Purchaser of defective diesel car who continued using it post-rejection can continue case for refund

About this case:

• Citation:
  [2024] CSIH 3
• Judgment:
  External link
• Court:
  Court of Session Inner House
• Judge:
  Lady Dorrian

Pursuer and appellant Alan King had made a hire purchase agreement with first respondent Black Horse Ltd via a dealership, Park’s Ayr Ltd. The respondents argued that a common law bar on use of goods post-rejection continued to apply following the commencement of the Consumer Rights Act 2015 and prevented the appellant’s claim. An intervention in the case was made by the Competition and Markets Authority.

The appeal was heard by the Lord Justice Clerk, Lady Dorrian, together with Lord Malcolm and Lord Pentland. Mitchell KC appeared for the appellant, and Thomson KC and MacColl KC for the respondents. Middleton, advocate, appeared for the intervener.

No longer law

The appellant purchased a Jaguar vehicle from the second respondents, with the car itself and finance provided by the first respondents. He intimated rejection of the vehicle on the basis that the diesel particulate filter was defective. In his initial writ he sought declarator that the vehicle was not of satisfactory quality at the date of supply and payment of £35,769.40. While not mentioned in the pleadings, this rejection was done under the terms of the Consumer Rights Act 2015.

Even though he had rejected the vehicle, the appellant continued to use it and make payments due under the contract. On this basis the sheriff granted summary decree of absolvitor to the respondents. The Sheriff Appeal Court affirmed the sheriff’s decision, with both decisions being founded in the proposition that at common law, per the case of Ransan v Mitchell (1845), there was an absolute bar on the continued use of goods after rejection by the buyer.

Counsel for the appellant submitted that the 2015 Act created a comprehensive, UK-wide scheme of consumer rights and remedies which significantly changed the right to reject per the Sale of Goods Acts. The Ransan bar was no longer good law, and the SAC had erred in failing to consider the Act’s full purpose and scope.

For the respondents it was submitted that the statute did not oust the common law. In the absence of terms in the 2015 Act indicating a clear and precise intention to change the common law, that principle continued to apply. In its intervention, the CMA submitted that the 2015 Act created a far more powerful remedy than the old common law one and disapplied the common law right. An absolute ban would hand a decisive advantage to a trader who may wish to avoid paying a refund.

Power imbalance

Delivering the opinion of the court, Lady Dorrian said of the 2015 Act: “In our view it is clear that the scheme of the Act differs in substantial ways from the protection previously offered to consumers. Once rejection is intimated the consumer is unequivocally entitled to treat the contract as at an end, and this applies whether or not the trader accepts the rejection. The power imbalance which previously existed between consumer and trader, in favour of the trader, is thus to a substantial degree inverted.”

She continued: “The arguments for the respondents would result in placing a strict limitation on the consumer’s rights under the Act, and in many circumstances make it impossible for the consumer, who is in the weaker position, to insist in his rejection of the goods. It would return the trader to a position of undue strength and allow a dilatory, or unscrupulous trader, to thwart the consumer’s ability to exercise his statutory rights.”

Explaining the court’s reasoning further, Lady Dorrian said: “The effect would be that the automatic right to refund, which is a strong step forward in favour of consumer rights, would become somewhat illusory, because the effect of a complete ban on post-rejection use would place undue economic pressure on the consumer, the weaker party. It would be artificial not to recognise the practical issues which might arise where the consumer exercised the right of rejection, but the trader refused to engage.”

She concluded: “There is one remaining issue, namely the fact that the appellant has on the pleadings a claim for common law damages for breach of contract. He is entitled to pursue such a claim as well as his statutory claim although he is not entitled to recover twice for the same loss. The damages claim flows from the allegation of material breach of contract, and is a matter for inquiry, which should not have resulted in decree of absolvitor at debate.”

The interlocutor of the sheriff was therefore recalled, and the matter remitted to the sheriff to proceed as accords.