England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (LEEDS DISTRICT REGISTRY)
MERCANTILE COURT
HIS HONOUR JUDGE MCGONIGAL
(Sitting as a Deputy High Court Judge)

		Royal Courts of Justice Strand, London, WC2A 2LL
		2nd April 2004

Lord Justice Auld:

1. This is an appeal by the claimants, Mr and Mrs Bramhill against the decision of His Honour Judge McGonigal, sitting as a Deputy Judge of the High Court in Leeds Mercantile Court of 5^th March 2003, in which he dismissed their claim against the defendants, Mr and Mrs Edwards for rescission or damages for misrepresentation and/or for breach of the implied warranty of satisfactory quality under section 14 of the Sale of Goods Act 1979 in respect of their purchase from Mr and Mrs Edwards of a second-hand motor-home or, as it is known in North America, a recreational vehicle ("RV"). Mr and Mrs Edwards also cross-appeal by way of a respondent's notice seeking to uphold the Judge's order on alternative grounds.
2. The Judge found that Mrs Edwards was not a party with her husband to the sale of the Dolphin to Mr and Mrs Bramhill and on that account dismissed the claim against her. Although Mrs Edwards is named as a respondent to the appeal, there is seemingly no appeal against that finding.

The facts

3. The motor-home in question was manufactured in and imported into this country from the United States of America under the make and model name of "Dolphin". It is a large vehicle, about the size of a normal single decker bus, being 34 feet in length and 102 inches wide. That width exceeds the maximum permitted by regulation 8 of the Road Vehicles (Construction and Use) Regulations 1986 ("the Regulations"), which provides that the over-all width of a vehicle (other than for example a refrigerated vehicle) must not exceed the equivalant of 100 inches.
4. The appellants, Mr and Mrs Bramhill were motor-home enthusiasts. Mr Edwards, closely assisted by Mrs Edwards, was a dealer in this country of motor-homes, specialising in vehicles that he imported from North America. He conducted much of his trade at shows all round the country, at which dealers in American motor-homes displayed their wares to owners of and enthusiasts for such homes.
5. Mr Edwards imported the Dolphin in question from the United States in 1998 and put it on his stand at a show in Malvern in May 1999. Mr Bramhill saw it there and was keen to buy it. He returned a day or two later, on a Sunday, with Mrs Bramhill and some friends, one of whom was Mr Crane. According to Mr and Mrs Bramhill, and Mr Crane, both Mr and Mrs Edwards made representations as to the width of the Dolphin, namely that its maximum was 100 inches. Mr and Mrs Bramhill, in their evidence, said that, when they were looking at the vehicle in the presence of Mr and Mrs Edwards, they noticed a spacious feel to the interior, and Mrs Bramhill commented that it was a "slide-out", that is, that is a motor-home one side of which could be slid out when it was stationary so as to increase its width. According to them, Mr Edwards corrected her, saying "No, it's a 100 inch and perfectly legal", adding that he would not import motor-homes of a width of 102 inches inches because they were illegal. Mr, but not Mrs, Bramhill, also said that Mrs Edwards made similar representations.
6. With the agreement of Mr Edwards, Mr and Mrs Bramhill parked the motor-home that they were going to trade in part-exchange alongside the Dolphin, and moved into the latter for a few days before the purchase. Clearly they had ample opportunity to measure the Dolphin if they had, for any reason, wished to do so. But there is no suggestion that they did measure it or that they had or expressed any concern at that stage about its compliance with the Regulations.
7. There was, in addition, evidence from Mr Brown, who, like Mr and Mrs Bramhill, was an American motor-home enthusiast, that when he looked at the Dolphin on Mr Edwards' stand at that Malvern show, Mr Edwards said to him that "it was 100 inches wide and perfectly legal for use within the UK".
8. Mr and Mrs Edward denied making any such representations, either to Mr or Mrs Bramhill or to Mr Brown. However, it is important to note, given the Judge's approach to this issue in his judgment, that it is agreed that there was some discussion between the Bramhills and the Edwards at the Malvern Show on the Sunday about the spacious feel of the interior of the Dolphin.
9. At all events, Mr and Mrs Bramhill agreed shortly afterwards, in June 1999, to buy the Dolphin. On 10^th June 1999 they decided to buy it a price of £61,000, with a cash payment of £31,000 and trading in their then motor-home, which, for the purpose they agreed at a value of £30,000. On Mr Bramhill's evidence, he knew at that time that the maximum width permitted in this country for such a vehicle was 100 inches.
10. Over the next six or seven months Mr and Mrs Bramhill used the vehicle, taking it around the country; and they made some minor modifications to it
11. It was not until January 2000 that Mr Bramhill, apparently prompted by Mr Brown, measured the width of the Dolphin and found it to be 102 inches. He spoke to Mrs Edwards about it, and she wrote to him stating that the United Kingdom Authorities had permitted its importation and registration for use on the roads of this country and that its width would have been checked as part of the processes of obtaining those permissions. Whether this information allayed Mr Bramhill's concern is not clear on the Judge's findings. However, he does not appear to have persisted at that stage with any complaint or expression of concern to Mr or Mrs Edwards on the matter.
12. Mr and Mrs Bramhill continued to use the Dolphin on the roads for a further four or so months, still without further mention as to its width to Mr or Mrs Edwards. In April 2000 they took it to a show in Peterborough, where Mr Edwards had a stand. Mr Bramhill spoke to him, expressing interest in exchanging the vehicle for anther model that Mr Edwards had for sale. It was not until 18^th April, shortly after that visit, that Mr Bramhill first wrote to complain about the width of the vehicle, maintaining that he had bought it "on the understanding that it was a legal 100 inches not an illegal 102 inches". Later in April he telephoned Mrs Edwards expressing interest in exchanging the Dolphin for yet another model that her husband had or could obtain for sale, one that also happened to be 102 inches wide. Nothing came of that expression of interest.
13. By May 2000 Mr Bramhill had clearly resolved that he no longer wanted to keep the Dolphin, allegedly because of its excessive width. He consulted solicitors and complained vigorously to Mrs Edwards about it at that year's Malvern show. In June he drew the matter to attention of the Vehicle Inspectorate who informed him that the vehicle did not comply with the Regulations and that use of it on the roads in this country "could result in prosecution". After a further abortive attempt – this time at the Newark show in July 2000 – to persuade Mr Edwards take the Dolphin back in part exchange for the purchase of another motor-home that Mr Edwards had for sale, Mr Bramhill commenced these proceedings, initially for misrepresentation only, seeking rescission and damages in the alternative.

