CASE NO: C8/47/2015
IN THE SUPERIOR COURT OF JUDICATURE
IN THE SUPREME COURT OF GHANA
CIVIL APPEAL SUIT NO.J4/43/2013
15TH JANUARY 2014
G.A. SARPONG & CO. )
HOUSE NO. C 301/3 ) PLAINTIFF/RESPONDENT/APPELLANT
KANFLAH STREET, )
SILVER STAR AUTO LIMITED ) DEFENDANT/APPELLANT/RESPONDENT
SILVER STAR TOWERS )
AIRPORT CITY VALLEY )
Facts of the case.
The plaintiff/respondent/appellant, (hereinafter referred to as the plaintiff), a Firm of Legal Practitioners and Consultants elected to buy a brand new C180 Mercedes Benz Salon car from the defendant/appellant/respondent (hereinafter called “the respondent”) in February 2007. The car was bought under a 2 year unlimited warranty. Five months into acquiring the C- 180 Benz, the head gasket cracked. It was agreed between the appellant’s officers and the respondent’s officers that the appellant surrender the C- 180 Benz for another brand new E-Class Benz after paying Euros 15,000 to the respondent subject to a 2 year unlimited warranty. The E-Class Mercedes Benz Saloon car with Registration Number GN 2266Y is the subject matter of this Appeal.
In May, 2008, the car suddenly stopped in the middle of the road on a rainy day at East Legon, and appellant’s officer notified respondent whose agents subsequently towed the car to respondent’s workshop for repairs. The respondent claimed after diagnosis that water had entered the engine compartment and damaged some parts in the engine. The car remained in the workshop of the respondent for three months because respondent claimed it had to import the new parts for the engine.
On August 8th, 2008 the respondent submitted an invoice of GH₵7,498.77 as cost for the repair of the car to Appellant’s insurers. The Insurers paid GH₵6,748.89 (Representing 90% of the total cost of repairs) under the insurance policy to respondent and appellant paid the remaining GH₵748.89 before respondent released the car to the appellant and appellant took delivery of same.
On December 1, 2008, two months after the respondent repaired the car, it broke down again whiles it was being driven by the appellant’s Director on the Korle Bu Mortuary Road on a clear and sunny day. This time round, there was a loud noise beneath the car and after appellant’s official had parked the car off the road, he discovered that all the oil in the car had drained onto the road. The respondent was notified after which its agents towed the car again to the workshop. The appellant was informed through its insurers that the engine of the car was damaged beyond repairs.
Subsequently, plaintiff commenced an action in the High court (Commercial Division) in Accra, against the respondent claiming, inter alia.
a. A brand new Mercedes Benz car (E Class) as replacement for Plaintiff’s damaged car, or in the alternative a refund of the purchase price of the vehicle.
b. Compensation for loss of use of Plaintiff’s Mercedes Benz Saloon Car No. GN 2266 Y
c. Further and/or in the alternative, damages for breach of condition and/or deceit.”
In its Amended Statement of Defence filed on October 19, 2009 respondent denied appellant’s claim and alleged that the cause of the damaged was attributable to the May 2008 incident and that appellant was not entitled to the claims as endorsed on the Writ of Summons. After the trail, the learned trial judge held that appellant was entitled to a delivery to it of a brand new Mercedes Benz car (E-class) as replacement for the damaged car. The court therefore entered judgment in favour of the appellant in terms of relief (a) as endorsed on the amended writ of summons but refused to grant reliefs (b) and (c) thereof.
Dissatisfied with the judgment of the High Court, the respondent appealed to the Court of Appeal, on 17thMay, 2012 affirmed the judgment of the trial court in part, but reversed the order that appellant was entitled to a brand new E-Class Mercedes Benz Saloon car as a replacement for the damaged car. In lieu thereof the Court of Appeal ordered that the appellant was rather entitled to a replacement only of the damaged engine with a new engine under 2 year warranty.
This appeal has been brought at the instance of the plaintiff who is dissatisfied with the Court of Appeal’s holding that the appellant was only entitled to a replacement of the engine and not to a brand new car.
The Grounds of Appeal are that:
“a. The Court of Appeal erred in holding that the Plaintiff was not entitled to a brand new Mercedes Benz E-Class Saloon car but only a replacement of the engines as a result of the two(2) year warranty.
a. Further Grounds of Appeal to be filed upon receipt of the Record of Appeal.”
No further Grounds having been filed the sole ground outstanding in this Appeal is Ground (a).
What is latent manufacturer’s defect?
According to Black’s Law Dictionary (8thed) a hidden or latent defect is defined as “a product imperfection that is not discoverable by reasonable inspection”.
