OUTER HOUSE, COURT OF SESSION

[2010] CSOH 14

CA102/08

OPINION OFLORD DRUMMOND YOUNG

in the cause

DAVID DOUGLAS

Pursuer;

against

GLENVARIGILL COMPANY LIMITED

Defenders:

________________

Pursuer: Clark, QC; Balfour + MansonDefender: Gillies, Solicitor; McGrigors

5 February 2010 [1] On 29 November 2004 the pursuer agreed to purchase an Audi car from the defenders, who then

traded as Edinburgh Audi. The price agreed for the car, an Audi A4 Avant 54Q, was £41,050, and a

deposit of £2,000 was paid on that date. The car was delivered on 22 February 2005, on which date the

balance of the price was paid. It is a matter of agreement of the car was purchased by the pursuer for his

own individual ownership and use, and that the defenders were acting in the course of a business.

[2] The car subsequently developed faults, and on 14 June 2007 the pursuer purported to reject it on

account of material breach of contract on the part of the defenders. The defenders did not accept such

rejection, and the pursuer has raised the present action for declarator that he was entitled to reject the car.

He further seeks repayment of the price paid by him, £41,050 and payment of a further sum of £15,000 by

way of damages for the loss that he claims to have suffered as a result of the defenders' breach of contract.

In the alternative, on the hypothesis that the car had not been validly rejected, the pursuer concludes for

payment of £25,000 by way of damages for the defenders' breach of contract. Following certain procedure

involving a third party, the action proceeded to proof before answer.

Evidence of fact

[3] At the proof the history of events following delivery of the car was not significantly in dispute.

Evidence on the matter was given by the pursuer and his wife, and was not seriously challenged. Although

both witnesses were at times somewhat vague or inconsistent, the picture of events that emerged was

generally clear. From an early stage intermittent problems were encountered; in particular, the car would

not start in the morning, and either the garage or the AA was asked to deal with the problem. Nothing

major occurred, however. A major problem first appeared in about March 2006. At that time the pursuer

and his father-in-law were driving to Skye when the engine management system cut in, slowing the car to

approximately 30 mph. The pursuer switched the car off and attempted to restart it, but failed to do so.

Eventually it was possible to move the car, but it would not travel at more than 30 to 35 mph. The

following morning, however, the car restarted and appeared to operate normally. One of the expert

witnesses, Mr Bathgate, explained that the electronic system in the car rebooted when it was switched on;

he thought that this would in most cases have corrected the fault that had occurred. A short time

afterwards, in April or May 2006, when the car was travelling at speed on the motorway between

Edinburgh and Glasgow at approximately 70 mph, the engine management system cut in and rapidly

slowed the car down to approximately 30 mph. This caused the pursuer and his wife great concern, for

obvious reasons; the pursuer described the experience as "quite frightening" and his wife as "quite scary".

Other problems of a lesser nature were encountered. The windows operated erratically and lights would

come on for no reason. Somewhat more seriously, on occasion the automatic transmission would not

move out of first gear; when the latter problem occurred it could be corrected by switching the engine off

and then on again. The car was not in fact used a great deal by the pursuer and his wife; it was their third

car, and it travelled slightly in excess of 2,000 miles in the first year of their ownership.

[4] The pursuer did not know the cause of the faults that had occurred, and in May 2006 he took the car to

Edinburgh Audi to discover what was wrong. The car remained with Edinburgh Audi until December

2006, a delay that can only be described as extraordinary. The pursuer sought information as to what was

wrong and what was being done to the car, but failed to obtain any proper information. In September 2006

he was told that the car had been repaired and was ready for use. When he collected it, however, it broke

down on the way to his home. Consequently it was taken back to Edinburgh Audi. In November 2006 the

pursuer spoke at some length to Mr Farrell, the garage manager for Edinburgh Audi. He was informed that

during the period when the car was in the garage a number of parts had been replaced and the engine had

been stripped down. He was also told that the work had been carried out by an incompetent operative who

had been dismissed. The pursuer stated that he wished to reject the vehicle, and in subsequent telephone

conversations on 20 and 21 November 2006 he repeated that he did not want the car back. Mr Farrell's

response, confirmed in a letter of 22 November (no 6/2 of process), comprised three offers. The first was

to replace the car in return for payment by the pursuer of approximately £15,800; that sum was designed

to represent the fact that the car sold to the pursuer was no longer new. The second offer was to replace the

car with a car of similar age, mileage and specification at "minimal" cost to the pursuer. The third offer

was that, if the pursuer accepted return of the car following road testing, he would be given a guarantee

that any repeat of the problems with the performance of the car within one month of return would instigate

a like-for-like vehicle replacement. These offers were not acceptable to the pursuer. Edinburgh Audi

refused to retain the vehicle and dropped it off at the pursuer's house in December 2006. When the car was

returned Mr Farrell wrote to the pursuer (letter of 5 December, no 7/4 of process) to state that it had been

repaired and extensively road tested, and that the faults had been rectified. Nevertheless the pursuer was

not given any specific information as to what had been wrong.

[5] After the return of the car in December it was little used, and the first significant trip was to Paisley in

February 2007. On this occasion the pursuer's wife was driving. The car shuddered and almost stopped; it

lost power and the automatic gear system dropped to first gear. The pursuer stated that this was exactly the

same problem as had been encountered previously. On 23 February the car was returned to the garage

(warranty invoice no 7/8 of process). At that point Edinburgh Audi said that nothing was wrong, and the

car was returned to the pursuer. The car was returned to the garage on 21 March (warranty invoice no 7/9

of process) for replacement of keys; the keys had not been working properly in the locks, and problems

had occurred with the doors and windows. On 4 April the car would not start and experienced electrical

problems; the RAC could not fix it, and it was towed into the garage once again. Thereafter Edinburgh

Audi informed the pursuer that the vehicle was in working order. Following a telephone call on 17 April

Mrs Douglas intimated that she was not willing to accept the car. On 7 May Mr Farrell wrote to the

pursuer and his wife (no 6/3 of process) to state that Edinburgh Audi had been unable to find a fault and

that they were unwilling to store the car. The car would therefore be delivered to the pursuer on 10 May,

and if it was not accepted a storage charge of £50 per day would be imposed. The car was accordingly

taken back by the pursuer, but on 29 May Edinburgh Audi agreed to examine it at the pursuer's house and

found problems with it, as a result of which they replaced the battery. Thereafter, on 14 June, the pursuer

through his solicitors formally rejected the car.

[6] On 1 September 2006 during the time when the car was in the garage for investigation, the business of

Edinburgh Audi was sold by the defenders to another company, Lomond Motors (East) Ltd, who were

thereafter responsible for all repair work on the car. Nevertheless, Lomond had not sold the car, and they

refuse to accept responsibility for any defects in it. Consequently the present action is brought against the

original sellers.

