FITNESS FOR PURPOSE AND PROPER USE
In the recent case of BDW Trading Ltd v Lantoom Ltd [2023] EWHC 183 (TCC), the Court dealt with, among others, whether a term for fitness for purpose can arise via an implied term and whether the supplier can rely on a defence of “proper use”.
Salient facts. In brief, the claimant, BDW Trading Limited (“BDW”) was a housebuilder and undertook the development of a housing development known as Penndrumm Fields in St Martin, Looe, Cornwall ([1] – [2]). The defendant, Lantoom Limited (“Lantoom”), supplied stone for the building ([2]).
Some of the houses for the development used stone supplied by Lantoom as the external leaf of cavity walls, and from 2014 onwards, householders began noticing the stone cracking, spalling and falling away ([4]).
BDW claimed that investigations revealed the stone itself as being the cause of the problems and replaced all the stone with stone from a different quarry. BDW then commenced proceedings against Lantoom ([4]).
BDW’s case. While there was a dispute over whether the contract between BDW and Lantoom was on BDW’s standard terms, or Lantoom’s terms, or a simple contract, BDW’s case was that at the end of the day, there was (1) an express term that Lantoom would deliver walling stone and (2) there were implied terms that the stone would be of a satisfactory quality, and be fit for a particular purpose ([43]).
For this blog, we focus on the discussion in the judgment under the heading “Fitness for purpose”, where the Court considered if there was an implied term that the stone would be fit for the purpose of being used to form the external leaf of a cavity wall ([132]).
What purpose? As is often encountered in disputes over fitness for purpose, there was an issue in the case over what, exactly, was the purpose. As set out in [133] – [142], there were disputes over whether the purpose notified to Lantoom by BDW was that:
The stone was to be used as external walling stone (generally); or
The stone was to be used as the outer leaf of a cavity wall; or
The stone was to be used as cladding.
This issue arose because, on Lantoom’s pleaded case (at [133]) and the evidence given by Mr. Crocker, the Managing Director of Lantoom (at [135] – [137]), there appeared to be a distinction between the cladding of a wall, and the walling (or construction) of a wall.
However, as it transpired, the Court proceeded on the basis that the issue was simply whether the stone was fit for any of the purposes identified (at [143]), though the Court accepted that the stone was to be used to form the external leaf of a cavity wall (at [144]).
Why? The reason is because, as set out in [145] – [146], the references to cladding by Mr. Crocker himself made clear that the stone were to be used in the walls of the houses.
Further, as set out earlier in the judgment at [60] – [61], there was an email sent by Mr. Crocker to BDW which stated that Lantoom could supply “… stone in 100mm bed suitable for external or internal wall cladding…”.
This was important as Lantoom’s own expert, Mr. Bright, agreed that stone supplied as 100mm on bed was “… a product that could form a 100mm wide leaf of a cavity wall, and that there was a widespread practice in the construction industry of building cavity walls with 100mm wide walls, especially the case in Cornwall” (at [148]). BDW’s witness, Mr. Wallace, who is the joint owner of the company operating the quarry from which stone was used by BDW to carry out remedial works, gave similar evidence.
Given the above, the Court took the view that on the evidence, Lantoom was informed that the stone was to be used in the external walls of houses, and on the balance of probabilities, as the external leaf of a cavity wall (at [151]), and hence, there was an implied term as to fitness for that purpose.
Proper Use? The Court then turned to the issue of whether there was a breach. In this regard, we focus on Lantoom’s defence, and specifically, the defence that the stone supplied was “… fit for use and safe “if used properly”…” (at [333]).
In essence, Lantoom argued that the stone supplied should have been used consistently with local practice via (at [338]):
Weatherstuck joints;
A higher quality (or strength) mortar;
Washing the stone before installation; and
The use of Surecav or similar backing) or a minimum thickness of the wall of 250mm.
However, this defence of “proper use” did not succeed.
The Court identified a number of difficulties with what the “proper use” of the stone should have been on Lantoom’s case as Lantoom’s case shifted(see, e.g., [341] – [343]).
Specifically, the Court also identified at [353] – [355] that if the stone was only suitable for use as a walling stone if it was installed in a particular manner, then “… that was a qualification which needed to be made contractually by Lantoom and that the contractual burden of identifying the "proper use", in the sense of the local vernacular, does not pass to BDW.” (at [355]).
This was not something which “one would expect a designer generally to do” as even on Lantoom’s own case, “… the stone requires particular construction methods in order to be suitable and fit for purpose and… what those specific requirements are is not a matter of general knowledge or readily ascertained …” (at [356]).
The Court was careful to caution that this issue is always a question of fact and degree (at [357]).
Hence, the Court found that the burden laid on Lantoom to establish what the proper use was, and on the facts of the case, the evidence was not supportive of Lantoom’s case (at [362]).
The Court also proceeded to consider Lantoom’s case on the weatherstruck joints, mortar, etc., at [363] – [403] and found that Lantoom did not establish its case.
The end result was that the Court found that Lantoom had breached the term of fitness for purpose of use as external walling tone and/or external leaf of a cavity wall.
Observations. In general, fitness for purpose obligations often arise via express terms in the contract. However, fitness for purpose obligations can also arise via implied terms.
Hence, if you have been asked to build / design / supply a particular building / good for a particular project, ask yourself carefully: are you being asked to build / design / supply just in accordance with a set of prescribed specifications, or are you actually being asked to deliver a particular result to meet a particular purpose?
It is important to clarify this issue as part of your contract, as otherwise, you may end up assuming a far greater liability than what you are comfortable with.
Further, if you are asked to supply a particular item, and the item can only be used “properly” in a particular manner and this is not generally known, consider if this is something which you need to flag out to the counterparty.
A failure to do so may mean that, if the product could not be used / there are defects, you may be sued by the counterparty and you may not be able to avail yourself of a defence that the counterparty had failed to use the product properly.
This publication is not intended to be, nor should it be taken as, legal advice; it is not a substitute for specific legal advice for specific circumstances. You should not take, nor refrain from taking, actions based on this publication. Chancery Law Corporation is not responsible for, and does not accept any responsibility for, any loss or damage that may arise from any reliance based on this publication.