel.

Our clients, having rejected, are also entitled to sue for damages and we are calculating those with our clients and will give you notice of them in due course.”

On 16th March 2001 Mr Clegg wrote to Mr Andersson enquiring when he might receive a response to his solicitors’ letter. He pointed out that in the meantime “I am being chased to register the vessel which obviously I will not do if we decide to reject it”. On 25th March 2001 Mr Clegg wrote again to Mr Andersson setting out four scenarios any one of which might be accepted by Mr Andersson as it stood and completed within 7 days. Scenario III and IV involved the rejection of the Yacht. Under Scenarios I and II the Cleggs retained the Yacht but Mr Andersson paid compensation of £125,000 or £95,250. Mr Andersson did not accept any of them and the claim form in the action was issued on 16th May 2001.

The Cleggs claim the return of the cost of the Yacht put at £251,718 and damages to be assessed under six heads quantified at £37,750. In the light of certain submissions made to the judge I should also record that on 6th August and 13th September 2001 Mr Clegg wrote to Mr Andersson in terms which are open to the interpretation that he intended to ensure that Mr Andersson’s defence of the proceedings would be conducted in the context of adverse press comment procured by Mr Clegg. In addition, at the Southampton Boat Show held in September 2001 Mr Clegg and five of his supporters wore t-shirts on which were emblazoned disparaging comments concerning Mr Andersson and Malo.

Each side instructed experts and their reports were exchanged in January 2002. The expert retained by the Cleggs was Mr Barry Deakin, a senior engineer with the Wolfson Unit for Marine Technology and Industrial Aerodynamics at the University of Southampton. The expert instructed on behalf of Mr Andersson was Mr Duncan Saunders, a marine surveyor.

In paragraph 5 of his statement Mr Deakin recorded that the ballast keel as designed should have been 5,500 kgs. He noted that in August 2000 it had been reported to be 6,500 kgs but that the foundry record indicated that it was 6,107 kgs. I should also refer to some other passages in his report. In paragraph 5.2.3 he observed that the rig design should incorporate safety factors to take account of additional displacement due to extra equipment. He added

“Adherence to the design stability therefore is not critical for safe operation of the rig, but it is unlikely that the design margins would be sufficient also to include the additional keel weight that appeared to have occurred in this case.”

In paragraph 7 he summarised the issues and his conclusions. In paragraph 7.1.4 he recorded that

“The keel was 607kg heavier than intended, and resulted in a total displacement 4.4% greater than that quoted for the standard Malo 42. In my opinion this was unacceptable.”

In paragraphs 7.2.2 and 7.2.6 he added that “Rig structural failure was a possible danger” and “the rig designers advised that their structural design of the rig was inadequate for the stability of the yacht with the additional keel weight”.

Mr Saunders observed in paragraph 3.1.6 of his report that one effect on the Yacht of the heavier keel was that

“The greater stability and the ability to carry more sail for a given wind speed will place additional load on the mast and rigging. Selden, who supplied the rig, have stated that the rig cannot be modified to take account of these extra loads. This is the most significant effect of the heavier keel and the reason why it needs to be modified.”

In the summary of his conclusions he repeated that

“6.

Selden, the suppliers of the rig, cannot modify the rig to safely cope with the additional loads.”

The experts met on 18th February 2002. They managed to agree ten out of the twelve issues. In March 2002 they recorded in writing:

Issues upon which we agree:

1.

The yacht was delivered with a keel heavier than designed.

2.

The increased keel weight would have an adverse effect on speed, fuel efficiency, rig safety, freeboard, and safe capacity.

3.The increased keel weight would have effects on handling, rig efficiency and sailing performance, but these would not necessarily be adverse.

4.

The increased rig loads were considered unacceptable by the rig designers.

5.

Malo Yachts offered to modify the keel in August 2000. The removal of 1000kg is referred to in correspondence, but it is unclear to us whether that was the precise intention or an approximate reference to the amount of lead to be removed. It is now clear that the foundry records and the design value of the keel weight differed by 607kg.

6.

If 1000kg of lead had been removed the error would not have been rectified satisfactorily.

7.

The owners’ claim that removal of lead from the keel would have adverse effects on the directional stability was not correct.

8.

Following an inclining experiment to measure the stability, Malo Yachts offered two alternatives for modification in February 2001. The first of these, to remove 450kg from the keel and strengthen the rig was offered but not recommended by Malo Yachts. This option would have produced a yacht with non-standard design characteristics and therefore would not have been appropriate.

9.

The second option, to remove 800kg from the keel, would have produced the design stability characteristics with a keel shape closely matching that designed, and thus rectified the situation satisfactorily.

10.

Shaving the keel, if carried out efficiently by experienced technicians, would not be detrimental to the value of the yacht.

Issues upon which we do not agree:

1.

Barry Deakin considers that, because the increased rig loads were unacceptable to the rig designers, the yacht was not fit for the purpose as delivered. Duncan Saunders does not agree with this statement.

2.

The owners rejected the offer to modify the keel in August 2000, and requested technical advice. Barry Deakin considers that, in the absence of adequate details regarding the proposal by Malo Yachts, their decision was justified. Duncan Saunders does not agree with this statement.”

At the trial oral evidence was given by both Mr Saunders and Mr Deakin. Mr Deakin was not cross-examined on either his report or his oral evidence. In addition the judge had evidence, both written and oral, from Mr Clegg, Mr Katenkamp, Mr Andersson and Mr Leander. The trial took place from 7th to 9th May 2002. Judge Seymour QC reserved his judgment and supplied copies of it in draft to the parties and their counsel before handing it down on 21st May 2002. Junior counsel for Mr Clegg complained to the judge about certain comments the judge had made about his cross-examination of Mr Andersson. The judge declined to delete them from his judgment and the complaint was renewed in the written argument for Mr Clegg put before us. Leading counsel for Mr Clegg made it clear in his oral argument, in my view rightly, that such complaints were irrelevant to this appeal save insofar as they related his submissions on other issues. Accordingly I will bear them in mind in that context but not otherwise.