[7] Before I leave the evidence of fact, I should record that the defenders lodged witness statements from

four individuals, Mr Joe Farrell, who had been Head of Business of Edinburgh Audi from 2003 until

2007, Mrs Janice Carse, who at the relevant time had been Customer Care Manager at Edinburgh Audi,

Mr Geoffrey Hunt, who was employed by Volkswagen Group UK Ltd, who explained the Audi warranty

scheme, and Mr Kevin Lamb, who is the sole remaining director of the defenders. None of these

documents was sworn, and none of those who made statements was available for cross-examination. In

these circumstances I am of opinion that the statements can be given little weight. In any event, I did not

find that they added anything of value to the other evidence. The main passage in Mr Farrell's statement

that was relied on by the defenders related to his letter of 22 November 2006, and I do not think that it

adds anything to the substance of the document. Mrs Carse referred to events at about the same time, to

the existence of a warranty and to the difficulty in dealing with intermittent faults. I do not think that what

she said added anything to the evidence of Mr and Mrs Douglas and the documentary evidence, and what

she said about intermittent faults is no more than the obvious. Mr Hunt referred to the warranty invoices

that came from Volkswagen Group UK, which were in any event agreed. Mr Lamb referred to the sale of

the Edinburgh Audi business by the defenders to Lomond and to the commercial problems that would

arise were it possible for the buyer of a vehicle to reject it 15 months after delivery. Any such commercial

difficulties are clearly important in any consideration of the reform of the law (although the seller would

in most cases have a remedy against the manufacturer), but in my view they do not have any bearing on

the interpretation of the law as it stands at present, which is what must be applied in this case. Mr Lamb

further referred to the manner in which an intermittent fault would be dealt with and the difficulties

encountered in dealing with such a fault. This evidence is very general in nature, and I do not think that it

adds significantly to the documentation that is available dealing with the defenders' and Lomond's work

on the car. That documentation was considered by the two expert witnesses, to whose evidence I now turn.

Expert evidence

[8] Two expert witnesses gave evidence on behalf of the pursuer, Mr Alan Bathgate, a consultant

automotive engineer, and Mr Graham Doughty, an engineering consultant. Mr Bathgate's evidence was to

the following effect. He was instructed in May 2007, and was supplied with a precognition from the

pursuer setting out the history of events since he had acquired the car. On 29 May 2007 Mr Bathgate

examined the car at the pursuer's house, and thereafter prepared a report (no 6/12 of process). Mr Bathgate

described the car as being in good condition and free from bodywork damage. He had intended to road

test the car, but this was impossible because, while its engine started immediately on every occasion, it

failed to run for longer than one second and then cut out as soon as he released the starter switch. The car

was getting full power to all systems in the start position, and the engine was working, but it cut out

thereafter. Mr Bathgate attempted to start the car on 20 occasions but the engine cut out every time. The

engine did not run long enough for the management system to make diagnostic checks or for Mr Bathgate

to listen to it. Nevertheless, when the throttle opened it behaved normally before stalling; that fact together

with the immediate start indicated that there was not a mechanical problem with the vehicle, and all eight

cylinders were firing. There were no unusual mechanical noises, which would have been expected if they

had been a failure of a major component within the engine. Nevertheless, the engine did not run long

enough for a proper assessment.

[9] Mr Bathgate further found that the central locking system was inoperative, requiring the vehicle to be

opened manually at the offside front door and at the other doors by using the inside handles. The alarm

system was also faulty, causing the hazard warning lights to flash continuously when the doors were

opened and the alarm siren to sound whenever the ignition was switched on. This occurred because the

alarm had not been properly deactivated on entry. Mr Bathgate described the problems that he experienced

as very similar to those that had existed since March 2006, whereby the vehicle either cut out or was

restricted in power. That indicated a fault, which might be intermittent in nature, with either the vehicle

management systems, probably the engine management system ("EMS"), or a system sensor or sensors.

The EMS controlled fuel injection and air and monitored oil and water; it was responsible for ensuring

that the correct amount of fuel was injected into the engine and that the ignition spark occurred at the

optimum time, to give the best available performance. Mr Bathgate stated that an authorized Audi dealer

should have been able to diagnose such a fault as a matter of routine by using their diagnostic equipment

to interrogate the vehicle's management system memory and interpret the fault codes that were stored in

that memory. Possessing such equipment was a requirement of an Audi franchise. If the vehicle had been

returned to the pursuer with no fault having been found, that was clearly wrong, as the symptoms had

remained constant throughout. Mr Bathgate described the vehicle in its then condition as

"undriveable"; he added that, even if the vehicle did continue to run when started there was no guarantee

that the fault would not recur and leave the vehicle stranded again. Mr Bathgate was further able to

examine the diagnostic log of the vehicle (no 6/20 of process). He stated that the information in that

document was exactly as he would expect from the symptoms described.

[10] Among the productions was a warranty notice (no 7/6 of process) issued on 19 December 2006 by

Edinburgh Audi; this indicated the history of the work performed on the car by Edinburgh Audi. It

disclosed a number of major problems. It began with the car's being towed into the garage because it was

going automatically into first gear while driving; in addition a noise was coming from the exhaust. It had

been discovered by Edinburgh Audi that a camshaft journal bearing was excessively damaged in the

cylinder head, causing consequential damage to the camshaft, valves and timing chain. On further

examination, cylinder bores were found to be heavily scored. Mr Bathgate described the foregoing as a

major mechanical failure, which would have been sudden and obvious to the driver. The damage would be

permanent, and the car would not run satisfactorily. The top half of the engine and one of the cylinder

heads and timing chains required replacement. When the engine was restarted by Edinburgh Audi further

problems had been disclosed; the engine was misfiring and a lambda fault was discovered; the lambda

probe is a sensor in the exhaust system which will detect excessive fuel there, in which event the supply of

fuel to that bank of cylinders is reduced. The lambda probe was replaced, but further problems were found

because the associated catalytic converter had melted. Mr Bathgate explained that for that to happen there

would have to be a great increase in temperature in the exhaust, producing an event of a catastrophic

nature. Nevertheless, the lambda fault indicated that the vehicle had overfuelled over a prolonged period.

Mr Bathgate stated that nowadays one would not expect a failure of this magnitude on any car at any age.

[11] On 8 October 2007 the vehicle was brought from storage to Stirling Audi to enable a full diagnostic

check to be carried out in order to identify the cause of the problems. Mr Bathgate was present. On this

occasion the engine cut out in exactly the same way as Mr Bathgate had observed previously. The

diagnostic test revealed a substantial number of fault codes. One of these indicated that there was no

communication between the engine's management unit and the ABS control unit, and this disclosed a

problem with the dash control module, which acts as a hub for all of the vehicle's systems control units.

The dash assembly was then removed, disconnected and examined. No visible faults were found, and it

was then reconnected, which would cause it to reboot, after which the car started and ran in safety mode.

Safety mode enables the car to travel at 30 mph using very little fuel. All of the fault codes were cleared,

and thereafter the vehicle reverted to operating on its full system in the normal manner. Mr Bathgate

concluded from the tests that there was an intermittent problem with the dash assembly, and in particular

the control module that acts as a hub for the vehicle's electronic systems. Replacement of the dash

assembly would be required to overcome this fault; although the vehicle was running correctly after

testing, its performance could not be relied upon. Mr Bathgate expressed the opinion that the fault

discovered by Stirling Audi was consistent with the complaints made by the pursuer about the vehicle's

behaviour since it was approximately one year old. The repair required was to replace the entire dash

module, including the electronic communication hub. The repair time would be two hours, and the total

cost, including parts and labour, would be £562.70 plus VAT. Mr Bathgate further expressed the opinion

that the fault was material, as the dash assembly contained the main communication hub that allowed all

of the components in the vehicle's electronic equipment to speak to one another. The intermittent nature of

the fault would result from the fact that every time the engine was restarted the vehicle's systems were

rebooting; thus the problem was disguised.