The issues

14. The appeal and the cross- appeal raise the following issues:

i) whether Mr and Mrs Edwards misrepresented to Mr and Mrs Bramhill before their purchase of the Dolphin that it complied with the maximum width permitted by United Kingdom law for the vehicle, namely 100 inches;

ii) whether the Dolphin at the time of sale was of satisfactory quality in accordance with the term implied by section 14(2), when read with (2A) of the Sale of Goods Act 1979 ("the 1979 Act");

iii) whether, if the motor-home, by reason of its width, was in breach of that implied term, section 14(2C)(b) of the 1979 Act disentitles Mr and Mrs Bramhill from relying on it, because they examined it before buying it and their examination should have revealed its unlawfully excessive width; and

iv) the measure of damages, if any, for any proved misrepresentation and/or for breach of the statutory implied term as to satisfactory quality

15. At the start of the trial, Mr and Mrs Edwards conceded, through their counsel, Mr David Fletcher, that the maximum width of the Dolphin was 102 inches and that it was, therefore, in excess of the maximum permitted width of 100 inches permitted by the Regulations, and that its wheel arches were not capable of modification so as to reduce its width to that maximum. It was, therefore, common ground at the trial that the vehicle could not be driven lawfully on the roads in this country. However, Mr and Mrs Edwards relied on what Mr Fletcher described as the "Nelson touch" defence, namely that the relevant authorities turned a blind eye to such minor infringement of the Regulations.

Misrepresentation

16. Mr and Mrs Bramhill's case under this head was that Mr and/or Mrs Edwards, in order to induce them to purchase the Dolphin, negligently misrepresented that its maximum width was 100 inches, that is within the permitted maximum, when it was at least 102 inches. They claimed rescission of the transaction, return of the purchase price and damages for distress and/or loss of enjoyment and consequential losses. Alternatively, they claimed damages representing the difference between the contract price of £61,000 and its market value at the time of the transaction, which they claimed was nil, or the difference over a year later between that price and its market value in the United States.
17. Mr and Mrs Edwards, whilst acknowledging that the Dolphin was wider than the 100 inches permitted by the Regulations, denied that they had represented it was 100 inches wide, or that they had made any representation at all as to its width.
18. On this issue, the Judge preferred the evidence of Mr Edwards to that Mr Bramhill, and, to the extent to which Mrs Edwards and Mrs Bramhill supported their husbands' respective accounts, he preferred the evidence of Mrs Edwards. As to Mr Crane and Mr Brown, he concluded that they, like the Bramhills, had persuaded themselves in discussions about the matter before and after the start of litigation that Mr Edwards had said much more about the width of the Dolphin at the Malvern show in May 1999 than in fact he had said. But the Judge concluded, contrary to all their accounts, that Mr Edwards had made a representation about the width of the vehicle, but only as to its interior width and unaccompanied by any reference to the maximum permitted width. Accordingly, he found that there was no misrepresentation. This is how he explained and expressed his findings on this issue in paragraphs 14, 28 and 29 of his judgment:

"14. I am satisfied that on the Sunday of the Malvern show in May 1999 there was a discussion about the width of the Dolphin but it is clear from the evidence of all those involved in that discussion that, at least initially, the subject matter of that discussion was the spaciousness of the internal layout of the vehicle. "

"28. I find ….that in May 1999 Mr Edwards did tell Mr and Mrs Bramhill that the Dolphin was 100 inches wide. The statement that the Dolphin was 100 inches wide was made in the context of a discussion about the spacious feel of the interior. The exterior width of the main body of the Dolphin is 2360 mm [102 inches] at its widest. It is the wheel arches which make the vehicle exceed the permitted maximum; the wheel arches are irrelevant to the internal space."

