Court of Appeal
Civil Appeal No. 6 of 1991
19, September, 1991.
KENNETH ST. L. HENRY, P.
NICHOLAS J. O. LIVERPOOL, J.A.
SIR JAMES A. SMITH, J.A.

Mr. Denys Barrow S.C. for the Appellants.
Mr. Oscar Sabido for the Respondent.

Sale of Good - Whether warranty was given of fitness of truck - Applicability of Sale of Goods Act, Chapter 214 - Defence of set-off - When is defence of set-off possible under the Sale of Goods Act - No finding of fact by the trial court whether warranty was given - Matter sent back to High Court for retrial.

J U D G M E N T

The facts of this case are relatively simple. By writ dated 16 November, 1990, the Respondent who is a businessman, claimed against the Appellants who run a trucking service, the sum of $5,000.00 and interest being the balance alleged to be due from the sale of a truck on 13 September, 1990. The Appellants by their defence (a) denied that this sum was due (b) pleaded that subsequent to the date of purchase they had expended monies exceeding $8,000.00 for repairs and labour to a defective hydraulic jack on the truck, after assurances by the Respondent that the truck was in good condition; and (c) in the alternative, they claimed to set off the sum of 48,000.00 expended by them, against the Respondent's claim.

The trial of the action commenced on 21 February, 1991 and was concluded on 2 May, 1991. With the leave of the court the defence was to be filed forthwith after the action commenced. It was eventually filed on 3 May 1991 after the conclusion of the case. This is a procedure which seems as strange as it is irregular. During the trial the issue between the parties crystalised around the allegation of the second Appellant that the Respondent had given her an assurance that the truck was in good working condition, and the statement of the first Appellant that the Respondent had told the second Appellant that she could repair the defect and deduct the sum incurred from the balance due.

The Respondent's evidence was that on 13 September, 1990 he had sold the truck to the Appellants for $30,000.00. The Appellants prepared a sale agreement, and all three parties signed this agreement which provided that the sum of $25,000.00 would be advanced to the vendor and the balance of $5,000.00 was "to be paid by the Purchasers to the Vendor within a reasonable time of completion of a land filling contract by the Purchasers.". Ownership and possession of the truck was transferred to the Appellants on receipt of the advance of $25,000.00, but that up to 21 September, 1990 he had not received the balance of $5,000.00 despite making 10 to 11 telephone calls to them about the balance. He said that the Appellants never told him anything about the malfunctioning of the truck since they bought it. In cross-examination he denied that he was told immediately after the purchase that there was a problem with the truck or that he had told the Appellants to go ahead and fix it and let him know what it cost, or to deduct the cost from the balance due to him. It does not appear that the matter of the assurance which he is supposed to have given to the Appellants that the truck was in good working condition was put to the Respondent in cross-examination.

The first Appellant Enrique Murillo testified that on the first occasion that the truck was put to work after it was purchased, he checked it and discovered that it would not lift and dump material which was in the body of the truck. The second Appellant (his wife) telephoned the Respondent but got no reply as he was then in the United States of America. When the Respondent returned 1 ½ months later he returned the call, and when the second Appellant told him about the lifting problem he told her "to go ahead and fix it and deduct from the $5,000,00". He gave no evidence about an assurance having been given by the Respondent at or before the time of sale, that the truck was in good working condition.

The second Appellant's evidence in so far as it is relevant is as follows:-

"We signed the agreement on Friday evening. The truck manifested the problem the first time we took it out i.e. on Monday. Until Monday I or my husband knew then the truck had this problem. Mr. Cruz assured me that the vehicle was in good condition. I did not get anybody to examine the vehicle. He mention nothing of the Jack. He said that he had just bought it and that it was in perfect condition. After we discovered that the truck was not dumping the material, I investigated the problem. The Jack was not lifting and off loading the material. It was visibly seen to everybody. I went to the site and saw it for myself. I made efforts to have the Jack repaired. I replaced the pump twice, the first time I spent $1,200 to rebuild the pump that was in the truck. In all I spent about $8,000 plus on the repairs of the Jack. I have some of the receipts. I have 7 receipts and I wish to tender them to Court, Marked Exh. H.R. 1 - 7. After installing a new Jack and a new pump, it works better. I am claiming my disbursements as a set off."