[12] Mr Bathgate stated in his report that the failure in the dash module appeared to be due to lack of

durability, as a component of that nature should not require attention during the life of the vehicle. The

dash control module is located within the cabin, in front of the driver, and does not require any

maintenance; consequently it would not have been disturbed in any way since manufacture. Moreover, the

fault was within a control unit which is a sealed component, and Mr Bathgate confirmed that it had not

been damaged or affected by any other outside influence. A failure of this nature is not common and is not

expected in any vehicle at any price.

[13] In cross-examination Mr Bathgate stated that he did not know when the electrical failure arose; it

could have happened at any time up to his inspection of the car. He was cross-examined about the

evidence referred to in the last paragraph, and he reiterated that the dash control module should not

require attention or maintenance, but should survive for the life of the vehicle. It was suggested that a wire

might have been dislodged in use, but he replied that he did not think that that was likely. It is possible for

the main multiplug to develop a poor connection, but he thought that that was unlikely in the

communications hub because of its location; nothing was happening around it, and it was part of the car's

instrument cluster. There was no need to go into that area, and because of its location in the car it was

shielded from vibration and the like. Vibration can affect the electrical systems in parts of the car, for

example in the suspension, but there would be no such movement with the communications hub. Before I

leave Mr Bathgate's evidence, I should record that I found him a very impressive witness, and I have no

hesitation in accepting the evidence that I have summarized above.

[14] Mr Doughty was instructed to produce a report based on certain documentary evidence on inter alia

the question of whether the vehicle control system showed the durability that a reasonable purchaser

would expect. He subsequently produced such a report, dated 3 September 2008 (no 6/11 of process). In

preparing the report, on 25 June 2008 he inspected the vehicle in the premises where it was stored. The

mileage was noted as 9,498 miles, which Mr Doughty described as very low mileage; the average is

10,000-12,000 miles per annum. The automatic door locking system did not operate, and the car had to be

unlocked mechanically. It was possible to switch on the engine, and it was left running for 15 minutes. A

self-diagnostic check on the dashboard showed no faults other than a need for a service. Nevertheless,

Mr Doughty's examination revealed a fault with the electronic stabilisation programme ("ESP"). The ESP

unit processes data from three integrated systems and certain additional inputs; these register the vehicle's

rotation about the vertical axis, lateral acceleration, brake pressure and steering wheel angle.

[15] Mr Doughty saw the results of the fault diagnosis carried out at Stirling Audi in the presence of

Mr Bathgate. He expressed the view that this clearly indicated a loss of communication between the

engine's management unit and the ABS control unit, and he agreed with Mr Bathgate that the probable

cause for the loss of communication would have been with the dash control module. He carried out his

own analysis of the fault codes for the Audi A4/S4; this clearly indicated that there was a communication

fault with the control module. He further expressed the view that the fault appeared to be intermittent, and

that this was supported by the fact that the vehicle appeared to operate normally when he examined it at

the storage facility.

[16] Mr Doughty's final opinion was that he would not expect the fault of this type to occur within the first

three years of use of a car, and its appearance within 13-15 months of purchase was totally unacceptable.

He was further of opinion that any buyer of a vehicle fitted with this type of equipment would expect

trouble-free use of the vehicle for some years. When he gave evidence about these matters, it is clear from

his manner of speaking that he thought that his views were obvious. He went on to say that the fault was

"fraught with danger", and that it would be expected that it would lead to additional damage. (This was in

fact borne out by the warranty invoice, no 7/6 of process). In his report he stated that any continued use of

the vehicle would have put the user and occupants, and other road users, at serious risk; the vehicle could

be dangerous to use in its current state. This resulted from the possible sudden loss of power and also from

the ESP fault; the ESP fault could mean that the ABS system failed to operate, causing a loss of traction

control. The primary cause of all of the pursuer's problems with the vehicle was in Mr Doughty's opinion

the dash control module. It should have been easy for Edinburgh Audi to identify the problem using the

appropriate diagnostic equipment.

[17] Mr Doughty had also examined the warranty invoice (no 7/6 of process), and gave evidence about

that. His evidence on this matter was broadly similar to that of Mr Bathgate, and it is clear that he thought

that the faults were serious. That is hardly surprising in view of his opinion that the vehicle could be

dangerous to use in its current condition. I should record that I found Mr Doughty a very competent

witness, and I accept his evidence as accurate.

Legal analysis

[18] Against the foregoing background of fact, three legal issues are in dispute. The first is whether the

defenders were in breach of contract at the time when the car was sold by them to the pursuer: in

particular, was the car of satisfactory quality at that time? The second relates to the remedies that are

available to the pursuer if a breach of contract is established: in particular, is the pursuer entitled to reject

the car, or is he confined to other remedies that are available under the Sale of Goods Act and the

European Consumer Sales Directive? The third issue is the quantum of any damages to which the pursuer

may be entitled. I will deal with each of these in turn.

Breach of contract

[19] In asserting that the defenders are in breach of contract, the pursuer relies primarily upon section 14

of the Sale of Goods Act 1979. That section states the familiar implied term that goods supplied under a

contract of sale will be of satisfactory quality, and goes on to state the goods will be of satisfactory quality

if they meet the standard that a reasonable person would regard as satisfactory, taking into account a

number of specified factors. In the present case the factors that are particularly relied on by the pursuer are

safety and durability. For the defenders it was submitted that, for there to be a breach of the implied term

in section 14, the fault must have existed at the time of delivery; reference was made to Rogers v Parish

(Scarborough) Ltd, [1987] 1 QB 933, at 940 per Mustill and 947 per Sir Edward Eveleigh, and to

Lamarra v Capital Bank PLC, 2007 SC 95, at [62] per Lord Osborne:

"In short, it seems to us that, because the issue of whether the quality of the goods is satisfactory

requires to be judged as at the time of delivery, the [manufacturer's] warranty can have no bearing

upon that matter".

In evidence, however, the pursuer and his wife stated that at the time of delivery they were satisfied with

what they had purchased. Serious problems did not arise until 13 months or thereby after delivery.

Moreover, Mr Bathgate had stated that the electrical failure could have arisen at any time prior to his

inspection of the car in May 2007. Thus his evidence was that it was merely possible that the defect

existed at the time of sale.

[20] In my opinion the foregoing argument proceeds on a misreading, or at best a very selective reading,

of Mr Bathgate's evidence. It is not in doubt that, for a breach of section 14 to exist, the defect must have

existed at the time when the goods were delivered. Nevertheless, Mr Bathgate stated clearly that the

failure in the dash module appeared to result from lack of durability, as that component should not require

maintenance or any other attention during the vehicle's life: see paragraphs [12] and [13] above.

Consequently it should not have been disturbed in any way since manufacture. In addition, it was within a

sealed component, and Mr Bathgate was able to confirm that that component did not show signs of

damage or any other outside influence. Furthermore, in cross-examination Mr Bathgate pointed out that

the location of the communications hub was shielded from vibration. As I have already mentioned, I

found Mr Bathgate an excellent witness, and I have no hesitation in accepting his views on these matters.