29. … in response to Mrs Bramhill's enquiry as to whether the Vehicle was a 'slide-out' model, Mr Edwards replied, " … no, it's a 100 inch … and the beauty of it is that can be driven on a car licence …" … it was a statement about the interior width of the vehicle, not a statement about the width of the vehicle at the wheel arches and not a statement directed to the question whether it was of a legal width. As a statement about its interior width it was not incorrect."

19. Mr Craig Moore, on behalf of Mr and Mrs Bramhill, maintained that the Judge's finding of no misrepresentation was perverse in disregarding the evidence, not only of Mr and Mrs Bramhill, but also that of Mr Crane and Mr Brown. He submitted that no judge, properly directing himself to the evidence, could have reasonably concluded that Mr or Mrs Edwards had made any representation as to the interior, as distinct from the exterior, width of the Dolphin. He pointed out that the only issue as to width canvassed on the pleadings, in evidence and in submissions at trial related to the maximum exterior width of the vehicle, which was the only relevant measure for the purpose of the Regulations. He maintained that, on the evidence, the Judge should have found that the representation he found had been made related to the exterior width of the motor-home and was, therefore, false and actionable.
20. Mr Fletcher's response was that this was an issue of fact on which the Judge has made a finding against Mr and Mrs Bramhill after hearing all the material witnesses, and that there is nothing perverse about it.
21. In my view, there is no substance in this ground of appeal. First, as to the relative credibility of the Bramhills and the Edwards, this was essentially a matter for the Judge. None of the other evidence or inferences that Mr Moore sought to draw from it are sufficient to undermine his finding, still less to the extent of rendering it perverse. Nor can I see any basis upon which this Court could substitute its own and a different conclusion from that reached by the Judge on this critical issue as to what was said before contract about the width of the vehicle. The fact that the Judge's finding was not that for which either side had contended is no bar to its acceptability, if, on the whole of the evidence before him going to that issue, including the acknowledgement by Mr and Mrs Edwards that there was talk about the spacious feel of the vehicle, a picture emerged which, on his view, produced a more probable version than that of either side. I do not see why he should not have found it as a fact. A judge is not a prisoner of the rival factual contentions of the parties before him; he does not have to find one or the other or, failing that and depending on where the burden of proof lies, fall back on a failure to discharge it. Accordingly, I would dismiss this ground of appeal.

Section 14 of the 1979 Act

22. I should start my consideration of this issue by setting out the material terms of section 14 of the 1979 Act:

"(2) Where the seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality.

(2A) For the purposes of this Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances." [my emphasis]

"(2B) For the purposes of this Act, the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of the goods –

(a) fitness for all the purposes for which goods of the kind in question are commonly supplied,

(b) appearance and finish,

(c) freedom from minor defects,

(d) safety, and

(e) durability.

(2C) The term implied by subsection (2) above does not extend to any matter making the quality of goods unsatisfactory –

(a) which is specifically drawn to the buyer's attention before the contract is made,

(b) where the buyer examines the goods before the contract is made, which that examination ought to reveal, …

…"

23. There were two respects in which Mr and Mrs Bramhill claimed that the Dolphin was in breach of the statutory implied term of satisfactory quality. The first was that, by reason of its width, it was uninsurable at the time of the purchase in June 1999 because it was in breach of the Regulations; and second, that they could not drive it on the roads in the United Kingdom without committing an offence for which they could be prosecuted.
24. Mr and Mrs Edwards, whilst acknowledging that the Dolphin exceeded the maximum permitted width, maintained that the excess was so small as to be immaterial, that the vehicle and others like it of the same width imported from North America were insurable, that the authorities knew of their breach of the Regulations and turned a "blind eye" to it – the "Nelson touch".
25. Mr and Mrs Edwards' alternative case under section 14 was that the sale document expressly provided agreed that the Dolphin was "sold as seen", seemingly a reference to section 14(2C)(b) of the 1979 Act, which excludes the implied term of satisfactory quality where the buyer examines the goods before sale and the examination ought to have revealed the matter rendering them unsatisfactory.
26. Finally and in the further alternative, Mr and Mrs Edwards argued that, if they were found to be in breach of the statutory implied term, it should be treated as a breach of warranty, not of condition, because the breach was so slight, and therefore remediable in damages, not rescission.
27. I should add, purely as a matter of record, that it was not pleaded or argued before the Judge that the contract was tainted with illegality or that public policy should in some way affect the outcome of the dispute on this issue, in particular as to the existence of a United Kingdom market for vehicles in excess of the maximum permissible width. Mr Moore sought nevertheless in the closing minutes of the appeal to develop such an argument independently of the effect, if any, of illegality, on the marketability of goods - an endeavour that the Court rejected. It did so, not only because these issues had not been pleaded or canvassed in evidence or argument before the Judge, but also because it considered them immaterial to the essential question before him, namely as to marketability of the Dolphin.
28. The Judge held that there would have been a breach by Mr Edwards of the statutory implied term, not because of uninsurability of the Dolphin, but because its unlawful width exposed anyone who used it on the roads in this country to what a reasonable man would consider an unacceptable risk of prosecution, applying the test of satisfactory quality in section 14(2A). However, he held that that, by virtue of section 14(2C)(b) of the Act, the Bramhills were not entitled to rely on that term because their examination of the vehicle before the purchase ought to have revealed the defect.
29. Mr and Mrs Bramhill maintain that the Judge should have held that the statutory implied term was breached on the ground of uninsurability as well as of perception of risk of prosecution, and they challenge his disapplication under section 14(2C)(b) of the statutory implied term.
30. The pattern in argument at trial and in the submissions on appeal has been to consider the issue of insurability first and separately from that of the perception of risk of prosecution. But, in my view, looked at through the eyes of the reasonable person as required by section 14(2A), the issue as to insurability flows from that of illegality and cannot sensibly be considered separately from it. I shall accordingly deal with the arguments under both heads, but in the reverse order from that taken so far.