The Cleggs contended that there was. They relied on ss.13 and 14(2) Sale of Goods Act 1979 as amended by the Sale and Supply of Goods Act 1994. They claimed that the Yacht as supplied was (a) not as described in the contract (s.13) and (b) not of satisfactory quality (s.14(2)). The judge rejected both submissions. With regard to the first he held that the reference in the manufacturer’s standard specification “ballast (encapsulated lead keel) 5.5 t.” was not part of the description for the purposes of s.13. In the case of the second he held, in the light of the evidence before him, that the Yacht as delivered was of satisfactory quality. The Cleggs appeal against both conclusions. Their counsel made clear that, whilst not abandoning their case in respect of s.13, he placed greater emphasis on his case under s.14(2). As he accepted that if he was right on either of them it mattered not which I shall deal first with the case for the Cleggs under s.14(2).

S.14, so far as material, is in the following terms:

“(2)

Where the seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality.

(2A) For the purposes of this Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all other relevant circumstances.

(2B) For the purposes of this Act, the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods –

(a)

fitness for all purposes for which goods of the kind in question are commonly supplied,

(b)

appearance and finish,

(c)

freedom from minor defects,

(d)

safety, and

(e)

durability.

[(3)-(5)]

(6)

As regards England and Wales and Northern Ireland, the terms implied by subsections (2) and (3) above are conditions.”

The judge’s conclusion on this issue originates in paragraph 36 of his judgment which is in the following terms:

“No one gave evidence before me that the consequence of leaving the keel of the Yacht unmodified was that it would be unsafe to sail. The evidence of Mr. Andersson and Mr. Leander was that sailing the Yacht with the existing rig and an unmodified keel was not unsafe. Mr. Leander told [me] that it would reduce the factor of safety of the rig, but the factor of safety was of the order of 2.5. He told me that the service life of the rig would be reduced if the keel of the Yacht was not modified. That corresponded with the evidence of Mr. Andersson, who explained to me that the service life of the rig, theoretically measured in miles, would be of the order of ten or twenty years anyway, even if the keel of the Yacht was not modified.”

Counsel for the Cleggs submits that the judge was mistaken as to the evidence before him. He contends that the judge’s conclusion was contrary to paragraphs 2 and 4 of the agreed statement of the experts (paragraph 26 above) and inconsistent with the views of Mr Deakin recorded in his report (paragraph 24 above) on which he was not cross-examined. He submits that it was not open to the judge to prefer the evidence of Mr Andersson and Mr Leander, who did not give evidence as experts, to the agreed statement of those who did.

The same point arises in paragraph 53 of the judgment where the judge expresses his conclusion on the claim of a breach of s.14(2) in these terms:

“...Mr. Rich submitted that the Yacht was not of satisfactory quality with an overweight keel because the fact that the manufacturers of the rig considered that the rig loads imposed by the Yacht with an overweight keel were unacceptable meant that the Yacht was unsafe to sail. Although Mr. Rich made that suggestion repeatedly, both in cross-examining Mr. Andersson and Mr. Leander, and in his submissions, there was no evidence to support it. Neither Mr. Deakin, called as an expert witness on behalf of Mr. and Mrs. Clegg, nor Mr. Katenkamp, who was called on their behalf as a witness of fact, but who is in fact a marine surveyor, expressed the view that the Yacht with an overweight keel was unsafe to sail. What Mr. Deakin said was that the overweight keel would have an effect on the performance of the Yacht in terms of speed and fuel efficiency, but this would be small and difficult to measure. That was also the evidence of Mr. Saunders. While it was common ground between Mr. Deakin and Mr. Saunders that the extra weight of the keel would reduce the factor of safety of the rigging, no one, other than Mr. Rich, suggested that the reduction would be so great as to cause the use of the Yacht to be unsafe. Both Mr. Andersson, who told me that he has been involved in sailing for over 40 years, and Mr. Leander, who is Malo’s designer, told me that the effect of the overweight keel on the rigging in practical terms would be to reduce the service life of the mast and the rigging. However, so Mr. Andersson told me, it would last ten or twenty years anyway. I accept the evidence of Mr. Andersson and Mr. Leander on the issue of the implications for the rigging of the keel of the Yacht being overweight by 607 kilogrammes. I also accept their evidence, and that of Mr. Deakin and Mr. Saunders, as to the implications on the performance of the Yacht of having an overweight keel. In the light of that evidence......I also find that the Yacht was of satisfactory quality in the condition in which it was delivered because the implications of the keel being overweight were so small as to be incapable of measurement in relation to matters such as speed and fuel efficiency, and so long term and so dependent on how often the Yacht was sailed and in what conditions of wind and sea in relation to the possibility of a reduction in the service life of the rigging. So far as those qualities which Mr. Deakin and Mr. Saunders agreed would be affected by an overweight keel, but not necessarily adversely, the evidence of each was that whether one liked those effects or not was a matter of individual taste. Having sailed the Yacht for some nine days in August 2000 Mr. Clegg decided that he did like the feel of the Yacht as it was.”

It is necessary to bear in mind the problems faced by an appellant on a question of fact. It is incumbent on him to show clearly that the judge forgot or misunderstood the evidence. It is not enough that faced with conflicting evidence he preferred one account over another, particularly if that preference stemmed from the judge’s assessment of the credibility of the witnesses.

