Southern Fruit Growers Ltd
Refrigeration Systems (the engineers)
1. I think the court would find a clear breach of maintenance contract in respect of failing to inspect the plant by the engineers.There was a written contract between the parties(see enclosure 2) that the engineers would carry out the inspection and would provide a certificate that the refrigeration plant is in good operating condition . Therefore, the company paid the engineers $ 1,5oo in accordance with clause 1 of the maintenance contract.
2. The terms in the contract were express on which the engineers had agreed to carry out the inspection. One of the terms was the company would notify the engineers in writing of intention to load to inspect the company’s refrigeration plant at least three weeks before. As a result, the company notified the engineers by letter of its intention to start loading the storage chambers before three weeks (see enclosure 3), which was on 28 september 2002. The engineers acknowledged receipt of that letter but letter failed to inspect the plant. Therefore this is a clear breach of express term of the maintenance contract.
3. It is unlikely that there would be a complete breakdown of the refrigeration plant due to a valve stuck in the heat exchanger if the inspection of the plant would have carried out by the engineers. Clearly, the default would have identified by them and could have taken necessary steps to repair it. Therefore, their failing led the company incur loss . Although the company submitted a claim to its insurers for the loss it had suffered , the insurers repudiated liability as a result of a breach of special conditions 2 and 3 of the insurance policy which was entirely engineers default.
4. I think the loss company had incurred by selling their pears due to the sudden rise in temperature in the storage chambers would be a reasonable claim against the engineers as the company had minimised the loss as much as they could by choosing the right option to sell it. The company had further suffered loss due to the unsaleable bramley drops. It might be a difficult situation for them to establish liability as the engineers might argue that the loss suffered as a result of the labour force which at that time was engaged on picking bramley drops had to be redeployed on grading and packing pears is not reasonably forseeable.
5. In my opinion, they do not have any satisfactory defence although they might have partial defence to reduce the amount of damage. Further, there is no clear indication who had repaired the refrigeration plant when its brokedown so I would need more information to suggest on the specific issue.
I think there is a good chance to establish liability against the engineers for breach of the maintenance contract.
6. I think that Southern Fruit Growers Ltd would be able to recover damages for the loss of selling pears and the waste of bramley drops. I do not find there is any problem of remoteness in respect of pears, but it might be argued that the unsaleable bramley drops were too remote. However, I think this argument would not succeed. As the company’s labour force had to redeploy on grading and packing pears which was at that time engaged on picking bramley drops, the bramley drops deteriorated and became unsaleable. Therefore, it is clear that the loss is foreseeable.
7. I advise accordingly that a claim should be pursued against the engineers for their breach of contract in failing to inspect the plant and that it has good prospect of success.