In these circumstances I am of opinion that the most reasonable inference is that the defect existed from

the date of delivery. There was nothing to cause it to arise at a later date; interference of any sort was

inherently unlikely, and there was no evidence of such interference when Mr Bathgate examined the

component.

[21] It was also submitted for the defenders that the defect was ultimately found to be of a fairly trivial

nature. Mr Bathgate's evidence was that all that was required to remedy the defect was replacement of the

electronic communications hub, which would take two hours in the workshop and cost approximately

£600. Moreover, the defect resulted in the car's losing power, but it was submitted that there was little

evidence that, when the problems occurred, the users were ever in danger. The pursuer's journeys were not

terminated when the engine dropped to its safety mode; all that happened was that the car continued at

approximately 30 mph. In my opinion it cannot be said that the defect that the car exhibited was in any

way trivial. No doubt it could be easily remedied, but that does not mean that it was not serious. It seems

to me that the defect with the communications hub was extremely serious, for three reasons. First, the

rapid loss of power that occurred on three occasions involved a clear and obvious risk of danger to the

occupants of the car, and indeed other road users. If a car on a motorway suddenly drops its speed from 70

mph to 30 mph, the danger is very clear indeed, and Mr Doughty described the faults in the vehicle as

"fraught with danger" (paragraph [16] above). Secondly, if the car shuts down into safety mode, it cannot

travel faster than 30 mph or so. On a long journey that would add a great deal of time to the length of the

journey. Quite apart from the inconvenience involved, the inability to go faster would create an obvious

hazard, as the car would be travelling at well under the normal speed of traffic. Thirdly, the defect affected

the vehicle's management systems, with the consequences for the engine described at paragraph [10]

above; these appear in themselves to be serious. Finally, I should note that both Mr Bathgate and

Mr Doughty were quite clear that the defects exhibited by the car were serious. I have no doubt that that is

correct. I accordingly conclude that the pursuers have demonstrated a breach of the implied term in

section 14 of the Sale of Goods Act.

Remedies available to pursuer: rejection

[22] It is not in dispute that, once a breach of contract is established, the pursuer is entitled to damages.

What is in dispute is whether the pursuer is also entitled to reject the car. The law on this matter is set out

primarily in section 15B of the Sale of Goods Act 1979, a provision that applies to Scotland only. This is

in the following terms:

"(1) Where in a contract of sale the seller is in breach of any term of the contract (express or

implied), the buyer shall be entitled --

(a) to claim damages, and

(b) if the breach is material, to reject any goods delivered under the contract and treat it as

repudiated.

(2) Where a contract of sale is a consumer contract, then, for the purposes of subsection (1)(b)

above, breach by the seller of any term (express or implied) --

(a) as to the quality of the goods or their fitness for a purpose,

...

shall be deemed to be a material breach".

The right to reject is lost, however, if the buyer accepts or is deemed to have accepted the goods sold.

Section 35 of the Act provides for certain situations where the buyer is deemed to have accepted the

goods. These include intimation to the seller that the goods have been accepted (subsection (1)(a)), the

performance by the buyer of any act that is inconsistent with the ownership of the seller (subsection (1)

(b)), and cases where after the lapse of a reasonable time the buyer retains the goods without intimating to

the seller that he has rejected them (subsection (4)). In addition, subsection (6)(a) provides that the buyer

is not deemed to have accepted the goods merely because he asks for or agrees to their repair by or under

an arrangement with the seller. Finally, section 59 of the Act provides that where any reference is made in

the Act to a reasonable time the question what is a reasonable time is a question of fact.

[23] In addition to the right of rejection provided in section 15B of the Sale of Goods Act, and previously

at common law, certain further remedies are made available to consumers under sections 48A-48F of the

Act; these were introduced into Scots and English law by the Sale and Supply of Goods to Consumers

Regulations 2002 (SI 2002/3045) in order to implement the European Consumer Sales Directive

1994/44/EC. These apply to goods that do not conform to the contract of sale at the time of delivery. In

that event, the buyer has the right (under section 48A(2)(a) and section 48B) to require the seller to repair

or replace the goods. If that is unsuccessful, the buyer has the right (under section 48A(2)(b) and section

48C) to require the seller either to reduce the purchase price of the goods by an appropriate amount or to

rescind the contract. These remedies are subject to requirements of proportionality, and the relationships

that exist among the various remedies are not clear. Nor is their relationship with the remedy of rejection

under the Sale of Goods Act. Because of the uncertainties in this area of the law the remedies available for

the supply of faulty goods in consumer sales were the subject of a reference to the Scottish Law

Commission and the Law Commission for England and Wales. The two Commissions produced a Joint

Consultation Paper on Consumer Remedies for Faulty Goods (Law Commission No 188; Scottish Law

Commission No 139, published in November 2008) and subsequently a Joint Report on the same subject

(Law Commission No 317; Scottish Law Commission No 216, published in November 2009). The Report

proposes a scheme under which the two sets of remedies, those under the Sale of Goods Act (and the

common law) and those under the European directive, would be properly integrated. In short, the scheme

is that a consumer who is supplied with faulty goods should be entitled to reject them, and at that point

should have a choice of remedies: he may opt for termination of the contract and a refund of the price, or

alternatively may opt for the European-inspired remedies of either repair or replacement (with termination

and refund or a price reduction as fall-back remedies in the event that the European remedies are chosen).

The solicitor for the defenders referred me to the work of the Law Commissions, but it seems to me that

the Consultation Paper and Report can only be used to the extent that they survey the existing law; the

scheme that is put forward in the Report and considered in the Consultation Paper is an innovation on the

existing law.

[24] The remedy that the pursuer seeks to invoke in his pleadings is described as "rejection", although no

mention is made of section 15B or indeed any other provision of the Sale of Goods Act. The submissions

made at the close of the evidence were concerned almost exclusively with rejection under section 15B.

Nevertheless, counsel for the pursuer did at one point raise the question of whether, if rejection under

section 15B had not taken place within a reasonable time, what the pursuer did in June 2007 might be

equated with rescission under section 48C of the Act. I will return to this question at paragraph [37]

below. At present, however, I will discuss the issues raised in the case on the basis that what is relied on is

rejection under section 15B, and that the critical question is whether such rejection was timeous under

section 35.

[25] The most significant feature of the present case is the time that elapsed before the pursuer attempted

to exercise his right of rejection. Put simplistically, the critical question is whether he was too late in

rejecting the car. In approaching the remedy of rejection, the primary rules applicable in Scots law are

those set out in section 15B itself and in section 35, which states cases where the buyer is deemed to have

accepted the goods. In relation to section 35, the defenders did not suggest that the pursuer had intimated

that he accepted the car; instead, the defenders relied on the second and third types of deemed acceptance,

where the buyer has performed an act inconsistent with the ownership of the seller or where after the lapse

of a reasonable time the buyer retains the goods without intimating to the seller that he has rejected them.