The "Nelson touch"

31. As I have indicated, Mr and Mrs Bramhill's case was that the Dolphin was not of satisfactory quality because they could not drive it on the roads in the United Kingdom without committing an offence for which they could be prosecuted. Mr Edward's case was that, as the authorities turned a blind eye to the breach, the illegality had no effect on the quality of the vehicle.
32. The Judge set out his approach to this issue in the following terms in paragraph 38 of his judgment:

"If wide American motorhomes can be properly and effectively insured, the only issue is whether the risk of prosecution for having such a vehicle on the road in breach of Regulation 8 leads to the conclusion that a reasonable person would not regard such a vehicle as of satisfactory quality or fit for purpose. There was no suggestion in this case that the Court should treat the non-compliance with [the] … Regulations as a matter of public policy; the case was put on the commercial basis that the non-compliance meant that the vehicle was not satisfactory quality. The main defence is that a reasonable person would not regard an American motorhome exceeding the maximum permitted width as not of satisfactory quality because the risk of any prosecution is non-existent or negligible. "

33. The Judge then proceeded to make a number of findings on the evidence before him. First, he found that, before and after June 1999, an increasing number of American motor-homes in excess of the maximum permissible width under the Regulations had been imported into and were in use on the roads in this country. He noted that neither the Customs and Excise on importation nor the DVLA on registration had taken any point about the lawfulness of their width, and there was no known instance of prosecution on that account under the Regulations. In addition, he suggested that it was plain from a debate in a Standing Committee of the House of Commons in June 1998 that the Government was well aware that, as a result of differences in North American and European standards, there was non-compliance in a number of respects with United Kingdom Regulations and that, for the time being at any rate, the Government was prepared to live with it. As he put it in paragraph 39 of his judgment:

"The tone of the debate suggests that the attitude of the Government to that particular non-compliance with UK regulations was that it was a regrettable inconsistency between the rules here and in the USA that ought to be sorted out in favour of allowing North American imports."

34. The Judge, mindful that the issue of satisfactory quality had to be judged at the time of the contract in June 1999, considered evidence derived from specialist magazines over that period, indicating that 102 inches wide American motor-homes were being imported into this country and used here by enthusiasts who knew of their non-compliance with the Regulations. This is how, in paragraph 40 of his judgment, he reached that conclusion:

"The question of satisfactory quality and fitness for purpose has to be judged as at June 1999 when the Claimants purchased the Dolphin vehicle. At that date fewer wide bodied vehicles had been imported than is the case now. There were articles in the American RV Magazine for December 1998 and in American Motorhome Club magazine for January 1999 saying that 102 inches wide vehicles were too wide to be legal on the roads in Britain and Europe. There are also in evidence from such magazines advertisements from the period prior to June 1999 advertising 102 inch wide vehicles for sale in this country. The evidence indicates that many American motorhomes are sold to enthusiasts and that the magazines to which I have referred are designed to be read by such enthusiasts. I infer, therefore, that by June 1999 wide bodied American motorhomes were being sold to purchasers who knew that such vehicles did not comply with the … Regulations. There is no evidence that any buyer has refused to buy a wide bodied motorhome on the grounds of non-compliance with the …. Regulations. But the question is whether a reasonable person knowing of the illegality would regard the vehicle as not of satisfactory quality. This depends on their perception of and attitude to the risk of prosecution. It seems to me that reasonable people could hold either opinion. I cannot say that a person who regarded that risk as unacceptable was not a reasonable person. I find, therefore, that a reasonable person knowing of the breach of the regulations would regard such a vehicle as not satisfactory. I reach a similar conclusions as to fitness for purpose."

