Fundamental breach of washing machine contract bars seller from relying on exemption clause.

[*218] 1979 June 22

(NIKITAS. D.J.)

IN THE DISTRICT COURT OF NICOSIA

Soteris Andreou,

Plaintiff,

v.

Nakis Hamalis (Century Cyprus) Ltd.,

Defendants.

(Action No. 1790/77).

Contract - Exception clause - Sale of washing machine - Fundamental breach - whether sellers protected by clause.

C. Mitsides, for the Plaintiff.

A. Danes, for the Defendant.

JUDGMENT

The following judgment was was delivered by: -

NIKITAS.D.J.: The plaintiff in this action claims £245.- against the defendant company as damages for breach of contract and a further sum of £40.- as special damages. The defendants are dealers of domestic applicances at Nicosia. They sell, inter alia, television sets and washing machines. In June 1976 they were offering their CENTURY washing machine at the reduced price of £155.- The offer was made through advertisements in the press and over the radio. The normal price at which the defendants sold the machine was £245.- but this was a special offer to displaced civil servants. The plaintiff, being a refugee, took advantage of the offer. On June 1,1976 he purchased from the defendants a washing machine CENTURY make for £155.-. [*219] At the same time he bought a television set of a different brand for £95.- and he paid the price for both items purchased.

The defendants gave a written guarantee to the plaintiff for the T.V. set. It was not in dispute that anidentical guarantee though not actually handed over to plaintiff covered the washing machine as well. The guarantee for the T.V. set is exhibit 2 before me. It is valid for a period of one year. Under the terms of that document if the washing machine did not operate properly the defendants undertook to replace defective parts and restore same to proper working condition provided that the fault could not be attributed to overloading misuse or to certain other causes enumerated in the guarantee.

The circumstances giving rise to plaintiff's claim may be summarised as follows. The plaintiff has said that the machine was delivered to him at Kato Polemidhia on 12.7.79 but did not use it until the defendants had sent a technician from Limassol to instruct his family how to operate it. This occurred some two months after he took possession of the machine and after he made repeated requests to defendants to send some one over at his place for the purpose. According to plaintiff the machine proved defective after being used for a month or two. His complaints were that while the machine was in operation the door opened and water with detergents poured out of the machine. The net result was that the laundry was damaged and the matter was immediately reported to defendants. The plaintiff testified that the defendants made several attempts [*220] to repair the machine. They first sent a technician from Limassol, who tried to repair the fault hut according to plaintiff things became worse. A new problem was added, that is to say, water was pouring out even when the door of the machine was locked. So in about October 1976 the machine was removed by defendants to Nicosia.

When the machine was returned the defendant ’ technician told plaintiff that it had been repaired. The plaintiff, however, stated that though this time the door did not open the machine was still defective and each time it was used part of the clothing was damaged, that is it was torn, as before. The plaintiff went on to say that in January 1977 he visited defendants at their premises in Nicosia and met Miss Moyseos and Mr. Nakis Hamalis the defendants’ managing director. Miss Moyseos is in charge of defendants’ sales department and was the only witness who gave evidence on behalf of the defendants. It is the allegation of the plaintiff that both Mr. Hamalis and Miss Moyseos admitted on this occasion that the washing machine was defective and they orally agreed with him to replace it with a brand new one of the same model. It is further the case for the plaintiff that the machine delivered to him subsequently on March 22, 1977 was not new as agreed but second hand. The plaintiff stated that he telephoned the defendants immediately and protested to Miss Moys os who happened to be on the phone and asked her to take the machine away and supply him with a new one. A letter dated 29.3.79 to the same effect was addressed to defendants by plaintiff’s advocate. Eventually he saw Mr. Hamalis [*221] at Nicosia who proposed to replace the machine on payment of an additional sum of £85.-. Miss Moyseos conceded in cross-examination that the second machine was the last of their stock and that defendants offered plaintiff their more expensive model which would cost him £85.- more. The plaintiff rejected the proposal insisting on his bargain. He again asked defendants to take away the machine but they refused to do so. Subsequently on 13.4.77 the plaintiff bought a washing machine from another firm for £170.-

P.W.2 an experienced refrigerator and washing machines engineer examined the substitute machine at plaintiff’s request in March 1977 and found that it was second hand. He based his

conclusion mainly on the fact that the exterior of the machine was rusted at parts and the hoses were also corroded.

In their statement of defence the defendants denied that the machine they originally supplied was defective alleging in substance that it was damaged by misuse while in the hands of the plaintiff, that is, overloading. They further allege that though not legally bound to do so they replaced the machine and in any event the replacement was a brand new machine.