In summary, the defenders' argument was in three parts: first, the period of 15 months that elapsed before

the fault was discovered and the car was taken back to Edinburgh Audi in May 2006 was more than a

reasonable time for rejection; secondly, the further period of two to three months that elapsed between the

return of the vehicle to the pursuer in March 2007 and the intimation of rejection in June 2007 was again

more than reasonable; and thirdly, the use that the pursuer and his wife made of the vehicle during those

periods amounted to an act inconsistent with the ownership of the seller. Although reliance was based on

the use of the car, it is obvious that a car is normally acquired for immediate use, and consequently I

cannot see that the mere use of the car is sufficient to take away the right to reject. The substance of the

defenders' argument in the present case is the time that elapsed prior to rejection, even making allowance

for the periods during which the car was under repair. Consequently the critical question is whether that

time was reasonable. In terms of section 59 what is a reasonable time is a question of fact, and the precise

question that must be answered is whether in all circumstances of the case the pursuer rejected the car

within a reasonable time.

[26] It is clear that if the buyer decides to allow the seller to repair the goods time will not run during the

period while repairs are being carried out. This is obvious, because clearly it cannot be known until the

repairs have been completed whether they have been successful in eliminating the defect. The point can

perhaps be put more generally: in the words of Lord Watson in Hick v Raymond and Reid, [1893] AC 22

(at 29):

"[The] condition of reasonable time has been frequently interpreted; and has invariably been held

to mean that the party upon whom it is incumbent duly fulfils his obligation, notwithstanding

protracted delay, so long as such delay is attributable to causes beyond his control, and he has

neither acted negligently nor unreasonably".

That case involved an obligation to discharge cargo with all dispatch, but the same principle was held

applicable to sale of goods in Truk (UK) Ltd v Tokmakidis GmbH, [2000] 2 All ER (Comm) 594, at 604.

When repairs are carried out that is a matter that can be regarded as an example of this wider principle. In

this connection, I should also note that, in accordance with section 35(6) of the Sale of Goods Act, a buyer

is not deemed to have accepted goods merely because he agrees to their repair.

[27] A more difficult question is when the time for rejection begins to run in the case of latent defects. For

this purpose, a latent defect is one that cannot be discovered by reasonable inspection or use of the goods

at or immediately following delivery. One possible view is that time does not begin to run until the defect

manifests itself. The alternative is that time begins to run immediately, but some delay in rejection may be

reasonable if the defect is not immediately apparent. On the latter basis, assessing what is a reasonable

time for rejection is dependent on two factors, when the defect appears and the time that elapses before

rejection is intimated, but the precise relationship between those two factors depends upon the particular

circumstances of the case. On a consideration of the authorities cited to me, I am of opinion that the

second of these approaches is correct. At common law, however, there are indications that time did not

begin to run until the defect manifested itself: Fleming & Co (Ltd) v Airdrie Iron Co, 1882, 9 R 473;

Carter & Co v Campbell, 1885, 12 R 1075, at 1080 per LP Inglis and 1082 per Lord Adam; McCaw,

Stevenson, & Orr Ltd v Maclaren & Sons, 1893, 20 R 437. In the first of those cases, which involved

defects that appeared in stills for use in a chemical works after six weeks of use, Lord Shand stated (at

480):

"I think the pursuers were entitled to use the steels until the defects were fully disclosed, as they

did, and that the fact of their having done so cannot bar the present claim".

In the same case, LP Inglis stated (at 481):

"Goods of this kind... cannot be tested without a considerable amount of use, and if within a

reasonable time of the discovery of a defect intimation of that defect is made to those who had

supplied the goods, I think that that is all that can be expected".

Nevertheless, it is I think significant that in Fleming the defect appeared after six weeks of use, and that in

McCaw, Stevenson, & Orr the problem was discovered after two weeks. These cases cannot be used to

support the proposition that, in the case of a latent defect that takes many months to appear, time will not

begin to run until it does actually appear.

[28] Following the enactment of the Sale of Goods Act 1893, the leading commentary (Brown, Sale of

Goods, 2nd edition, 67-68) stated:

"[If the defect] is latent, as often happens, especially in the case of horses, seeds, and machinery,

we have seen that it is sufficient if the rejection is intimated immediately on the defect being

discovered".

A similar view is found in certain cases: Nelson v William Chalmers & Co Ltd, 1913 SC 441; Burrell v

Harding's Executrix, 1931 SLT 76. In Nelson the court made it clear that the provisions of the Sale of

Goods Act did not alter or impair the common law right to reject goods at any time before acceptance,

whether actual or deemed, occurs: see Lord Kinnear at 450 and Lord Dundas at 453. Burrell is of interest

because of the time that elapsed before rejection. The pursuer, the well-known art collector, purchased a

reredos from the defender's late husband, an art dealer, in January 1928. The pursuer averred that two

years thereafter the reredos was taken out of store and examined by an expert, who stated that an

important part of the reredos was modern work, and that he intimated rejection in April 1930. It was held

by Lord Moncrieff that the pursuer's averments were relevant and should go to proof. Nevertheless, it

must be said that the facts of the case were exceptional, in that the reredos was kept in store throughout

the period prior to rejection. I was further referred to Mechans Ltd v Highland Marine Charterers Ltd,

1964 SC 48; that case, however, involved an express certificate stating that the goods (two steel water

buses) were accepted as in accordance with the contractual specification: see LJC Grant at 63 and Lord

Strachan at 73; it is therefore not concerned with deemed acceptance of goods. In yet other cases rejection

of goods was refused on the ground that the defect (of colour or design) ought to have been apparent

immediately following installation: Charles Henshaw & Sons Ltd v Antlerport Ltd, 1995 GWD 24-1316;

Jones v Gallagher, [2005] 1 Lloyds LR 377.

[29] In their Report on Sale and Supply of Goods published in 1987 (Law Com No 160; Scot Law Com

No 104), the Scottish Law Commission and the Law Commission for England and Wales made the

following comments in relation to section 35 of the Act (at paragraph 2.54):

"Under the Sale of Goods Act, which in section 35 merely adds further qualification to or reflects

the common law, the Scottish courts in exceptional cases have been prepared to allow the

purchaser to reject the goods although a substantial period of time has elapsed since delivery, or

even when the goods have been used. Much will depend upon the particular circumstances of the

contract. Considerations such as whether the purchaser was aware of the defect, and the nature of

the action taken by the purchaser when he was in fact aware of the defect, have been factors taken

into account in determining whether the right to reject has been lost".

Reference was made to Burrell, and to two further cases, Aird & Coghill v Pullan & Adams, 1904, 7 F

258, and Munro & Co v Bennet & Son, 1911 SC 337. In the first of these cases, a printing machine was

rejected after 16 months of use, during which the buyers had frequently intimated their dissatisfaction

with the working of the machine and had requested the sellers to put it into proper working order; the

sellers had attempted to do so unsuccessfully. In the second case, a pump was rejected 19 months after it

was installed. Complaints had been made about it shortly after it was installed, and at various points the

sellers sent representatives to examine it and perform work on it. It can be seen, therefore, that in both of

these cases the defect had manifested itself at an early stage and had been followed almost immediately by

a complaint and attempts at repair. That distinguishes these cases from the present, where the defect did

not manifest itself until more than a year had elapsed following delivery; moreover, the car was not taken

back to the seller until 15 months after delivery.

