Norta Wallpapers v John Sisk Ltd

JudgeKENNY J.:,Henchy J.
Judgment Date01 January 1978
Neutral Citation1977 WJSC-SC 1157
Date01 January 1978
Docket Number(118/1976),[1976 No. 101 SS.]
CourtSupreme Court

1977 WJSC-SC 1157


Henchy J.

Kenny J.

Griffin J.

Norta Wallpapers (Ireland) Ltd.
John Sisk & Son (Dublin) Ltd.

Judgment of Henchy J.delivered the 29th July 1977 [GriffinJ.concurring]


There is only one question to be answered in this appeal. It arises in these circumstances. The employer engaged the contractor to build a factory, specifying that the roof was to be supplied and erected under subcontract by a nominated firm which manufactured and supplied such superstructures. The employer had accepted the proposed subcontractor's tender before engaging the contractor, but it was provided, and so understood by all parties, that the roof would be supplied and erected under a formal subcontract.


Shortly after the main contract was signed, the contractor entered into a formal subcontract with the subcontractor for the supply and installation of the roof Under it the subcontractor agreed to indemnify the contractor against any liability that might arise under the main contract as a result of the subcontractor'sbreach of the subcontract. The employer's engineer had before that vetted the tender for the roof and had made it clear in writing that the formal order for the roof would come from the contractor and be embodied in a formal subcontract. Therefore, the formal subcontract superseded any prior agreement made by the employer or his engineer.


The subcontractor supplied and erected the roof, apparently to the satisfaction of the contractor and the employer's engineer. However, over a year later it began to leak after heavy rain. The matter was sent to arbitration under the contract. The arbitrator found (inter alia) that the roof was unsuitable for its purpose. The roof lights were defective in design. Although complying with the specification, they did not, as they should have done, incorporate an upstand which would keep the cills at least 6" above the roof surface. That defect was held by the arbitrator to be 85 per cent of the cause of the leaky roof.


The arbitrator stated a special case for the HighCourt under s.35 of the Arbitration Act, 1954. Among the questions put in that case was, whether the contractor is liable to the employer for the loss and damage suffered by reason of the defective design of the roof. In the High Court McMahon J. answered that the contractor was not liable under that head. While other matters were adjudicated on in the High Court, it is that single question that is agitated in this appeal which has been brought by the employer.


In all cases of supply and installation by a subcontractor I conceive the law to be that, unless the particular circumstances give reason for its exclusion, there is implied in the contract a term to the effect that the contractor will be liable to the employer for any loss or damage suffered by him as a result of the goods, materials or installations not being fit for the purpose for which they were supplied. The basis for this rule is that while the contractor is thus made primarily liable, he will be able, under the subcontract, to have recourse, by third party procedure or otherwise,against the subcontractor for an indemnity in respect of his liability to the employer.


I do not think there is any dispute about the law as stated thus. The cleavage of opinion arises as to whether the circumstances of this case are such as to exclude an implied term in the contract making the contractor liable for the subcontractor's default. An implied term in a contract to the effect that goods or installations supplied under it will be suitable for their purpose cannot be held to exist unless it can be said to have come within the presumed intention of the parties: G. H. Myers & Co. v. Brent Cross Service Co. 1934 1 K. B. 46, at p.55, approved by all the judges in the House of Lords in Young and Marten Ltd. v. McManus Childs Ltd. 1969 1 A.C.454.


The real question in the present case, as I say, is whether the implied warranty of fitness is excluded in the particular circumstances. It is common ground - at least there is no appeal from the judge's decision to that effect - that the contractor is liable to the employer,under an implied term in the contract, in respect of the defective materials and the bad workmanship employed in erecting the roof. The judge however went on to hold that there was no such implied term in regard to the defective design of the roof lights. He approached the matter in the following way:


"When one comes to deal with the loss and damage sustained by [the employer], due to the fact that the design of the roof lights was defective, there is a new element to be taken into account in considering what warranty ought to be employed, founded on presumed intention of the parties and on reasonableness. In nominating [the subcontractor] to supply the factory superstructure as a systems built unit designed by [the subcontractor] it cannot be said that [the employer] relied upon the contractor's skill and judgment at all in regard to the superstructure. It is clear that [the employer] used [his] own judgment in selecting a subcontractor and the subcontractor's design. The contractor's obligations therefore are analagous to those of a seller under the Sale of Goods Act, 1893, who undertakes to supply goods which are specified in the contract under their trade name. The goods must be of merchantable quality and the contractortherefore is liable for any defect in the quality of the materials used in constructing the goods, or defects of workmanship, but he does not warrant that the goods will be reasonably fit for the purpose to which they are to be applied.


"In the circumstances of this contract [the contractors] were precluded from exercising any skill or judgment as to the fitness for purpose of the factory superstructure provided by [the subcontractor] and therefore the parties cannot be presumed to have intended nor could it be reasonable to require [the contractors] to under-take responsibility for the adequacy of the design of the superstructure. In this case the want of remedy by the employer against the subcontractor for defects in design of subcontract work cannot prevail because of the circumstances and express terms of the contract".


I would approve and adopt that general approach. The modern cases (particularly the decisions of the House of Lords in Young and Marten Ltd. v. McManus Childs Ltd. 1969 1 A.C. 454 and Gloucestershire County Council v. Richardson 1969 1 A.C. 480) show that the liability of a contractor under an implied term in the contract is approximated to the liability of a seller under s.14 ofthe Sale of Goods Act, 1893. Thus he may be liable, as the contractor here is, for bad workmanship done or inferior materials supplied by the subcontractor. But if the subject matter of the employer's complaint is something which under its patent or trade name he has required to be supplied or installed under subcontract, he cannot hold the contractor liable if, because of bad design, it turns out not to be suitable for a particular purpose. If he nominated it under its patent or trade name he has in effect accepted the design as being suitable for the particular purpose. If that be the position here, then the trial judge's reasoning for rejecting the employer's claim against the contractor isunanswerable.


However, I am inclined to think that the defective design of this roof did not simply render it unsuitable for a particular purpose. The arbitrator has held that "the roof has now deteriorated to the extent that, in my opinion, it is not suitable for its purpose". By that he presumably meant that the roof is not fit for thepurpose or purposes for which a roof of that kind is commonly bought, in that it is not rain-proof. If that be so, then it might be held to be wanting in merchantable quality: see per Lord Denning M.R. in CehaveN.V. v. Bremer Handelgesellschaft m.b.H. 1976 Q.B.44. Without more findings than the arbitrator has set out in the case stated, one would not be justified in firmly reaching such a conclusion. But such a conclusion is not necessary for the purpose of deciding this case. Even if the defect in the design of the roof is such as to justify describing it as lacking merchantable quality, a warranty on the part of the contractor that it will not have such a defect should not be read into the contract unless it would be reasonable to do so. As Lord Reid stated in Young and Marten Ltd. v. McManus Childs Ltd. 1969 1 A.C. 454 at p. :


"In my view no warranty ought to be implied in a contract unless it is in all the circumstances reasonable. If authority be required for that proposition I find it in the judgment of the Exchequer Chamber in Redhead v. Midland Ry. Co. (1869) L.R. 4 Q.B. 379 at p.392):"Warrantiesimplied by law are for the most part founded on the presumed intention of the parties and ought certainly to be founded on reason and with a just regard to the interests of the party who is supposed to give the warranty, as well as of the party to whom it is supposed to begiven.""


As to this roof, whether its defect is to be categorised as making it unfit for a particular purpose or as lacking in merchantable quality, I consider that it would be unreasonable to import into the contract an implied warranty by the contractor that the roof which the subcontractor was to supply would be...

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