35. Mr Edwards, by his cross-appeal and independently of his entitlement to rely on the Judge's finding in his favour on the section 14(2C)(b) defence, asks this Court to set aside that conclusion and to substitute a finding of no breach of the implied term in this respect as well as in relation to insurability. Mr Fletcher, in his submissions, had no quarrel with the Judge's findings on the evidence as to the authorities' tolerance of the breach of the Regulations in this respect, only with his conclusion as to its effect on the quality of the vehicle within the meaning of section 14(2A). He submitted, by reference to that test, that a reasonable person who would have regarded the Dolphin as of satisfactory quality presupposed that such a person was "fully acquainted with all the material background facts", namely: that in June 1999 there were in use on the roads in this country a significant number of imported motor-homes of an illegal width; that such illegal use had not led to any prosecution under the Regulations or otherwise; that the authorities were turning a blind to the illegality; and that such vehicles were insurable here. On assumed knowledge by a potential buyer of such facts and on the Judge's own findings on the evidence as rehearsed in paragraph 40 of his judgment, Mr Fletcher described as illogical or perverse his conclusion that, in June 1999, a reasonable person would have regarded the Dolphin as of unsatisfactory quality.
36. Mr Fletcher added, with reference to the way the Judge expressed himself in paragraph 40 of his judgment, that if he was unable to reach a conclusion as to whether a reasonable person would or would not have regarded the risk of prosecution as unacceptable, then he should have dealt with the uncertainty by holding that Mr and Mrs Bramhill had failed to discharge the burden of proof of that issue. In effect, he submitted, the Judge failed to decide the question whether, on the evidence and all relevant circumstances of the case, a reasonable person would have regarded the quality of the Dolphin as satisfactory.
37. Mr Moore's response was that there was no evidence, in particular from any enforcement agencies, on which the Judge could properly have found that the responsible authorities had consciously decided to ignore the breach, only the unsupported assertions of Mr Edwards. He said that the only evidence before the Judge came from the letter from the Vehicle Inspectorate to Mr Bramhill stating that such a breach "could result in prosecution". Accordingly, he maintained that no judge, properly directing himself to the evidence before him, could reasonably have concluded that the so-called "Nelson touch" had been made out, and that, in any event, it was a matter on which the Judge did not appear to have made a clear finding. He added that, as Mr Edwards had raised this issue by way of defence, the burden was on him to prove, on a balance of probabilities, that the authorities had adopted a policy of taking no enforcement action in respect of such breaches, and that on the evidence they had not discharged that burden. Similarly, he challenged the findings of the Judge as to the increasing and widespread prosecution-free use such vehicles on the roads over the material period.
38. In my view, there was ample evidence, albeit of a secondary and circumstantial nature, to which the Judge referred in paragraphs 38, 39 and 40 of his judgment, on which he was entitled to conclude that the authorities had turned a blind eye to wide-spread breaches of the Regulations and that that was well-known to enthusiasts for such vehicles in this specialist trade. There is also force in Mr Fletcher's submission that the Judge misinterpreted or misapplied the test as to satisfactory quality in section 14 (2A), which, for convenience I set out again here:

"For the purposes of this Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances." [my emphasis]

39. This objective test was introduced to the 1979 Act by the Sale and Supply of Goods Act 1994 in response to the Report of the English and Scottish Law Commissions (Cm) 137, May 1987; see paras 3.19-3-26. Its purpose is seemingly to focus on the attitude of a "reasonable person" to the quality of the goods in question rather than on that of a person who would be willing to accept or buy them. However, as the learned editors of Benjamin's Sale of Goods suggest in its sixth edition at paragraph 11-049:

"… the reasonable person must be one who is in the position of the buyer, with his knowledge; for it would not be appropriate for the test to be that of a reasonable third party observer not acquainted with the background of the transaction."

I respectfully agree with that construction and with Mr Fletcher's succinct formulation of it, that, although the test is objective, the reasonable buyer must be attributed with knowledge of all relevant background facts. As Mr Fletcher submitted, such facts in this case would include that: 1) in June 1999 a significant number of vehicles of greater width than permitted in this country were in use on its roads; and 2) the authorities were turning a blind eye to that illegal use.

40. The question for the Court is whether the Judge's conclusion that a "reasonable person knowing of the breach of the Regulations would regard such as vehicle as not satisfactory" can stand alongside his evidence-based findings of such facts – in short, whether his conclusion can be stigmatised on this issue as perverse. I have to say that, as I read for the first time the Judge's reasoning in paragraph 40, I was surprised, given his rehearsal of and comment on the material evidence, that he found for Mr and Mrs Bramhill on the basis that he did.
41. It follows from the Judge's reasoning, if correct, that the Dolphin was of unsatisfactory quality within the statutory test. However, his reasoning was equally capable of leading to it being of satisfactory quality within the test, since he found that a reasonable man could take either view. That reasoning could not be faulted in many legal contexts, for example as to the duty of care – Bolam – or in judicial review – Wednesbury. But is not apt in this context where a court is required to decide whether a claimant has proved on a balance of probabilities that a person had a certain state of mind, namely whether a reasonable person in the position of the buyer and with his knowledge of the background facts "would" not regard the goods as unsatisfactory. In my view, the Judge's error lay simply, but importantly, in overlooking the requirement that, where a decision on the facts of and/or on the inference to be drawn from them is evenly balanced, it is for the party making the assertion to prove it. Here, Mr and Mrs Bramhill were asserting that the illegality coupled with the vulnerability of prosecution to it rendered the Dolphin of unsatisfactory quality within the meaning of section 14(2A). To the extent that the question of proof crosses the line between, on the one hand, matters of primary fact and inference and, on the other a question of judgment, it becomes a burden of persuasion. It is possible too that the Judge, in allowing for different attitudes to the question by different reasonable men, overlooked the important point made in Benjamin's Sale of Goods that such men must be credited with knowledge of the transaction and its background.
42. Accordingly, I am of the view that the Court should set aside the Judge's conclusion on this issue. I should add that, whatever the propriety or impropriety of the Judge's reasoning at the end of paragraph 40 of his judgment, I consider his conclusion so contrary to the weight of the evidence as to entitle and require the Court to set it aside and substitute a conclusion in Mr Edward's favour on this point.