[30] In more recent cases rejection has been permitted after shorter periods. In Fiat Auto Financial

Services v Connelly, 2007 SLT (Sh Ct) 111, Sheriff Deutsch held that a buyer was entitled to reject the car

after nine months, where faults had appeared less than two weeks after delivery and continued during the

remainder of that period; repeated attempts were made to repair them, but these were unsuccessful. The

case is therefore one where the defect appeared at an early stage and repeated attempts were made to deal

with it. That distinguishes it from the present case. In Cruickshank v Specialist Cars (Aberdeen) Ltd, 2002

GWD 25-858, Sheriff MacFadyen held that rejection of a car was permissible after five months; the most

serious problems appeared when the car was used to tow a caravan, which only occurred four months after

delivery. The period is much shorter than in the present case. Of the modern Scottish cases, the greatest

support for the pursuer is found in MacGill v Talbot, 2002 GWD12-377, where the pursuer bought a Rolls

Royce car with a view to restoring it on the basis, he averred, that it would cost a specified amount to

restore it; in fact he was advised that the cost of restoration would be very much greater. He rejected the

car 14 months after purchase. Sheriff Evans decided that we could not hold as a matter of relevancy that a

reasonable time had elapsed under section 35(4). The case is unusual, however, in that the car was

acquired for restoration rather than everyday use; it is clear that that might justify a substantially longer

period. Despite that consideration, it must be said that the period of 14 months is well beyond any other

reported case. In Truk (UK) Ltd v Tokmakidis GmbH, supra, an underlift fitted to a recovery vehicle was

rejected after six months; it was held that this was still within a reasonable time. The judge, Judge

Raymond Jack QC, emphasised that the most important feature of the case was that the vehicle was not to

be used by the purchaser but to be resold, and it was on resale that the defect in the goods had been

discovered. The facts of that case are accordingly somewhat special, and in any event the period involved

is well below that in the present case.

[31] I was further referred to two decisions of the Court of Appeal, Rogers v Parish (Scarborough) Ltd,

[1987] 1 QB 933, and Clegg v Andersson, [2003] 1 All ER 721. In Rogers the plaintiffs bought a Range

Rover vehicle which turned out to have serious faults from the point of delivery, although it was driven for

more than 5,500 miles. The case accordingly does not deal with latent defects. It is, however, authority

that the right of rejection is not precluded by a manufacturer's warranty. Clegg is largely concerned with

the provision of information by the buyer to the seller. In that case a yacht had been supplied with a keel

that was substantially heavier than the manufacturer's specifications. Following delivery, the parties

corresponded on the overweight keel and the possibility of repairs over a period of seven months. Early in

that correspondence the buyers sought certain information, but they did not receive it until close to the end

of the period. Three weeks thereafter they rejected the yacht. It was held that the rejection was timeous.

Sir Andrew Morritt V-C stated (at paragraphs [63]-[64]):

"[Section 35(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 [section 35(4): whether after the lapse of a reasonable time the buyer has retained the goods

without intimating rejection]. In the light of the undisputed fact that [the buyer] did not receive the

information he had sought in August and September 2000 until 15 February 2001 I consider that

the three weeks which elapsed thereafter until the letter of rejection dated 6 March 2001 did not

exceed a reasonable time for the purposes of s 35(4) of the 1979 Act ".

Hale LJ referred to the terms of section 35 and continued (at paragraph [75]):

"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 case was founded on by counsel for the pursuer in view of the repeated requests that had been made

to Edinburgh Audi for information as to what was wrong with the car; counsel submitted that time could

not run while the pursuer was denied information. If the defect in the pursuer's Audi had come to light at

an early stage, and information about its nature had been refused, this argument would in my opinion have

had very considerable force; the refusal to provide the pursuer with proper information would clearly have

prevented him from making an informed decision as to whether to reject the car. Nevertheless, the need

for information has no bearing on the initial period of 15 months or thereby before the car was returned to

Edinburgh Audi for repair. In considering Clegg, it is important to bear in mind that the problem with the

overweight keel became apparent and was raised by the buyer at or about the time of delivery, and that the

case is accordingly not one that involves a latent defect.

[32] In Clegg, the view was expressed that the earlier case of Bernstein v Pamson Motors (Golders Green)

Ltd, [1987] 2 All ER 220, no longer represented the law following the amendment of section 35 of the

Sale of Goods Act by section 2(1) of the Sale and Supply of Goods Act 1994. In that case, a car broke

down nearly four weeks after delivery. The car was repaired, and was held to be as good as new, but was

rejected by the buyer. It was held that, because the buyer had had the car for more than three weeks and

had driven approximately 140 miles, he had had a reasonable opportunity to examine the car and had

accordingly lost his right to reject it. The judge, Rougier J, indicated (at 230) that what is a reasonable

time depends upon the nature of the goods and their function, and that the complexity of that function was

highly relevant. In my opinion that proposition remains law, and indeed accords with the earlier Scottish

cases that permitted some time in order to discover whether machinery functioned properly. Nevertheless,

in the present case, the time involved before the defect manifested itself is very much longer than in the

earlier cases.

[33] Finally, I was referred to J &H Ritchie Ltd v Lloyd Ltd, 2007 SC (HL) 89, a case which emphasizes

the importance of having sufficient information to make an informed choice between acceptance and

rejection. A company carrying on a farming business bought a harrow, but when using it they noticed

vibrations. The sellers repaired the harrow but refused to disclose the fault. The buyers made repeated

attempts to obtain information, but when these were refused they rejected the harrow. It was held that they

were justified in doing so, on the basis that the sellers were under an implied obligation to tell them what

was wrong with the goods. Nevertheless, although all of the members of the House of Lords agreed the

final result, to some extent different approaches were adopted. Lord Hope was of opinion that a term

should be implied into the contract of sale to the effect that the sellers would tell the buyers what was

wrong with the harrow: see paragraph [18]. In reaching that conclusion, Lord Hope made the following

remarks (at paragraph [16]):

"The nature of the defect was not immediately obvious and it was not known what, if anything,

could be done to correct it. But the underlying principles are the same. The effect of sec 35(2)(a)

[which provides that a buyer is not deemed to have accepted goods until he has had a reasonable

opportunity of examining them for the purpose of ascertaining whether they are in conformity with

the contract] is that, as the buyer is not deemed to have accepted the goods, he retains the right to

reject them. That right will, of course, be lost if, at any time, he decides to accept the goods or is

deemed to have accepted them. But it is a right of election which the buyer cannot be expected to

exercise until he has the information that he needs to make an informed choice. The seller, for his

part, cannot refuse to give him the information that he needs to exercise it".

Lord Rodger adopted a somewhat different approach; he held that the parties had concluded a separate

contract for the repair of the harrow and that a term should be implied into that contract; he held (at

paragraph [37]) that business efficacy required the implication of a term that the sellers would tell the

buyers what had been wrong with the harrow and what had been done to put it right. Ritchie is obviously

different from the present case, in that it was primarily concerned with an agreement to repair the goods

supplied, in circumstances where the repair might have been successful; consequently, the critical question

was whether a term should be implied that information would be provided. Moreover, the defect was

noticed at an early stage and the goods were immediately returned to the sellers for attention. It was not a

latent defect In the present case, by contrast, the critical question is whether rejection occurred within a

reasonable time, after making due allowance for the period of repair. The lack of information as to what

was wrong is relevant to the period after repair was attempted. It is not, however, relevant to the

15 months that elapsed before the car was taken in for repair following the emergence of the major fault.