Black’s Law Dictionary (6th ed) defines latent defect as:
“hidden or concealed defect, one which could not be discovered by reasonable or customary observation or inspection; one not apparent on the face of the goods, product or document…Defect which the owner has no knowledge of.”
In US v Lembke Const Co Inc (CA Ariz 786 F 2d 1386-87) the term ‘latent defect’ has been described as ‘one which cannot be discovered by observation or inspection made with ordinary care’. Stroud’s Judicial Dictionary (5th ed, Vol 2, page 663) describes the term ‘latent defect’ as:
“A latent defect is not simply any defect not discoverable through ordinary use and maintenance, but a defect or a flaw, generally in the metal or material itself, which could not be discovered by known and customary test.”
A manufacturer’s defect is defined as “an imperfection in a product that departs from its intended design.” In Parente (Robert A) v Bayville Marine Inc and General Insurance of America (1975) 1 Lloyds Reports 333), it is defined as “a defect generally in the metal or material itself which could not be discovered by any known and customary test”.
In Georgia Hotel Ltd vrs. Silver Star  2 SCGLR, Sophia Adinyira JSC, stated on page 1283 as follows:
In the view of this court, by the mere definition of “latent defect”, it means the defect is a manufacturing defect, which must exist at the time of production and delivery of the product. By being hidden or latent defect both the seller, and most importantly, the buyer, could not detect or be aware of the defect upon reasonable examination at the time of conveyance.
Were there latent defects in the vehicle?
Findings made by the learned trial judge on the strength of the evidence on record, which were affirmed by the court below, are as follows;
i. That the defect on the vehicle engine was latent.
ii. A buyer of a brand new Mercedes Benz E-Class vehicle will not be able to detect a latent defect in the vehicle by ocular examination of the vehicle or with a test-drive.
iii. The buyer will be able to detect such defect only after the contract has been concluded.
iv. It is in the light of (ii) above that it has become a common practice in the automobile industry for the seller to give a warranty that should such a defect manifest itself during the period of warranty, the seller is prepared to either repair the vehicle at no cost to the buyer or if it is a major defect replace the vehicle.
v. There was no evidence that appellant’s G. A. Sarpong Esq., in May 2008 drove the vehicle into a ditch at East Legon as alleged by the Respondent.
vi. The damage to the car in December 2008 had nothing to do with the flooding incident of May 2008.
vii. The defect of December 2008 was not a minor defect but a grave one.
Additionally, the Court of Appeal held that;
viii. The Trial Judge did not proprio motu introduce a case contrary to that put forth by the Appellant as alleged.
ix. The trial Judge did not change the basis of the defence neither did he allocated to Respondent a burden of persuasion on a point Respondent had not pleaded as alleged.
There is thus, much common ground in the decisions of the High Court as well as the Appeal Court in terms of the finding of fact that there was a defect in the engine of the vehicle and that the defect in the vehicle engine was latent, constituting a breach and that the breach was not of a trivial nature. This is what the trial Judge said on the events of 1st December 2008.
“…but first the events in December 2008 whilst he was driving the said vehicle in very clear weather on the Korle-Bu Mortuary Road there was a loud explosion underneath the car. He stopped and thereafter realized that oil was leaking from the vehicle. He informed the Defendants who towed the vehicle to their workshop the next day. On examination the defendant informed the plaintiff through his insurers that the engine was damaged beyond repair. It is this damage that has provoked the present litigation.
It is settled law that an appellate court such as this ought not to disturb findings of fact by two lower courts unless the findings are perverse. Since the High Court and the Appeal Court are agreed on the facts, it is not open to this court to upset or reverse those findings.
However the two lower courts diverge on the question of remedies and award of damages. This court (per Georgina Wood CJ) said in Continental Plastics Engineering Co Ltd v IMC Industries-Technik GMBH  SCGLR 298 that:
“An appeal being by way of hearing, the second appellate court is bound to choose the finding which is consistent with the evidence on the record. In effect, the court may affirm either of the two findings or make an altogether different finding based on the record”
See also Tuakwa v Bosom  SCGLR; Achoro v Akanfela [1995-1996] SCGLR [1996-97] SCGLR 209; Obrasiwa II v Otu. [1996-97] SCGLR 618; In re Krobo Stool (No.1); Nyamekye (No. 1) v Opoku  SCGLR 347; Ababio v Bekoe [1996-97] 392; Barclays Bank Gh. Ltd v Sakari 1996-97 SCGLR 639
As the two courts below are agreed on the facts as itemized above, it is not pertinent to set out the evidence produced at the trial in much detail except to affirm the finding that there were latent defects in the engine of the vehicle.