Insurability

43. As to insurability, the Judge found that there was no breach of the implied terms since, on the evidence before him, the Dolphin could be properly and effectively insured for use on the roads in this country and could have been so insured in June 1999. He held that neither non-compliance with the Regulations as to maximum width or the fact that the width of the motor-home was wider than normal vehicles on United Kingdom roads was material to risk, and that, therefore, there was no obligation on Mr and Mrs Bramhill, or on anyone to whom they might want to sell it, to volunteer to potential insurers breach of the Regulations in this respect.
44. The main evidence before the Judge on this issue was that of Mr Pope, a tied agent for the NFU, called on behalf of Mr and Mrs Edwards. His evidence, as correctly summarised by the Judge in paragraph 35 of his judgment, was to the following effect. He did not consider the width of a motor-home such as the Dolphin to be material to risk, but he, personally, did regard its non-compliance with the law as material to the risk and would decline cover. However, the NFU had indicated to him that it would not decline a claim or seek to avoid a policy for material non-disclosure on that account because it did not regard such illegality as material to risk or to premium. He was unable to explain adequately why he, personally, regarded the illegality, as distinct from the fact of the vehicle's greater than normal width, as material to the risk. He added, however, that he had effected insurance on up to 400 American motor-homes and that a significant number of them were wider than permitted by the Regulations and that, although he had now, as a result of his involvement in this case, drawn the NFU's attention to the effect of the Regulations, they had not instructed him to refuse cover of vehicles in excess of the permitted width.
45. The Judge's findings and conclusion were, as he acknowledged, based on limited evidence, all of which related to a period after June 1999. This is how he expressed them in paragraph 37 of his judgment, which, though firmly stated at the beginning of the paragraph, are less sure at its end:

"In the light of this limited evidence I conclude that non-compliance with the … Regulations so far as the width of the motorhomes is concerned is not a matter material to risk or to premium, that such breach does not, therefore, need to be disclosed to motor insurers and that failure to do so would not be a material non-disclosure entitling insurers to avoid the policy. The fact that the vehicle is wider than normal vehicles is also not material to risk and premium but the evidence is that disclosure of this does not prevent insurance being obtained. If such a vehicle has an accident it could only be its width, and not its illegality, which could be a material factor. In any case under the Insurance Industry Code of Practice any policy with consumers can only be avoided if the circumstance which has not been disclosed is material to the accident giving rise to the claim. The evidence of Mr Pope was that the insurers to whom he spoke were unaware of the … Regulations. If such Regulations were material to risk or premium I would expect insurers to have informed themselves of such regulations. In any case an insured does not need to disclose to insurers any circumstance which is known or presumed to be known to the insurer. I conclude, therefore, that American motorhomes in excess of the maximum permitted by the … Regulations can be properly and effectively insured for use on the roads in this country and could have been so insured in June 1999. This conclusion is based on the limited evidence as to insurance practice and more evidence might have led me to reach a different conclusion on the question whether the breach of the Regulations requires to be disclosed."

46. Mr Moore submitted that the Judge's finding on this issue was contrary to the weight of the evidence and that his reliance on Mr Pope's somewhat confused and internally inconsistent evidence was misplaced. He maintained that, considered over-all, the evidence was to the effect: 1) that a person seeking cover with knowledge of the unlawful construction of his vehicle was under a duty, not only to disclose its nature, but also the fact of its illegality; 2) that no reasonable insurer, when confronted with that knowledge, would have accepted the risk; and 3) that Mr and Mrs Bramhill, when they made such full disclosure, as they were bound to do, were unable to insure the motor-home.
47. Mr Fletcher on the other hand, submitted that the Judge was entitled, on the evidence before him, to conclude as he did, and that, in addition, as a Mercantile Court Judge, he was well equipped and entitled to rely on his own knowledge and experience of insurance law and practice as to the duty of disclosure of material facts. He observed that the whole basis of Mr and Mrs Edwards's case on this issue was that the illegality was tolerated by the authorities and that there was plenty of circumstantial evidence before the Judge to that effect and that, perhaps more importantly, the trade regarded it as a technical illegality and no more. He conceded that Mr Pope's evidence was, as he put it, "a bit of a muddle". But, he said, it was for the Judge to exercise his own judgment in the matter, which he did in paragraph 37 of his judgment.
48. In my view, there is no basis upon which the Court can take any different view on this issue from that of this experienced Mercantile Judge, however limited the direct evidence on the matter or imprecise Mr. Pope's account in the witness box. The general thrust of his evidence, as well as of the circumstantial evidence to which the Judge had recourse under this heading and that of perception of vulnerability to prosecution, was that in reality and assuming disclosure of the illegality, insurability of such vehicles was not a problem.