[34] On the basis of the wording of section 35 and the foregoing cases, I am of opinion that, in the case of

a latent defect, time begins to run for the purposes of section 35(4) as soon as the goods are delivered, but

that some level of delay in rejection may be reasonable if the defect is not immediately apparent. In

Mechans Ltd v Highland Marine Charterers Ltd, supra, LJC Grant stated (at 1964 SC 63) that "in the case

of goods which are not expressly accepted and which may be subject to latent defects the Courts will be

generous in fixing the 'reasonable time' which must elapse before acceptance is deemed or implied". In the

case of a complex piece of machinery such as a car, it is to be expected that it may be used for a period of

weeks or even months before rejection becomes impossible, because it may take a significant period of

use before the defect becomes apparent. To that extent the fact that a defect is latent is relevant.

Ultimately, however, the remedy of rejection becomes unavailable through "the lapse of a reasonable

time", if the buyer retains the goods without intimating rejection. In my opinion that "reasonable" period

cannot begin only when the defect manifests itself, for three reasons. First, the wording of section 35(4),

"after the lapse of a reasonable time", seems clearly to relate to a period running from the date of delivery.

That is the obvious meaning in the context in which the subsection occurs; had it been intended that the

period should run from the appearance of a defect that would, I think, have called for express wording.

Secondly, rejection is a relatively drastic remedy, in that it involves return of the goods and the whole of

the price. At a certain stage, commercial closure is required, to permit the seller in particular, but also the

buyer to some extent, to arrange his affairs on the basis that the goods have been effectively sold. Thirdly,

damages remains as an alternative remedy (as may the remedies in sections 48A and 48C); thus the buyer

is not left without any recourse against the seller.

[35] In view of the foregoing analysis of section 35(4), I have reached the conclusion that by May 2006,

when the vehicle was taken in to Edinburgh Audi for repair, a reasonable time within the meaning of that

subsection had elapsed without intimation of rejection; consequently by that time the pursuer was deemed

to have accepted the car. I reach this conclusion primarily because the period in question starts to run on

delivery, and after 15 months I am of opinion that it was too late to reject the goods. While the court

should clearly be generous in fixing a reasonable time, as LJC Grant indicated, I consider that 15 months

is simply too long a period for rejection. It is significant that, with one exception, in none of the reported

cases has rejection been permitted where a defect has not appeared for a period even approaching

15 months. The exception is MacGill v Talbot, supra, but that was a case where a car was acquired for

restoration rather than immediate use in the ordinary way. Consequently the case cannot be taken as

authority that rejection is normally available even when a period in excess of one year has elapsed.

Moreover, in the present case it appears that during the period from delivery, in February 2005, to March

2006, when the serious defect first manifested itself, the pursuer had had uninterrupted use of the car.

Minor faults had appeared, but it was not suggested that any of these required more than a visit to the

garage to be put right. Indeed, even after the major fault first appeared in March 2006, the pursuer waited

until it reappeared in April or May before taking the car back to Edinburgh Audi for detailed

investigation. In these circumstances I am of opinion that the right to reject had been lost through implied

acceptance of the car.

[36] I reach the foregoing conclusion with some regret. The major fault was intermittent but very serious,

in the sense that it represented a significant risk to the safety of those using the car. The car was an

expensive one, supposedly built to a high specification, and plainly failed to meet very basic standards of

manufacture; Mr Bathgate and Mr Doughty were clear that the faults exhibited by the car should not have

appeared in any vehicle, regardless of price. Moreover, Edinburgh Audi had been given repeated

opportunities to repair the car but failed to do so successfully; indeed, despite their possession of

sophisticated electronic equipment, they do not even appear to have discovered what the basic fault was,

and carried out various unnecessary repairs that adversely affected the value of the car. Nevertheless, the

law appears to me to be reasonably clear: rejection is a relatively short-term remedy, and is simply not

available when a latent defect manifests itself for the first time more than a year after delivery; in no

reported case has rejection been permitted after such a period.

Remedies available to pursuer: rejection

[37] As mentioned above at paragraph [24], in his submissions counsel for the pursuer suggested that, if

he were unsuccessful on the basis of rejection under section 15B, his case could also be considered as

based on rescission under section 48C. The solicitor for the defenders submitted that the two remedies

were conceptually different, and that there was no relevantly pled case for rescission as against rejection.

"Rescission" is a term commonly used in Scots law (but not, I understand, in English law) to signify the

bringing to an end of parties' obligations of performance on account of a material breach of contract, and

it seems to me that the use of the word in section 48C is essentially similar to the traditional Scottish

concept. Rejection will almost invariably follow a material breach of contract, and unless replacement

goods are provided it will in Scotland normally be followed by rescission of the contract. Thus in

section 158(1) of the Sale of Goods Act it is stated that, on breach of contract by the seller, the buyer may

"reject any goods delivered under the contract and treat it as repudiated". Nevertheless, the remedy of

rejection in section 48C is subject to a number of conditions that are absent from the traditional remedy of

rejection; in particular, replacement or repair must have been unavailable or unsuccessful, and account

must be taken of the use that the buyer has had of the goods since delivery. The submissions presented on

rescission under section 48C were not detailed, and the differences were scarcely touched upon. For these

reasons I am not willing at this stage to hold that the remedy of rescission under section 48C is available.

This is, however, a commercial action, and consequently a degree of procedural flexibility is required to

enable the true issue in dispute between the parties to be resolved. If, therefore, the pursuer wishes to take

this matter further, I will have the case put out by order in order that both parties can make further

submissions. If that is to be done, I think it essential that the pursuer should provide a written statement of

his arguments on this matter. For the avoidance of doubt, I should make it clear that I am not at this stage

holding that any argument based on section 48C can properly be made by the pursuer; I am merely giving

the pursuer an opportunity to submit that I can following proof and should give effect to such an

argument.

Remedies available to pursuer: damages

[38] The pursuer is in any event entitled to damages for breach of contract. Indeed, I do not think that the

right to damages, as against their quantum, was seriously disputed by the defenders. The statutory

provision governing measure of damages in Scotland is section 53A of the Sale of Goods Act 1979.

Subsection (1) of that section provides that the measure of damages is the estimated loss directly and

naturally resulting, in the ordinary course of events, from the breach; that is the ordinary common law rule

laid down in Hadley v Baxendale (1854) 9 Ex 341. The pursuer's case for financial recompense was

presented on three bases: that the car had been rejected in June 2007; that the car was not effectively

rejected but the pursuer's losses were continuing; and that the car was not effectively rejected and the

pursuer's losses ceased on 8 October 2007, when he was informed that the problem with the car related to

the communication hub and that the problem could easily be rectified. In the event I have held that the car

was not effectively rejected; consequently the first of those does not apply. I also assume for present

purposes that the car was not effectively rejected under section 48C.

[39] As between the second and third heads, in my opinion the principle of mitigation applies as at

8 October 2007. On that date, as a result of the visit to Stirling Audi the pursuer was informed that the

problem with the car was that it required replacement of the communication hub and that that problem

could be easily rectified, at a cost of approximately £650. On the hypothesis that the car had not been

effectively rejected, in my opinion the pursuer should have instructed that work. Thereafter he should

either have continued to use the car or should have sold it, no doubt taking a loss. Nevertheless, replacing

the communication hub would have made it possible to use the car. On that basis, I consider that the

pursuer's losses are as follows.