The starting point must be the agreed statement of the experts, Mr Deakin and Mr Saunders. In paragraphs 2 and 4 they clearly recorded their opinion that the overweight keel would have an adverse effect on rig safety and that the increased rig loads were unacceptable to the rig designers. This conclusion is to be contrasted with that recorded in paragraph 3 that increased keel weight would affect, but not necessarily adversely, handling, rig efficiency and sailing performance. If two experts consider that the overweight keel had an adverse effect on rig safety and the manufacturers consider that the consequential rig loads are unacceptable then the judge was wrong to say, as he did in paragraph 53 of his judgment, that there was no evidence that the Yacht was unsafe to sail. The implied criticism of counsel for the Cleggs for making that suggestion in cross-examination was unjustified. But the question is not whether the Yacht was unsafe to sail but whether, as delivered, it was of satisfactory quality.

It is also necessary to consider the oral evidence to which the judge referred. The first witness was Mr Katenkamp. He is, as the judge noted, a marine surveyor; but he was not called as an expert. In his witness statement he dealt only with certain conversations he had had with Mr Clegg. He gave no oral evidence on the effect of the overweight keel on the safety of the rig. Indeed when counsel for Mr Clegg sought to re-examine Mr Katenkamp on the impact on rig safety of an overweight keel counsel for Mr Andersson objected on the grounds that the question did not arise out of her cross-examination and was not a proper one to ask a witness of fact even if expert in the field. Both objections were upheld by the judge and the re-examination terminated. Accordingly the fact, as relied on by the judge in paragraph 53 of his judgment, that Mr Katenkamp did not say that the Yacht with an overweight keel was unsafe to sail is of no significance.

The second of the witnesses to whom the judge referred in paragraph 53 of his judgment is Mr Deakin. I have quoted the material parts of his witness statement in paragraph 24 above. In his oral evidence he confirmed that the overweight keel would have an adverse effect on rig safety and an effect, not necessarily adverse, on handling, rig efficiency and sailing performance. He agreed that the latter effects would be minimal and only susceptible of determination in a sea trial. He did not suggest that the effect of the overweight keel on rig safety was minimal.

Mr Deakin was then examined on the first of the two issues on which he and Mr Saunders did not agree (paragraph 26 above). The transcript records the following exchange:

Q. You considered that because the increased rig loads were unacceptable for the rig designers, the yacht was not fit for the purposes as delivered. Mr. Saunders apparently thinks that the boat, as delivered, was fit for the purpose for which it was intended. Can you explain the difference between you there?

A. Only that he could not agree to that statement, but I felt strongly enough that it should be commented on. I think that ---- To put it into perspective perhaps, the rig designers will design their rig on the basis of the stability, and the quoted stability, of the yacht. They will have a factor of safety, and that may be very high. I’ve no idea what factor of safety they would’ve allowed, but having been told that the stability had been increased, then their factor of safety would’ve been reduced. It may have only been a small percentage difference on their factor of safety, but I think that you have to respect their advice. If they say that they won’t guarantee their rig with that stability, then ---- then you have to respect that they’ve designed it, and they’re aware that their factor of safety has been reduced ----

Q. But that is because the mast could have come down, and there could have been no recourse.

A. Yes. Yes.

Mr Deakin was not cross-examined on either his written or oral evidence.

The judge’s references to the evidence of Mr Deakin in paragraph 53 of his judgment suggest that he understood Mr Deakin to be saying that the effect of the overweight keel on rig safety was minimal. It is true that Mr Deakin did not say that the reduction in the safety of the rigging was so great as to make the use of the Yacht unsafe. But he adhered to his opinion expressed in both his witness statement and the agreement between the experts that the effect of the overweight keel on rig safety was adverse and, by clear inference, more than minimal. In his oral evidence (paragraph 37 above) he clearly recognised that the effect of the overweight keel was to increase the risk that the rig would fail and bring down the mast.

The third of the witnesses referred to by the judge in paragraph 53 of his judgment to give oral evidence is Mr Andersson. Counsel for the Cleggs put to him paragraph 4 of the agreed statement of the experts. The following exchange took place:

Q. You see there paragraph 4: “The increased rig loads were considered unacceptable by the rig designers.”. Now, that is something which has been agreed by both experts.

A. Yes, but it does not say that it was dangerous, which is what you just said.

Q. Well, what can happen to a rig if the rig loads are unacceptable? Mr Deakin told us.

A. It can shorten the rig’s life.

Q. It can shorten the rig’s life?

A. Yes.

Q. And are we talking there about masts breaking and the rig being shortened in that way, or are we talking about some other form of shortening?

A. No. Normally, at the end of a rig’s working life, it tends to be replaced. One tends not to wait for it to fall down.

Q. Now, it is your case that the boat, when it was delivered, was of merchantable quality.

A. Yes.

Q. Even though it had this keel on the bottom of it and the rig loads that would be consequent would be unacceptable to the rig designers?

A. Yes.

Q. Unacceptable to the rig designers, but acceptable to you?

A. I saw that we could correct the keel problem.

Q. You thought that it could be corrected?

A. I saw that we could.

Q. You saw?

A. Yes.

Later in his cross-examination he acknowledged that he and Malo obtained an independent measurement of the stability of the Yacht “in order to determine whether it was wise to leave the keel”. He also accepted that the purpose of the suggested remedial works was that the keel might match the rig. His counsel returned to this topic in re-examination when the following questions and answers occurred:

Q. Well, did you ever tell Mr Clegg that the boat could not be sailed as it was?

A. No.

Q. Did you ever tell Mr Clegg that it was dangerous?

A. No.

Q. Did anybody ever tell you that it was dangerous as it was?

A. No.

Q. When you talked about the rig perhaps having a shorter life as a result of the overweight keel, how much shorter would that life be?