Unlike her husband she did not state that the Respondent told her to repair the truck and deduct the repairs from the balance due.

The only other person who gave evidence was one Javier Berbey Garcia, who was called by the Appellants. His testimony related largely to the malfunctioning of the lifting mechanism of the truck which he stated existed prior to and after the sale to the Appellants.

The learned trial judge found no merit in the general denial of the Appellants that the sum of $5,000.00 was due to the Respondent, and we agree. Whether or not the Appellants did receive the assurance from the Respondent thus entitling them to claim for breach of warranty, or were entitled to set off their expenditure on repairs, it seems quite- cleal that the balance of $5,000.00 remained outstanding on the purchase price of the truck.

The learned judge then went on to deal with the assurance mentioned in paragraph 2 of the defence, and the claim to set-off contained in the third paragraph of the defence in the following manner:

"The second ground is equally or, in fact, more defective, unmeritorious and unsustainable in law than the first. According to it the Defendants expended monies exceeding $8,000.00 for repairs and labour to a defective hydraulic jack on the dump truck they bought from the Plaintiff "after assurances by the Plaintiff that the said truck was in good working condition". The fact that the Defendants rely for the defence of set-off is not that they expended monies on repairs and labour after assurance by the Plaintiff that they could set-off those expenses but of his assurance prior to or at the time of sale that the truck was ingood working condition. So then, the defence of set-off is not founded upon any agreement or upon a variation of the agreement to sell which gave rise to and established the liability of the Defendants but upon a unilateral wish of the Defendants that the monies expended by them in the repair of the truck subsequent to their taking possession of it should be set-off against the balance of the purchase price which they have agreed to pay the vendor within a reasonable time. It is as if though the Defendants are seeking in effect the benefit of the statutory set-off for damages for breach of warranty of quality - rule enshrined in section 53(l)(e) of the Sale of Goods Act, 1893 (Imperial); section 54(l)(a) of the Sale -of Goods Act (cap. 214) of the Laws of Belize. Such a "warranty" operable under the Sale of Goods Act will be only under a collateral agreement as to the warranty between the parties or in terms of the conditions prescribed for implied warranty as to quality or fitness for any particular purpose in section 16 of the sale of Goods Act (cap. 214). These, however, have no application in this case. In regard to this defence raised and relied on by the Defendants, I find that there is no set-off properly grounded in law that could be availed of by the Defendants and therefore the Plaintiff is entitled to have judgment entered.

The third ground does not reveal any separate or independent ground of set-off which the Defendants can, in any event, raise at all."

He made no finding of fact on the two pertinent issues in the case namely, whether an assurance was given, and whether the Respondent agreed that the Appellants could deduct the sums spent on repairing the lifting apparatus from the balance of $5,000.00 due to him.

Learned counsel for the Appellants argued that there was abundant evidence that the hydraulic lift jack was defective. He stated that he was not relying on the implied warranty contained in s. 16 of the Sale of Goods Act, but on an express warranty which was part of the agreement for sale, (citing the case of Andrews v Hopkinson (1957) 1 Q.B. 229), and that the remedy for this type of case was to be found in section 54 of the Act.

Learned counsel for the Respondent submitted that the learned judge did not accept that an assurance was given to the Appellants by the Respondent, that since there was continuous business between the parties the case of Andrews v Hopkinson should be distinguished, and that in any case no warranty was established by the evidence adduced.

In our view, the sale having been admitted, it fell to the learned trial judge based on the evidence adduced at the trial, having seen and heard the testimony of the witnesses, to make a specific finding on the question whether or not a warranty was given by the Respondent and/or whether the Respondent told the second Appellant that any sums incurred in the repair of the defective lift could have been deducted from the balance of $5,000.00 due to him. This he failed to do.

This court, not having had the benefit of seeing or hearing the witnesses cannot make that determination. In the result the appeal will be allowed, and the matter remitted to the court below to be retried. The costs this appeal should abide the result in the court below.

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