[40] The pursuer claims the cost of the examination of the car by Stirling Audi, which amounted to £124,

interest was said to be due at 8% from the date when those costs were incurred, 8 October 2007 (no 6/15

of process). The defenders did not dispute that that sum was due, but submitted that interest was due only

from the date of decree or alternatively from the date of citation. In my opinion interest on this sum runs

from the date when the expenditure was incurred, 8 October 2007. The pursuer further claims storage

costs for the vehicle from 31 May 2007 to 28 October 2007 at £25 per week, with interest thereon at 4%

per annum for the intervening period. For the defenders it was submitted that those sums were not due; the

cost could have been mitigated if the car had not been put into storage but had been left on the street. So

far as mitigation is concerned, the critical question is whether the pursuer acted reasonably in putting the

car into storage. The car was an expensive one, and if it had been left on the street there was a risk that it

might have suffered damage, or might simply have deteriorated, in which case its value would have

diminished. In all the circumstances I am of opinion that the pursuer acted reasonably in putting the car

into storage. Interest is claimed on principal sums at 4% per annum for period from 31 May 2007 to date.

In my opinion that interest is also due.

[41] The next two heads of claim are for what are described by the pursuer as wasted insurance and

wasted tax for the period from 27 May 2006 to 8 October 2007, the date when mitigation should have

occurred; the wasted insurance is said to have amounted to £2,345 and the wasted tax to £210 per annum.

Interest is claimed on the resulting sums at 4% per annum. For the defenders it was submitted that those

sums were not reasonable; neither the insurance nor the tax was required as long as the vehicle was in

storage. In my opinion that submission is partly correct. Once the vehicle was put into storage at the end

of May 2007 it was not necessary to pay tax, as a statutory off-road notice (SORN) could have been

issued. During the same period full insurance was not required either. The evidence of the pursuer was

that the vehicle was insured while in storage, but in my opinion there was no need for comprehensive

insurance during that period; third party, fire and theft insurance would have been sufficient. Full

insurance and tax are, however, claimed for the year from 27 May 2006, when the car was taken in to

Edinburgh Audi, to 31 May 2007, when the car was put into storage. The basis of the claim is that the

pursuer had no effective use of the car during that period. There was some limited use of the car during

the early months of 2007, but I think that it was sufficiently low, and sufficiently affected by continuing

problems, to permit recovery of the whole of the insurance and tax paid during that period. In relation to

the insurance that would have been allowable for the subsequent period, when the car was in storage, no

evidence was available as to the cost. In the absence of such evidence, I do not think that I can allow

anything in respect of such insurance. Interest will be due on the amounts due in respect of insurance and

tax at 8% per annum from January 2007, which is approximately halfway through the year when

payments were wasted.

[42] Next, the pursuer claims £2,500 as damages for inconvenience and upset. In Mack v Glasgow City

Council, 2006 SC 543, it was held that mere distress or other emotional reaction does not sound in

damages, but that inconvenience might be recoverable as a head of general damages for breach of

contract: see paragraph [17] of the opinion of Lord Macfadyen. It follows that all that the pursuer can

recover for in the present case is inconvenience. That is limited, however, because the vehicle in question

was admitted to be the third car used by the pursuer and his wife. Nevertheless I think that some

inconvenience was proved, not only on the journeys where the car caused trouble but also in the repeated

need to take it into Edinburgh Audi for attention. The only authority dealing with the assessment of

damages for a defective car that was brought to my attention was the sheriff court decision in Smith v

Park, 1980 SLT (Sh Ct) 62, when £75 was awarded. That sum must obviously be increased substantially

to allow for inflation, and I think that some further increase is appropriate in the present case to allow for

the very substantial inconvenience suffered. In all the circumstances I think that a total of £500 should be

awarded under this head.

[43] Further claims are made for the loss caused by the lack of integrity of the engine, depreciation for the

period when the pursuer had no effective use of the car (31 May 2006 to 28 October 2007), and

replacement of the communication hub. For the defenders it was submitted that the loss caused by the

integrity of the engine, which was not expressly mentioned in the pleadings, could only be recoverable if

the car were shown to be in a materially worse position than if no work had been carried out by Edinburgh

Audi. Evidence on this matter was given by Mr Bathgate, who expressed the view that the reconstruction

of the engine would have an adverse effect on the car; the reconstructed engine would not have been put

together under factory conditions, which are much better than those available in a garage, and

consequently would not have been as good as the engine in its original form. He gave evidence that the

effect on the value of the car would be in the region of £3,500, which is the amount claimed by the

pursuer. In my opinion the pursuer has established this amount. While it is not expressly referred to in the

pleadings, it arose out of evidence to which no objection was taken. Moreover, the work carried out on the

engine resulted directly from the major fault that the car exhibited. The claim for depreciation, which was

made (on the hypothesis that loss should have been mitigated on or immediately after 8 October 2007) for

the period from 31 May 2006 to 8 October 2007 and amounted to £5,575, was also based on the evidence

of Mr Bathgate. It was clear from the evidence of the pursuer and his wife that they failed to obtain

effective use of the vehicle for the period from May 2006 onwards. This resulted from its defective

condition. The fact that the fault had not been identified and rectified was not in any way attributable to

the pursuer. Consequently I consider that this head of claim is justified. Once again I am of opinion that

the claim was due to the pursuer's inability to obtain effective use of car for a substantial period; it is

therefore attributable to the breach of contract. Finally, the pursuer claims £650 for replacement of the

communication hub. This part of the claim was not disputed by the defenders if it was found that there

was a breach of contract. I have found that there was a breach of contract, and I accordingly consider that

this claim is justified.

[44] On the foregoing basis, the sums due are as follows. £124 is due in respect of the examination at

Stirling Audi, with interest of £28, calculated to mid-January 2010. £450 is due in respect of storage costs

to 14 January 2010. Interest on that sum amounts to £90. Wasted insurance and tax amount to £2083 and

£210 respectively, in each case for the year from June 2006 to June 2007. Interest on those sums amounts

to £499.92 (8% for the three years from January 2007 to January 2010). Damages for inconvenience

amount to £250. £3,500 is due in respect of the decline in value of the car owing to incompetent remedial

work; a further £5,575 is due in respect of depreciation; and £650 is due in respect of replacement of the

communication hub. Interest is not claimed specifically on those sums. The total of the foregoing sums is

£13,459.92, which is the sum that I will award by way of damages.

Further procedure

[45] For the reasons discussed in paragraph [37], I intend to give the pursuer an opportunity to make

further representations. If he decides not to do so, I will sustain the defenders' second and third pleas in

law (the second only in relation to rejection), repel the pursuer's first and second pleas in law, and refuse

decree of declarator that the pursuer was entitled to reject the car. I will further sustain the pursuer's third

and fourth pleas in law, repel the defenders' first, second and fourth pleas (the second in relation to the

damages claim only), and pronounce decree for payment of the sum of £13,459.92 by way of damages;

the latter sum includes interest to January 2010.