England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
CIVIL DIVISION
ON APPEAL FROM WALSALL COUNTY COURT
(Mr Recorder Millington)

		The Royal Courts of Justice The Strand London Friday 12 October 2001

Friday 12 October 2001

1. LORD JUSTICE MANTELL: PLM (Redfearn) makes glass bottles for the drinks trade including such firms as Malibu, K-Cider and Archers. It has plants in Sweden, Norway, Germany and at Barnsley in Yorkshire. Very often drinks of the sort mentioned will come in bottles made of coloured glass. PLM has made bottles of coloured glass in the past and for all I know continues to do so. However, a cheaper way of achieving much the same effect, rather surprisingly to me, is by painting the outside of the bottles with the desired colour.
2. In 1994 or even earlier PLM was minded to install equipment for painting bottles at its Barnsley plant. To that end it approached Electropaint Ltd, a company which specialises in designing and supplying automated painting systems. In due course Electropaint entered into a contract with PLM to supply a system (or, more precisely, a production line) which would pass the virgin bottles sequentially through cleaning, painting and drying processes. It was also necessary for there to be other lines carrying the bottles on to the conveyor on which these various processes were to be carried out and then to lift them off and remove them afterwards.
3. Electropaint approached specialist subcontractors to carry out the work. It invited a company called Marwel to tender for the task of supplying what I shall call the main production line and the necessary systems for cleaning, painting and drying, and a company called Meco Pak AB to tender for the task of supplying the loading and unloading equipment together with a device by which the equipment could be made to synchronise with the main production line.
4. There had been, previously to the introduction of Electropaint into these proposals, some discussions between Meco Pak or an associated company and PLM. That had produced an offer, or a proposal, dated 27 March 1993 which is found at the first page of the bundle of documents supplied for this appeal.
5. That letter describes what it was that the company then engaged in negotiations, Lys Pac (which for all practical purposes became Meco Pak), was offering. Under the heading "Loading", it reads as follows:

"The loading conveyor consists of a standard clambelevator bringing the glasses up to a level of about 2 meter.

The glasses are then conveyed to the loading elevator.

At the infeed of the loading elevator there is a special infeed conveyor, which will synchronise the infeed with the pinchain of the oven. The conveyor consists of two parts one with two straight rollerchains and one with a dog chain. The two parts overlap each other. A feedworm transfers the glasses from the rollerchain to the dogchain, tacking it in to each dog."

6. The letter then goes on to describe how the matters were to proceed until the unloading stage was reached, and then continues:

"The glasses will be picked up by the clambelevator by means of 2 meter leaning infeed and brought up to a level of about 2 meter.

The glasses are then conveyed to a clambelevator bringing them down onto the existing conveyor."

7. There is further detail as to the control system and how timing was be achieved so as to allow the synchronisation mechanism to harmonise with the pin chain which another sub-contractor was to install. But, importantly, the offer was based upon technical specifications which are included on the second page and which include the tolerances within which the system was to operate.
8. That offer was picked up at a later stage, and after the contracting parties had become, respectively, Electropaint taking over from PLM and Meco Pak taking over from Lys Pac. But the offer which we find there being reproduced, at page 21 and following of the second bundle, was to the same effect. It describes the system in much the same terms as had previously been put forward to PLM and includes the technical specification which, it might be thought, was critical to the offer. That allowed for tolerances of plus or minus 1 mm within the opening diameter of the glasses which were to be subjected to the process. It is common ground that at a later stage, before the contracts were concluded, that part of the specification was amended to allow for a tolerance of 1.5 mm.
9. The offer was eventually accepted. It is not necessary to refer to the terms of the acceptance, it is enough simply to say that in the first place it is to be found at page 228 of the bundle and, by way of final confirmation, at pages 360-361. So it was that contracts were entered into between Electropaint and Marwel and between Electropaint and Meco Pak on the basis of the work for which each sub-contractor had tendered. In due course, both systems were provided. There were other difficulties, but for present purposes it is only necessary to note that the lines bringing in and taking out the bottles -- that is to say, that part of the system designed and provided by Meco Pak -- did not synchronise satisfactorily with the the main production line provided by Marwel, thus resulting in delays and losses to PLM which PLM sought to recover from Electropaint.
10. Electropaint blamed Meco Pak. It claimed that it was Meco Pak's responsibility not only to supply a synchronisation device, as the terms of the contract expressly required, but also to ensure that the device harmonised with the equipment which was to be supplied by Marwel. Accordingly Electropaint sought to pass on to Meco Pak its liability to PLM. It also stopped payment to Meco Pak, which led Meco Pak to sue. Electropaint counterclaimed.
11. The action came on for hearing in January 2001 in the Walsall County Court before Mr Recorder Millington, sitting as a Deputy Judge of the County Court, who found for Electropaint on the claim and the counterclaim, having identified the key question as being, "whether synchronisation between the equipment provided by Meco Pak and Marwel was the responsibility of Electropaint as main project manager or Meco Pak who had contractual obligations with Electropaint to supply a synchronisation device." Meco Pak now appeal the learned deputy judge's order on the basis that his finding that it was "incumbent upon Meco Pak to obtain all necessary information from either Electropaint or Marwel on the performance data of the Marwel conveyor" was, at best, left insufficiently explained or, at worst, was unwarranted by the evidence which he had received.
12. It had not occurred to me before listening to oral submissions from Mr Ramsden (who appears on behalf of the appellant) that one of the issues which the learned judge was required to decide was whether or not the documents, on a proper construction, provided expressly for and limited the obligations of Meco Pak. It has been submitted to us, and we are shown that it was submitted before the judge -- albeit not contained within the pleadings, and only submitted before the judge in the form of a written submission supplied after the conclusion of the oral hearing -- that the documents, properly construed, simply required Meco Pak to provide a system which was capable of being synchronised or harmonised with the main production line, subject always to that production line operating within certain tolerances, those tolerances being the ones to which I have already referred in outlining the background to this appeal. It is said that on a true construction of those documents the judge was bound to consider and to determine whether or not there had been an express term in the contract which simply required Meco Pak to provide a device in, all other respects satisfactory, which would operate with the conveyor belt supplied by Marwel, provided Marwel's conveyor belt was capable of operating within the specified tolerances, those tolerances forming part of the contract between the parties.
13. If that argument had been at the forefront of the appellant's submissions before the judge, I find it surprising that there is no reference to it at all in the judgment and, indeed, if it was the main plank upon which the appellant was relying, that the matter had not been pleaded in any shape or form. In the event the learned judge proceeded upon the basis that it was not being contended by either party that there was an express term covering the main issue which he had identified. Instead he allowed himself to be seduced (so the appellant would say) by the evidence given at the hearing (the factual matrix so-called) into the conclusion which appears at paragraph 16 of his judgment:

"It follows that in my view Meco Pak bore contractual responsibility for designing and installing equipment properly synchronised with the Marwel conveyor line and that they failed to discharge this by providing equipment namely a synchronisation device which was unfit for the purpose for which they knew it was provided."

14. In arriving at that conclusion, he had regard to the matters which he outlines in paragraph 15 of his judgment, including the observation that Meco Pak was either aware of the characteristics of the conveyor belt to be supplied by Marwel, or, if it was not, that it had ample opportunity to find out what they were.
15. Subject always to him having failed, as it is submitted, to deal with the main thrust of the appellant's case at trial, it seems to me that the conclusions which the judge reached were available to him on the evidence as presented. After all, Meco Pak was the designer of a sophisticated electronic system. It knew that it had to be made to work with a rather cruder piece of equipment supplied by Marwel. It was in the best position, or perhaps it was the only one in a position, to ensure that the two did harmonise in such a way as to allow the system to operate satisfactorily. On that basis, although perhaps it is not spelled out quite as clearly as one might have wished, the judge's conclusions would appear to me to be justified.
16. The only question, therefore, which arises in this appeal and which causes me concern is whether or not the judge was at fault in failing to address the argument which has now been presented to this court and which does find a passing reference in the written argument which was submitted after the conclusion of the trial. It is, I am sorry to say, apparent to me that, although I must accept that it was advanced in the limited way which I have described, the argument cannot have been placed at the forefront of Meco Pak's submissions. It was not something that was pleaded. It was not something that finds expression, other than in the place to which I have made reference, and it was certainly not a matter which was considered -- at all, so it appears -- in the learned judge's judgment. On that basis, should the appellant be permitted to succeed on a matter which, as it appears, was not argued between the parties and which was not pleaded? In my opinion the appellant should not succeed on that basis, and accordingly I would dismiss the appeal.
17. There is another aspect to the appeal upon which we have not been addressed, and that is with regard to the form of the learned judge's order. It appears that he gave judgment to Electropaint both on the claim and on the counterclaim. Mr Ramsden, I think in writing if not orally, has submitted that there ought to have been judgment for the claimant (that is to say Meco Pak) on the claim and judgment for Electropaint on the counterclaim, that being the manner in which the matter had been presented to the learned judge. That would have certain further consequences. Not having heard argument upon that particular matter, I would prefer to reserve my position. Otherwise I would dismiss this appeal.
18. LORD JUSTICE LATHAM: I agree.
19. LORD JUSTICE SIMON BROWN: I too agree, and add only this. At one stage of the argument it seemed that the appellant's best case throughout had been the very simple one that it had contracted to supply a system to a given tolerance of plus or minus 1 mm, and that such an express term was inconsistent with the implication of a further term under section 14(3) of the Sale of Goods Act to the effect that its system would be reasonably fit for its purpose, namely to marry up with Marwel's conveyor, however that conveyor was to work (and of course at the time of the appellant's own contract, the conveyor to be supplied by Marwel was still to be contracted for). On this basis, its claim would on its face have succeeded, since it did supply a system at least to the tolerance specified, whereas in the event Marwel's conveyor required a tolerance apparently of as much as plus or minus 15 mm.
20. The plain fact is, however, that this case, strong and simple as at first blush it appears, seems never to have been pleaded or argued in quite that way, even in the appeal documents and skeleton arguments before us. Indeed it is right to say that it had escaped each member of this court until, I think, we ourselves crystallised it in the course of the hearing.
21. I have come to conclude, however, that the real reason why such a case never came to be put is because, on true analysis, it is in any event flawed. Everything that happened in the course of trying to make the appellant's synchroniser or control system work after the initial installation belies its entitlement simply to say, "We met our contractual obligation to supply a system to a plus or minus 1 mm tolerance, we bear no responsibility beyond that." Rather, as Mr Ramsden acknowledges, the 1 mm tolerance to be found in the contractual document slipped to 1.5 mm in the course of subsequent discussions, and we were furthermore shown the transcript of his expert's evidence which indicates that the appellants had in fact been expecting to have to meet a tolerance of plus or minus 9.5 mm. I therefore conclude that it remained open to the judge to approach the case as he did and to find, as he did, that the term of fitness was indeed to be implied under the statute; a term which in the event, of course, was plainly then breached. Essentially, as I recognise, that restates much of the reasoning already given by Lord Justice Mantell.
22. Accordingly, for these reasons, this appeal is dismissed.
ORDER: Appeal dismissed with costs