A. I don’t think I can answer that very accurately, but you are talking about a difference possibly … We are not talking about years. They tend to talk about miles, but it also depends on how you use the boat, but, no, I can’t accurately answer that question.

Q. Are we talking in terms of many, many years here?

A. Oh yes.

Q. How many?

A. Tens, twenty, that order.

Q. Right.

A. And we are not talking about the keel – sorry the mast – falling down either. We are talking about replacing it as a matter of course.

In both his letter to Mr Clegg dated 14th February 2001 (paragraph 18 above) and in his oral evidence (paragraph 39 above) Mr Andersson accepted that leaving the Yacht with both the existing rigging and the overweight keel was not an option. As the manufacturers could not adapt the rigging the keel had to be lightened. In accepting the evidence of Mr Andersson on the implications of the keel being overweight the judge has, in my view, given insufficient weight both to the obvious implications to be derived from it and the contrary evidence of both the experts. In any event the issue is not whether the Yacht was safe to sail but whether the Yacht, as delivered, was of satisfactory quality.

The fourth witness was Mr Saunders. He confirmed his opinion, as expressed in his witness statement and the joint statement of the experts, with regard to the adverse effect of the overweight keel on the rig safety. He accepted that the effect on the matters referred to in paragraph 3 of the joint statement might or might not prove to be adverse depending on the sailor’s preferences. He did not say or imply that the effect of the overweight keel on the safety of the rig was minimal.

The fifth and last witness to whom the judge referred in paragraph 53 of his judgment was Mr Leander. Mr Leander is a naval architect and employed by Malo. In paragraph 10 of his witness statement he said:

“We [sc. Malo] further believe that the yacht as built with a heavy keel was quite safe and could have been left although the mast and rigging would have had to be altered to take into account the different stability characteristics. The existing rig, however, was always safe which the rig designers and builders can verify, Selden Mast in Sweden. The argument is to what extent the extra weight would affect the life span of the rigging.”

Mr Leander was cross-examined by counsel for the Cleggs. The transcript records:

Q. So, the issues of safety which have been described to my client are fairly clear there [the letter of 14th February 2001], are they not? He is being told that the rig manufacturers do not think it will be safe to keep the same rig with 1000kg in the keel, and with the removal of 450kg, it would still require adjustment for it to be so. That is what Mr. Anderson is saying there. But, you are saying something different?

A. I would not use the word ‘safe’ as safety … (indistinguishable) … is not really the issue. It’s the long-term lifespan of the rig as it has been put to be by … (indistinguishable) …

Q. Well, you would not have used the word ‘safe’ then. You would have said ‘long-term lifespan of the rig’. But, obviously, if something goes wrong there a number of things which can happen to the rig. I suppose some of the ropes can break and possibly hurt someone, but obviously the ultimate catastrophe would be for the mast itself to come down.

A. Yes.

Q. But, knowing what you know about boats, you do not think that is the case.

A. No, definitely not, knowing what I know because if we talk about the rig loads, no part of the rigging at all is designed to take a load exceeding 40 percent of its breaking load, meaning that we have already there a safety factor of 2.5 in the rig loads … (indistinguishable) …more complex calculations in that which are the field of the rig makers, of course.

Q. So, basically what you are saying is that before the mast comes down, there are all sorts of other things which could break and fall off.

A. The mast will not come down until something else has broken because as long as all the stays and such are in place, the mast will stay.

Q. So, just to re-cap, before the mast breaks, something else has to break or fall off, and go wrong with the rig. So, you think that the mast itself coming down would be unlikely, but booms and sails and things like that, and other things would have to come off it before ---- before it came down.

A. No, not really. To introduce the case of a mast … (indistinguishable) … with a mast like these cruising boats masts, some … (indistinguishable) … would have to … (indistinguishable) … Essentially that.

Later the following exchange took place:

Q. Well, you know, I am thinking of taking things to such an extreme. If you look at bundle page 107 you can see what the experts agree, on 1 March 2002, about the effect of increased keel weight. The increased keel weight would have an adverse effect on the speed, fuel efficiency, rig safety, freeboard and safe capacity. Now, when my client was deciding whether or not to reject the yacht, he was under the impression that the overweight was 1000kg, and that Malo and the Defendant simply wanted to shave off 800kg. Now, you would accept, would you not, because the experts say, that the effect of increased weight would be to have an impact on the speed, an impact on the fuel efficiency, an impact on rig safety (which perhaps have been answered to some extent by the stability tests which, by then, had been conducted) freeboard and safe capacity. So, one would be dealing with a yacht, if it was thought to be 1000kg overweight in the keel, which had only had 800kg shaved off, but had a lower capacity, adverse effects on freeboard, adverse effects on fuel efficiency, and adverse effects on speed, even if the stability had been corrected up to 38 degrees.

A.

I think Mr. Deakin answered this question in saying that in a very minor way, which is --- which I frankly would support, in a way which cannot be measured in the open sea. He would have used have used test tank facilities at the Wolfson Unit.

This last answer shows that Mr Leander was not talking of the safety of the rig but of those other matters mentioned in paragraph 3 of the agreed statement of the experts. Nor, as the question shows, was he being asked about the Yacht as delivered. The context of the question was the suggestion that 800 kgs might be shaved off the keel leaving an overweight of 200 kgs. The fact is that Mr Leander did not say that the Yacht, as delivered, did not require any remedial treatment to either the keel or the rig. By contrast he recognised in the earlier passage quoted in paragraph 43 that the overweight keel did increase the risk of the rig failing and bringing down the mast.