Miss Moyseos in her evidence before me stated that the defendants replaced the machine not because it was defective but to quote her evidence ###. Under cross-examination she agreed that plaintiff had sent in the machine for repairs more than once but added that the defendants’ engineers found nothing [*222] wrong with the a chine and that the sola problem was that plaintiff did not know how to operate it. In answer to a further question by Mr. Mitsides the witness agreed that defendants would be prepared to replace the second machine as well but they ran out of stock. In actual fact the replacement was the last machine of that particular model and so they offered him another more expensive one.

The plaintiff impressed me as a frank and straight forward witness and I accept his evidence in toto. I am quite satisfied that the defendants agreed to replace the machine for the obvious reason that it was defective to such an extent as to be unusable. If the machine was not defective as alleged nothing would have been casier than to call the defendants’ engineers who examined it. But the defendants called none. On a consideration of the whole of the evidence and in particular the evidence of P.W.2 I am further satisfied that the second machine was not new but second hand. I may perhaps add that the cross-examination of Miss Moyseos who stated that the defendants would even change the second machine if they had the same model available lends support to my conclusion. Further there can be no doubt that the plaintiff promptly rejected the replacement as he was entitled to do. In my judgment the plaintiff is entitled to succeed.

Mr. Danos submitted that in case the plaintiff is successful his damages are limited by the terms of the guarantee to the cost of repairs. In the first place I do not think that exhibit 2 on its true construction limits [*223] liability in any way. Secondly, even in cases where there is a wide "exception” clause purporting to limit or even exclude liability for defects such a clause will not avail the party guilty of a fundamental breach of the contract. In Karsales (Harrow) Ltd., v. Wallis (1956) 2 All E.R. 866 at pp. 868, 869 Lord Denning said:

"Notwithstanding earlier cases which might suggest the contrary, it is now settled that exempting clauses of this kind, no matter how widely they are expressed, only avail the party when he is carrying out his contract in its essential respects. He is not allowed to use them as a cover for misconduct or indifference or to enable him to turn a blind eye to his obligations. They do not avail him when he is guilty of a breach which goes to the root of the contract. It is necessary to look at the contract apart from the exempting clauses and see what are the terms, express or implied, which impose an obligation on the party. If he has been guilty of a breach of those obligations in a respect which goes to the very root of the contract, he cannot rely on the exempting clauses. I would refer in this regard to what was said by Roche, J., in Pinnock Brothers v. Lewis & Peat, Ltd.(1923)(1K.B. at p. 695, to the judgments of Devlin, J., in Alexander v. Railway Executive (1951) 2 All E.R. 442;(1951) 2 K.B. 882 and Smeaton Hanscomb & Co., Ltd. v. Sassoon I. Setty, Son & Co. (1953) 2 All [*224] E.R. 1471, and a recent case in this court, J. Spurling, Ltd. v. Bradshaw

(1956) 2 All E.R. 121, and the cases there mentioned. The principle is sometimes said to be that the party cannot rely on an exempting clause when he delivers something 'different in kind' from that contracted for, or has broken a 'fundamental term' or a 'fundamental contractual obligation’. However, I think that these are all comprehended by the general principle that a breach which goes to the root of the contract disentitles the party from relying on the exempting clause".

Another instructive case in Pollock v. Macrae (1922) S.C. (H.L.) where Lord Dunedin said:

"The reminaing defects were such that, as Lord Ormidale says, the engines never worked satisfactorily. Now, when there is such a congeries of defects as to destroy the workable character of the machine, I think this amounts, to a total breach of contract and that each defect cannot be taken by itself separately so as to apply the provisions of the conditions of guarantee and make it impossible to claim damages. I am quite satisfied on the evidence that the engine never really did work as an engine should, and that in consequence the respondent lost much of his fishing season, besides losing the usefulness of his boat as a sailing boat.”

“…………………………………................................................................ [*225]

“The defects here are such that the respondent might have refused to accept the engine and repudiated the contract; he did not do so, but elected to keep the engine and claim damages".

In the present situation the machine originally delivered to plaintiff was totally useless and there was therefore a fundamental breach of contract which would entitle the plaintiff to claim his money back. At any rate the defendants did not honour their obligation under the oral agreement made in January 1977. The plaintiff rightly rejected the replacement and accordingly the defendants must be held liable to plaintiff in damages. I assess the damages at £155.- plus £20.- which I award in respect of clothing destroyed. In the result judgment is given against the detendants for £175.- with costs on the appropriate scale to be assessed by the Registrar.

Judgment for £175.- with costs.