The section 14(2C) defence

49. Mr and Mrs Edwards asserted as part of their case, as eventually pleaded, that Mr and Mrs Bramhill bought the Dolphin "as seen at the Malvern Show" and subject to any defects visible on inspection - assertions that the Judge took as a pleading of a defence under section 14(2C)(b) of buyer's inspection. If I am correct in my view that the Judge wrongly found the Dolphin to be of unsatisfactory quality on the illegality issue, this issue is academic. However, in deference to counsel's submissions, I shall deal with it.
50. As Mr Fletcher noted in his skeleton argument, such a defence did not flow naturally from Mr and Mrs Edwards originally pleaded case that there had been no mention of the width of the vehicle. On such a case, if it had been accepted by the Judge, there would have been no reason for Mr and Mrs Bramhill to measure its width. The question of inspection only became a relevant issue in the event of the Judge finding, as he did, that there had been a representation as to width, albeit as he found, only as to internal width. On such a finding, given Mr and Mrs Bramhill's case that they were aware before the contract that a 102 inches wide vehicle breached the Regulations, the issue arose whether Mr Edwards representation as found by the Judge should have prompted them to measure the width of the vehicle.
51. As I have said, the Judge concluded that Mr Edwards was entitled to overcome the finding of unsatisfactory quality by reliance on the defence provided under section 14(2C)(b) that Mr and Mrs Bramhill ought to have noticed its excessive width before entering into the contract. This is how he expressed that conclusion, at paragraph 41 of his judgment:

"… The evidence is that before the sale of the Dolphin was concluded Mr and Mrs Bramhill had parked the motorhome they were giving in part exchange alongside it at Mr Edwards' premises and had moved into the Dolphin. The evidence is that Mr and Mrs Bramhill lived in the Dolphin for a few days before buying it. I am satisfied that Mr Bramhill had an adequate opportunity to examine the Dolphin. His evidence is that when the question of its width was raised by Mr Brown in January 2000 he measured the Dolphin and found that it was 102 inches wide. His evidence is that in June 1999 he knew that a vehicle 102 inches wide was wider than permitted by the … Regulations. I conclude that an examination of the vehicle in June 1999 ought to have revealed its width and that the width was not revealed simply because Mr Bramhill did not measure it. Accordingly, the terms implied by section 14(2) and (2B) do not extend to the question of the width of the vehicle. The claims under Sections 14(2) and (2B) therefore fail."

52. Mr Moore challenged the Judge's entitlement to deal with the section 14 (2C)(b) argument because it had not been pleaded as part of Mr and Mrs Bramhill's case and they had not relied on it before him. He added that, even if the Judge was entitled to regard it as covered by the Bramhills' pleading, it had not been made out on the evidence that they were reasonably required to measure the width of the motor-home before agreeing to buy it, irrespective of the description of the transaction in Mr and Mrs Edwards' pleaded case as a "trade sale" and as to the vehicle having been "sold … as seen".
53. Mr Fletcher sought the permission of the Court to amend the respondents' notice, to uphold the Judge's finding under section 14(2C) under sub-paragraph (a), in addition to sub-paragraph (b), namely that the matter constituting the unsatisfactory quality had been "specifically drawn to the buyer's attention before the contract … [was] made". He submitted that, on the strength of Mr Bramhill's evidence to the Judge that, when he bought the Dolphin, he knew that the maximum permitted width of such a vehicle in this country was 100 inches, coupled with the Judge's finding that Mr Edwards had represented the interior width to be 100 inches, he had specifically drawn to Mr and Mrs Bramhill's attention that the external width must have been greater than permitted. It is clear from the evidence, Mr Fletcher submitted, that Mr and Mrs Bramhill examined the Dolphin more than once before buying it and, on the Judge's findng as to the nature of Mr Edwards' representation, should have appreciated without measuring the vehicle that it exceeded the maximum permissible width.
54. Given the Judge's finding, which I would uphold, that Mr Edwards made a representation as to the interior width of the Dolphin and that that should have alerted Mr and Mrs Bramhill to the fact that the over-all width was in excess of the permitted limit, this argument merges with that on the primary issue on which, as I have said, Mr Edwards should succeed. It also overlaps with the defence under section 14(2C)(b) of buyer's inspection, on which, as I have said, I would also, if necessary have upheld the Judge's finding. For that reason, with which Thomas and Jacob LJJ have agreed, the proposed amendment to the respondent's notice is unnecessary, and we do not allow it.

Damages

55. The only remedy arising for consideration in the appeal was that of damages, Mr and Mrs Bramhill having abandoned their claims to rescission on their application to this Court for permission to appeal. If I am correct in my conclusions on the issue of liability, the issue of damages falls away. However, again in deference to counsel's submissions on the matter, I shall deal with it, but shortly. The question for the Judge, assuming a breach of the statutory implied term as to satisfactory quality, was whether there was any evidence to support a conclusion that the Dolphin was at the material time of no value or of less value than the price Mr and Mrs Bramhill paid for it. As part of that question, the primary issues before the Judge were as to the relevant date for valuing the motor home and its value at that time. Mr and Mrs Bramhill called no appropriate expert evidence as to the value of the Dolphin. Mr Kutzner, whom they did call on the issue, was not, and did not claim to be, an expert on the retail market in the United Kingdom.
56. The Judge held that, had liability been established, he would have found that Mr and Mrs Bramhill had not proved any damage. He found, at paragraphs 43 and 44 of his judgment, that there was no evidence that the fact that the Dolphin exceeded the maximum permissible width under the Regulations had had any effect on its value. In so finding, he appears to have proceeded on the basis that Mr and Mrs Bramhill could not establish liability for breach of the implied term in section 14, and regardless of the assertion in evidence of Mr Kutzner that, assuming an informed market knowing of its illegality, the Dolphin had no value in the United Kingdom market. He said:

"43…The difference between the value of the Dolphin in June 1999 and its value in April 2000 was because it was a vehicle 10 months older and had more than 5,000 miles more on the clock; in January 2000 it had more than 5,000 more miles on the clock and was 7 months older. It does not appear, therefore, to be appropriate that damages should assessed in April or January 2000. There appears to me to be no reason to displace the normal rules for assessment of damages, namely at the date of the breach whether the claim was for misrepresentation or for breach of the implied term. There is no evidence that in June 1999 the value of the Dolphin was less than the Claimants paid for it assuming a sale with knowledge of the non-compliance with the … Regulations. If the breach of the Regulations was a matter of concern to a purchaser, that purchaser would not buy the vehicle at all; such breach had no effect on value. I would not, therefore, have been able to award the Claimants any damages even if they had established liability.

44.The Claimants argued that, because the Dolphin was wider than permitted by the … Regulations, there is no market for it in this country. It is clear from the evidence of Mr Edwards and from the documents that since before June 1999 there has been a market in such vehicles in this country and that such market has been increasing."

57. Mr Moore's first submission was that the Dolphin had no saleable value in the United Kingdom at the time of sale or at any material time thereafter. He complained that the Judge's finding that there was no evidence that the Dolphin was of less value in June 1999 than Mr and Mrs Bramhill had paid for it was predicated on the failure of the claim on liability. There is some truth in that comment, but, in the circumstances, it is hard to see how else the Judge could have dealt with the question, since there was no evidence upon which he could rely to support any lower or nil figure, even on the basis of his somewhat ambivalent approach to to his conclusion on illegality in paragraph 40 of his judgment (see paragraph 35 above). The fact is that there was no evidence before the Judge on which he could have fixed a lower or nil value of the Dolphin at any time between the purchase in June 1999 and over a year later when Mr and Mrs Bramhill commenced these proceedings. That is so, even on an assumption that they had succeeded on liability. It is not enough simply to assert, as Mr Moore did in argument, that, on the assumption of an informed market knowing of the illegality, it is a reasonable assumption that the vehicle had no market value in the United Kingdom because it could not be driven here.
58. Mr Moore also complained about the Judge's seeming failure to take account of, or even mention, Mr Kutzner's evidence that the Dolphin had no value by reason of its illegality. However, as I have said, the status of that evidence was little more than an unsupported assertion by a person who was not an expert in the United Kingdom market.
59. Mr Moore's submissions led him to submit, in reliance on a decision of Waller J (as he then was) in Naughton v. O'Callaghan [1990] 3 All E R 191 that the Judge ought to have found that the best available market for the motor-home was the United States where it could be driven lawfully and that it was not until September 2000, shortly after the earliest date when all the experts had an opportunity to inspect it, that they ought reasonably to have attempted to mitigate their loss by seeking to sell it there. He said that there was evidence before the Judge that, at that date, the value of such vehicles in the United States and the United Kingdom were broadly comparable and that the Dolphin's price in the United States would then have been significantly lower than the contract price.
60. Mr Fletcher's response was that, even if the Judge had correctly concluded that the Dolphin was of unsatisfactory quality because of a reasonable perception that its use involved a risk of prosecution, it would have been unrealistic to disregard the United Kingdom market for such vehicles notwithstanding its knowledge of their illegality. As to Mr Kutzner's evidence that the vehicle had no value in the United Kingdom market, he submitted that the Judge was entitled to disregard it, since it was unexplained and unsupported. And, he submitted, rightly in my view, that the Judge was correct for the reasons he gave to apply the normal rule and consider any putative damages as at the time of the putative breach. In short, he submitted that Mr and Mrs Bramhill, even on the assumption of a correct finding by the Judge of liability under section 14, had failed evidentially to establish any loss.
61. In my view, Mr Fletcher's submissions on this issue must prevail. The Judge had no evidence on which to find that the vehicle had any less value in this country, even assuming, contrary to his finding, that there was some breach of the statutory implied term as satisfactory quality. The appropriate time for identifying and assessing any possible damages were, for the reasons given by the Judge, the date of the putative breach of contract. Naughton v. O'Callaghan is of no assistance to Mr and Mrs Bramhill, since its facts are not in point here. They knew of the breach of the Regulations long before they took any action to rescind the contract in reliance on it. And, as the Judge found and they now appear to accept by their abandonment in the appeal of that remedy, their delay and affirmation of the contract disentitled them to it.
62. Accordingly, for all the reasons I have given, I would dismiss Mr and Mrs Bramhill's appeal.

Lord Justice Thomas:

63. I agree.

Lord Justice Jacob:

64. I also agree.
Order: Appeal dismissed. Respondent's cross-appeal allowed. Costs postponed to a later date. (Order does not form part of the approved judgment)