I have considered the written and oral evidence at length to see the extent to which it supports the judge’s conclusions. It appears to me to have been established beyond doubt that the effect of the overweight keel on the safety of the rig was both adverse and unacceptable to the manufacturers of the rig. Thus the Yacht as delivered required some remedial treatment. As it was not possible to modify the rig to take account of the increased load it was necessary to reduce the weight of the keel. It was ultimately established that the best modification was to shave off 800 kgs. The witnesses differed as to the consequences of the overweight keel but none of them suggested that the consequences were so slight that no remedial treatment was required at all. It appears to me that the judge, in accepting the evidence of Mr Andersson and Mr Leander, underestimated the effect, as agreed by both experts, of the overweight keel on the safety of the rig to a significant extent.

The question remains whether the Yacht as delivered was of satisfactory quality. Counsel for Mr Andersson submits that it was. She points out that any risk to the rig derived from the overweight keel was absorbed by the margin of safety built in to the rig by the manufacturers. She relies on the fact that the cost of the remedial work was found by the judge to be about £1,680, small in relation to the cost of the Yacht.

I do not accept the submissions of counsel for Mr Andersson. The suggestion that the effect of the overweight keel is absorbed into the margin of safety built in to the rig by the manufacturers is contrary to the evidence of Mr Saunders (paragraph 37 above) and the fact that the manufacturers found the increased load to be unacceptable, as recorded in paragraph 4 of the agreed statement of the experts. Nor is the cost of remedial works any reliable indication of whether the defect which requires to be remedied prevented the Yacht as delivered from being of satisfactory quality.

Counsel for the Cleggs relied not only on the overweight keel but also on the price, the fitness of the Yacht for the purpose blue water ocean sailing with access to shallower harbours, the appearance and finish of the overweight keel, the existence of many minor defects, and the lack of safety or durability of the rig.

I do not find it necessary to deal with any of these other aspects of the Yacht. On the basis of all the evidence to which I have referred I conclude that a reasonable person would consider that the Yacht as delivered was not of satisfactory quality because of the overweight keel, the adverse effect it had on rig safety and the need for more than minimal remedial work. It follows that in my view the Cleggs have established a breach of condition under s.14(2) Sale of Goods Act 1979. In those circumstances it is unnecessary to consider the claim for breach of condition under s.13(1).

It is not disputed that the result of my conclusion in respect of s.14(2) is that the Cleggs were, initially, entitled to reject the Yacht. The question is whether by their subsequent conduct they lost that right on or before 6th March 2001. This issue depends on the proper application to the facts of this case of s.35 Sale of Goods Act 1979 as amended by the Sale and Supply of Goods Act 1994. The material provisions are:

(1)

The buyer is deemed to have accepted the goods subject to subsection (2) below –

(a)

when he intimates to the seller that he has accepted them, or

(b)

when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller.

(2)

Where goods are delivered to the buyer, and he has not previously examined them, he is not deemed to have accepted them under subsection (1) above until he has had a reasonable opportunity of examining them for the purpose –

(a)

of ascertaining whether they are in conformity with the contract, …

(3)

Where the buyer deals as consumer...., the buyer cannot lose his right to rely on subsection (2) above by agreement, waiver or otherwise.

(4)

The buyer is also deemed to have accepted the goods when after the lapse of a reasonable time he retains them without intimating to the seller that he has rejected them.

(5)

The questions that are material in determining for the purposes of subsection (4) above whether a reasonable time has elapsed include whether the buyer has had a reasonable opportunity of examining the goods for the purpose mentioned in subsection (2) above.

(6)

The buyer is not by virtue of this section deemed to have accepted the goods merely because –

(a)

he asks for, or agrees to, their repair by or under an arrangement with the seller,…”

The terms of s.35 pose three questions, namely (1) did the Cleggs intimate to Mr Andersson that they accepted the Yacht? (2) did the Cleggs do any act in relation to the Yacht which was inconsistent with the ownership of Mr Andersson ? and (3) had a reasonable time elapsed by 5th March 2001 in which the Cleggs retained the Yacht without intimating to Mr Andersson that they had rejected it? The judge answered each of the first two questions in the affirmative. He indicated that had it arisen he would have answered the third question in the affirmative too.

In paragraphs 43 to 47 the judge dealt with a number of authorities on which Counsel for Mr Andersson had relied before him relating to the application of s.35(4). In paragraph 54 the judge explained why he preferred the evidence of Mr Andersson to that of Mr Clegg but pointed out that the differences between them on relevant matters were small and ultimately probably not crucial.

The judge’s conclusion on the first two questions to which I have referred in paragraph 51 above is set out in paragraph 55 of his judgment. He said:

“I find that Mr. Clegg was told on 12 August 2000 that the Yacht was overweight, that there seemed to be some 607 kilogrammes excess weight in the keel, and that Mr. Andersson and Malo would put that right. Even on Mr. Clegg’s evidence he knew on 16 August 2000 that the keel was overweight. With that knowledge he took his family on a cruise to Falmouth and Alderney over eight days or so. In the light of that experience he decided that he liked the Yacht as it was and told Mr.Andersson so. That, in my judgment, was an intimation that he accepted the Yacht, knowing of the condition of the keel and that Mr. Andersson considered that it should be corrected and was prepared to have the necessary work done. Mr. Clegg’s concern in his letter dated 28 August 2000 in relation to the keel was not whether its condition was such that he might want to reject the Yacht, but simply whether the remedial work proposed by Mr. Andersson was absolutely necessary. In my judgment by 28 August 2000, in the light of his experience of sailing the Yacht, it had not occurred to Mr. Clegg not to keep the Yacht. He was simply interested in whether he should have the remedial work done or not. The fact that he indicated to Mr. Andersson that he considered that it was his, Mr. Clegg’s, decision whether the remedial work should be done or not was a further intimation that he had accepted the Yacht. The giving by Mr. Clegg of an instruction in his letter dated 5 September 2000 to Mr. Andersson that remedial work should not be undertaken on the keel was, in my judgment, an act inconsistent with the continuing ownership of the Yacht by Mr. Andersson. In informing Mr. Andersson in his letter dated 13 January 2001 that he intended to move the Yacht to Portugal or Gibraltar in early May 2001 it seems to me Mr. Clegg was intimating that he had accepted the Yacht. I also consider that by leaving his personal possessions on the Yacht between August 2000 and the end of March 2001 Mr. Clegg was intimating that he had accepted the Yacht. His action in insuring the Yacht was inconsistent with ownership of the Yacht remaining with Mr. Andersson and amounted to the assertion by Mr. Clegg that he had an insurable interest in the Yacht. Contrary to his evidence to me, he would not have had such an interest unless he had accepted the Yacht. Mr. Clegg’s attempt to register the Yacht in his and his wife’s names was also inconsistent with ownership of the Yacht remaining with Mr. Andersson. For all these reasons in my judgment Mr. and Mrs. Clegg had lost the right to reject the Yacht, if, contrary to my findings, they would otherwise have had such right, well before the letter dated 6 March 2001 was written by Messrs. Blake-Turner & Co. Indeed, the tenor of the correspondence between Mr. Clegg and Mr. Andersson up to the letter dated 6 March 2001 does not in any way foreshadow the terms of that letter, which came rather out of the blue. I reject Mr. Clegg’s evidence that he was moved to give instructions for the letter to be written by a realisation from the terms of Mr. Andersson’s letter dated 14 February 2001 that significant work would be necessary to remedy the Yacht. I find it difficult to avoid the conclusion that the writing of the letter dated 6 March 2001 was in fact prompted by a desire to seek to manoeuvre Mr. and Mrs. Clegg into a better position to extract substantial compensation from Mr. Andersson. Certainly something about which I can only speculate appears to have happened at the beginning of March 2001 to cause Mr. Clegg to wish to adopt a much more confrontational stance as against Mr. Andersson than that which had been adopted up to that point.”

The intimations on which the judge relied in relation to the first question were (a) Mr Clegg, with knowledge and experience of the overweight keel, telling Mr Andersson in late August 2000 that he liked the Yacht, (b) Mr Clegg’s letter of 28th August 2000 indicating that the decision whether any and, if so, what remedial work should be done was for Mr Clegg, (c) Mr Clegg’s letter of 13th January 2001 informing Mr Andersson that the Cleggs intended to move the Yacht to Portugal or Gibraltar in early May 2001 and (d) the action of the Cleggs in leaving personal possessions on the Yacht from August 2000 until March 2001.

In my view intimations (a) and (b) should be considered together, not least because the terms of the letter of 28th August 2000 (paragraph 11 above) show the sense in which Mr Clegg’s statement should be regarded. He refers to the overweight keel as a fundamental point. He asks for a revised specification and measurements. He questions the effect on EU weight requirements and on a resale and asks for the appointment of an independent surveyor because he does not have the relevant expertise. I do not read this as an intimation of acceptance; rather Mr Clegg was asking for information so that he might then determine whether or not he should accept the Yacht. That this was his position is, in my view, made plain by the correspondence passing between him and Mr Andersson between 28th August and 8th September 2000 (paragraphs 12 to 16 above). The information he sought was not in fact supplied until 15th February 2001.

Mr Clegg’s letter of 13th January 2001 (paragraph 17 above) cannot be read as an intimation that Mr Clegg had, or then, accepted the Yacht. He was concerned to get the information for which he had previously asked. Had it proved to be satisfactory then, no doubt, he would wish to move the Yacht to Portugal or Gibraltar in early May. That would depend on the sailing/testing he wished to carry out in March/April. I do not read that letter as intimating an intention to move the Yacht to Portugal if the information or the result of the testing was not satisfactory. Until at least the information was received Mr Clegg was not in a position to decide whether to accept the Yacht or not. No doubt the Cleggs had left personal effects in the Yacht but, given the outstanding request for further information, that action cannot be regarded as an intimation of acceptance either. For these reasons I am unable to agree with the judge’s conclusion on the basis of any or all the intimations he referred to in paragraph 55 of his judgment.

The inconsistent acts on which the judge relied in relation to the second question were (a) the letter dated 5th September 2000 from Mr Clegg to Mr Andersson directing him that remedial work should not be done, (b) insuring the Yacht and (c) attempting to register the Yacht. I am unable to agree with the judge in respect of any or all of these acts either.

By s.35(6)(a) a buyer is not deemed to have accepted goods if he asks for or agrees to their repair by the seller. The circumstances existing on 5th September 2000 were that Mr Clegg had sought but had not yet been provided with the information required by him to decide whether or not to accept remedial works to the Yacht. If he had agreed to their repair that would not have amounted to acceptance. In my view Mr Clegg’s indication that he did not agree to any remedial works unless and until he had been provided with the information he sought is also incapable of amounting to acceptance of the Yacht.

