Dispute Resolution

The recent decision of the Sheriff Appeal Court in Christina Tenant Johnston and Peter Johnston v R&J Leather (Scotland) Limited [2019] SAC (Civ) 1 demonstrates the importance for suppliers to ensure that all rejections of goods from customers are dealt with timeously. An unresponsive seller may be ordered to refund the purchase price and lose the chance to recover the goods.

Facts

Mr and Mrs Johnston purchased a leather suite from R&J Leather (Scotland) Limited (“R&J”). When the suite arrived, it did not meet their expectations. The Johnstons therefore intimated rejection of the suite at R&J’s showroom the following day. They were told to contact R&J’s head office to intimate rejection. They duly did so by telephone and email. Three days later, R&J sent employees to the Johnstons’ home to correct a defective mechanism in the suite rather than to uplift it. The employees left whilst Mrs Johnston was on the phone to R&J’s head office explaining that she wanted the suite to be removed.

The Johnstons went to considerable lengths to try to secure a refund and arrange uplift of the suite. Seven recorded delivery letters and various other attempts at contact went unanswered. Alternative dispute resolution was offered to R&J. The Johnstons even involved their MP. R&J still did not engage.

Mrs Johnston then raised a court action. In the absence of any defence being put forward by R&J, the Sheriff Court made an order for payment in Mrs Johnston’s favour.

Believing that the matter had ended in their favour, the Johnstons decided to give away the suite. R&J then lodged an application to recall the court order. The recalled case eventually proceeded to an evidentiary hearing after which the Sheriff found in favour of the Johnstons.

Proceedings before the Sheriff Appeal Court

R&J appealed the Sheriff’s decision to the Sheriff Appeal Court. The appeal was effectively on one point: – in circumstances where the Johnstons no longer have the suite and so cannot return it, are they still entitled to a refund for rejection of the goods?

R&J’s lawyer argued that on a proper construction of sections 20(5) and 20(8) of the Consumer Rights Act 2015 (“the Act”), the buyer’s obligation to make the rejected goods available to the seller applies without limit of time (and applies irrespective of any intervening developments or the actions of the seller) and the seller’s obligation to refund is conditional upon the goods being available for return.

In response, the Johnstons argued that they had done everything they were required to do to exercise their right of rejection and had given R&J repeated opportunities for the goods to be uplifted.

Decision of the Sheriff Appeal Court

The Sheriff Appeal Court refused R&J’s appeal and held in favour of the Johnstons. The Johnstons were entitled, having properly exercised their right of rejection, to the order granted by the Sheriff. The right was not undermined by the unavailability of the suite. When reaching this decision, the Appeal Court made a number of observations. Notably:

  1.  The argument that there is an unqualified duty, without limit of time, to retain the goods has a superficial attraction (given the wording of the Act) but such an interpretation has the potential to lead to both unfairness and absurdity.
  2.  When a consumer exercises a right to reject faulty goods, there is no duty to return the goods to the seller. All the consumer needs to do is make the goods available to the seller. This imposes an onus on the seller to come and collect the goods.
  3. The duty to make the goods available cannot be construed as without limit of time or unqualified. In considering the nature and extent of the duty to retain goods which have been rejected, the court is entitled to take into account a number of factors, including:
    • the timescale within which rejection was intimated;
    • the practicality of providing storage;
    • the nature, extent and frequency of communications sent by the buyer to the seller;
    • any response, or lack of response, from the seller; and
    • whether proceedings have been raised.

Perhaps unsurprisingly, the Sheriff Appeal Court judgement remarked that “R&J have only themselves to blame for their inability to recover the item”.

Conclusion

This decision deals with facts and issues which are the subject of consumer legislation; however, the factors considered by the court in order to assess the extent of a buyer’s obligation to make rejected good available are potentially pertinent to commercial suppliers who offer their customers a contractual right of rejection. The risk is clear: – a seller that fails to deal with rejections timeously may ultimately have to refund the purchase price even in circumstances where it does not recover the rejected goods.

Ryan Openshaw

Ryan Openshaw

Associate at Brodies LLP
Ryan is an Associate within our dispute resolution and litigation team. Ryan has significant experience in all types of commercial litigation, particularly contractual disputes, professional negligence actions and debt recovery. 
Ryan Openshaw