In Kwei Tek Chao v British Traders and Shippers [1954] 2 QB 459, 487 Devlin J explained that in cases where, as in this case, property in the goods has passed to the buyer the ownership of the seller with which the buyer must not act inconsistently is the reversionary interest of the seller which remains in him arising from the contingency that the buyer may reject the goods. As property in the Yacht had passed to the Cleggs they had an insurable interest in it whether or not they subsequently rejected it. The act of Mr Clegg in insuring the Yacht in August 2000 was not in any way inconsistent with the reversionary interest of Mr Andersson. Moreover, as the judge recorded in paragraph 28 of his judgment, one reason why Mr Clegg insured the Yacht was because the loan agreement under which he borrowed the money to buy the Yacht required him to do so. In my view the judge was wrong to regard the act of insuring the Yacht as in any way inconsistent with the ownership of Mr Andersson.

The third act on which the judge relied was Mr Clegg’s attempt to register the Yacht in the name of his wife and himself. In cross-examination Mr Clegg said that he had applied through an agent to register the Yacht in Guernsey. From the context I infer that this was done before or at the time of delivery in August 2000. In paragraph 7 of his supplemental witness statement he indicated that he was required to do so by the terms of the loan agreement. I am unable to see how this act can amount to an act inconsistent with the reversionary interest of Mr Andersson to which I have referred.

Accordingly I am unable to accept that the three acts relied on by the judge, either alone or together, are capable of amounting to acts inconsistent with the ownership of Mr Andersson. With regard to the third question in paragraph 57 of his judgment the judge said

“Subject to the need to have regard to the provision made by Sale of Goods Act 1979 s. 35(4), which was introduced after his decision in Bernstein v. Pamson Motors (Golders Green) Ltd., I respectfully agree with the conclusion of Rougier J. that, on proper construction, Sale of Goods Act 1979 s.35(4) is not concerned with what defects existed in goods in any particular case and how easy they in fact were to discover. What it is concerned with is how long would objectively be a reasonable time on the facts of the particular case to retain goods without intimating a rejection. In applying that objective test what is important, it seems to me, is what opportunities there in fact were to examine the goods to see whether they conformed with the contract requirements, not with whether those opportunities were actually taken. On the facts of the present case Mr. and Mrs. Clegg had ample opportunity, had they chosen to take it, to evaluate whether the Yacht was in conformity with the Contract. Had it been necessary, therefore, I should have held that they had lost any right to reject the Yacht by lapse of time.”

In Bernstein v. Pamson Motors (Golders Green) Ltd [1987] 2 AER 220 Rougier J was concerned with a case in which the car had been delivered to the buyer three weeks before the purported rejection. In the interval the purchaser had driven it 140 miles. At p.230 Rougier J said

“In my judgment, the nature of the particular defect, discovered ex post facto, and the speed with which it might have been discovered, are irrelevant to the concept of reasonable time in s 35 as drafted. That section seems to me to be directed solely to what is a reasonable practical interval in commercial terms between a buyer receiving the goods and his ability to send them back, taking into consideration from his point of view the nature of the goods and their function, and from the point of view of the seller the commercial desirability of being able to close his ledger reasonably soon after the transaction is complete. The complexity of the intended function of the goods is clearly of prime consideration here. What is a reasonable time in relation to a bicycle would hardly suffice for a nuclear submarine.”

As the judge acknowledged that decision has been criticised (104 LQR 18). Further it was based on the terms of s.35 before amendment by the Sale and Supply of Goods Act 1994. It is unnecessary to express a view as to whether the decision of Rougier J was correct before the amendment to s.35 effected by Sale and Supply of Goods Act 1994. In my view it does not represent the law now. As originally enacted s.35(1) provided that a buyer was deemed to have accepted goods, inter alia, “when after the lapse of a reasonable time he retains the goods without intimating to the seller that he has rejected them”. S.59 provided then, as it does now, that what is a reasonable time is a question of fact. The material difference arises from the removal of that part of subsection (1) to subsection (4) and the addition of subsections (5) and (6). Thus subsection (5) provides that whether or not the buyer has had a reasonable time to inspect the goods is only one of the questions to be answered in ascertaining whether there has been acceptance in accordance with subsection (4). Subsection (6)(a) shows that time taken merely in requesting or agreeing to repairs, and, I would hold, for carrying them out, is not to be counted.

In these circumstances I consider that time taken to ascertain what would be required to effect modification or repair is to be taken into account in resolving the question of fact which arises under subsection (4). In the light of the undisputed fact that Mr Clegg did not receive the information he had sought in August and September 2000 until 15th February 2001 I consider that the three weeks which elapsed thereafter until the letter of rejection dated 6th March 2001 did not exceed a reasonable time for the purposes of s.35(4) Sale of Goods Act 1979.

In the concluding sentences of paragraph 55 the judge speculated on why Mr Clegg determined to reject the Yacht when he did. He rejected the evidence of Mr Clegg and considered that he sought to manoeuvre his wife and himself into a better bargaining position with regard to Mr Andersson. In my view the reason why the Cleggs rejected the Yacht when they did is irrelevant if, as I consider, they had the right to do so.

Although Mr Andersson had not served a respondent’s notice we gave him permission to rely on the letters dated 16th and 25th March 2001 (paragraph 21 above). Counsel for Mr Andersson submitted to us, as she had done to the judge, that these letters vitiated the rejection effected by the letter of 6th March. The judge rejected that submission and so do I. If the letter of 6th March 2001 was effective to reject the Yacht there is nothing in the subsequent letters to rob it of that effect. In particular they do not constitute a withdrawal of the rejection or a contract or estoppel not to enforce it.

Having concluded that the overweight keel constituted the breach of a condition under s.14(2) and that the Cleggs had validly rejected the Yacht by their solicitor’s letter dated 6th March 2001 this issue is to be approached on a different basis from that adopted by the judge. It is not disputed that the Cleggs are entitled to the return of the price and other acquisition costs they incurred. This is quantified at £251,718.49. In addition they are entitled to compensation for consequential losses. These have been formally verified and quantified in the sum of £37,750 under a number of heads. I understood both parties to agree that we should refer the matter to a Master for the assessment of those damages. So that there shall be no doubt what the Master is expected to do I should briefly mention certain issues relating to damages to which the judge referred.

In paragraph 60 of his judgment the judge indicated that there was no claim for damages pleaded in the particulars of claim if the Cleggs had no right to reject the Yacht. Given that the Cleggs did have the right to reject the Yacht and had properly exercised it the pleading point goes. In paragraph 61 the judge concluded that the refusal of the Cleggs to permit Malo to carry out remedial work to the keel in September 2000 constituted a failure by them to mitigate their loss so as to deprive them of damages to reflect that cost. That issue also does not arise in the circumstances that the Cleggs were entitled to and did reject the Yacht in March 2001. The overpayment, but not the berthing charge, referred to by the judge in paragraph 62 of his judgment does still arise and is a factor to be taken into account by the Master in assessing the damages to be paid to the Cleggs.

For all these reasons I would allow the appeal, discharge the order of the judge and refer the assessment of the damages to be paid by Mr Andersson to the Cleggs to the Master. It follows that the order for costs made by the judge is discharged also with the consequence that the issue of whether the costs he ordered the Cleggs to pay to Mr Andersson should be assessed on the indemnity basis does not arise and the matters referred to in paragraph 22 above cease to have any relevance.

I agree and would only add that at times the argument before us seemed to lose sight of the real issues in the English law of sale of goods. These are not whether either party has behaved reasonably. The defendant may well feel that he and the manufacturers Malo did their best to put right what had gone wrong and that the claimant purchaser should have taken up one of the options which they advised. If it is established that the seller is in breach of a condition of the contract, however, the choice does not lie with him.

There is an implied term, in English Law a condition, that goods sold in the course of a business must be of satisfactory quality: s 14(2) and (6). There are no implied terms as to quality in a sale of goods contract other than those implied by sections 14(2) and (3) and 15 of the Sale of Goods Act 1979 (and any other enactment): see s 14(1). This means that in the great majority of consumer sales the buyer has to rely upon section 14. If he does not have a remedy under section 14 he has no remedy at all. It so happens that the goods in this case did not comply with the express term of the contract that they be in accordance with the manufacturer's specification. But if there had been no such term, it would have been a surprising result indeed if the buyer had no legal remedy for a state of affairs which the seller himself considered unacceptable. Mr Andersson only thought the boat acceptable because they could put it right. That is not the point. Seller and buyer often agree to try and put defects right but neither is obliged to do so. The fact that the remedy supplied by English law may be thought disproportionate by some is irrelevant to a consideration of whether the implied term has been broken.

The test is whether a reasonable person would think the goods satisfactory, taking into account their description, the price (if relevant) and all other relevant circumstances: see s 14(2A). The question, as the joint Report of the Law Commission and the Scottish Law Commission explained, is “not whether the reasonable person would find the goods acceptable; it is an objective comparison of the state of the goods with the standard which a reasonable person would find acceptable” (1987, Law Com No 160, Sale and Supply of Goods, para 3.25) The amendments made to section 14 by the Sale and Supply of Goods Act 1994 also make it clear that fitness for purpose and satisfactory quality are two quite different concepts. In some cases, such as a high priced quality product, the customer may be entitled to expect that it is free from even minor defects, in other words perfect or nearly so.

A reasonable person is not an expert. If a reasonable person had been told in September 2000 that the seller himself had realised that a very large quantity of lead would have to be removed in some as yet unspecified way from the keel of a brand new boat costing nearly a quarter of a million pounds with as yet unspecified consequences for its safety and performance he or she would have had little difficulty in concluding that the boat could not be of satisfactory quality. Had he been told that the seller would later recommend the removal of different quantities of lead, he would have had no difficulty. The seller knew that it was unsatisfactory, hence his commendable attempts to get it put right as quickly as possible.

In English law, however, the customer has a right to reject goods which are not of satisfactory quality. He does not have to act reasonably in choosing rejection rather than damages or cure. He can reject for whatever reason he chooses. The only question is whether he has lost that right by accepting the goods: s 11(4). Once again, amendments made in the 1994 Act were designed to strengthen the buyer's right to reject by restricting the circumstances in which he might be held to have lost it. In particular, the Commissions thought that informal attempts at cure should be encouraged: para 5.28.

The buyer loses the right to reject if he informs the seller that he has accepted the goods, or if he acts inconsistently with the seller's reversionary interest in the goods, or if he leaves it too long before telling the seller that he rejects them: s 35(1), (4). The first two of these are subject to his having a reasonable opportunity of examining the goods to ascertain whether they conform to the contract, including the implied terms in section 14; whether he has had such an opportunity is also relevant to the third: s 35(2), (5). And a buyer does not accept the goods simply because he asks for or agrees to their repair: s 35(6). It follows that if a buyer is seeking information which the seller has agreed to supply which will enable the buyer to make a properly informed choice between acceptance, rejection or cure, and if cure in what way, he cannot have lost his right to reject.

This was a buyer who was told very early on that something was not right with his brand new boat and given one suggestion for curing it. When he sought time and information to reflect upon the best way forward the sellers agreed to supply the information required. When they eventually produced this, they not only made it clear that there was no 'do nothing' option, but presented two very different options for putting it right, each different from the one they had originally proposed. In my view, time only began to run then and the three weeks it took the buyer to inform the seller that he was rejecting the boat were not more than a reasonable time.

I agree with both judgments.