Warning for retailers: the curious case of Phillip Lloyd Jewellers and a lost diamond

The facts

The brief facts are that Mr. Hare purchased a rare yellow diamond from PLJ, and on a later date his girlfriend, Ms. Claffey, returned with him to choose a ring setting. PLJ arranged for the stone to be set, and in February 2018, Ms. Claffey collected it, and after wearing it only two or three times, the gem stone came away from the ring and was lost somewhere at Victoria Station, London.

Mr. Hare alleged that the stone had not been properly set. PLJ denied the claim and submitted that the diamond had been lost as a result of heavy wear and lack of care by Ms. Claffey. They even adduced expert opinion in support.

The law

The relevant law is to be found in the Consumer Rights Act 2015 (“CRA”), Part 1 of which deals with a consumer’s statutory rights in respect of contracts for goods. A consumer has the right to receive goods that are of “satisfactory quality” (Section 9(1) CRA).

The quality of goods includes their state and condition, and in this case their fitness for the purpose for which goods of that kind are usually supplied. Other factors relevant to satisfactory quality are:

• appearance and finish;
• freedom from minor defects;
• safety;
• durability.

The Judgment

In the PLJ case, Judge Parfitt, sitting in the Central London County Court, ruled that the ring supplied was not of satisfactory quality. Beyond Ms. Claffey removing some fluff with her nail, there was no evidence that she had mishandled the ring, and the Judge determined that in order to meet the satisfactory quality test, a diamond ring must be sufficiently robust to withstand every day wear without the diamond falling out. The accepted evidence was that the stone was lost because the upper holding part of one of the claws had come off.

What's the lesson for retailers?

A retailer has the duty to ensure the quality of the product, it is not the duty of the customer to question or test the quality. The law imposes a requirement of satisfactory quality on the trader, which cannot be excluded under contract (Section 31 CRA). Be warned that the retailer of high value/luxury goods could, as was the case for PLJ, face a hefty penalty.

The lesson for retailers when dealing with high value items is that the trader must ensure that rigorous quality control measures are in force. If the retailer implements such measures, it is unlikely that the PLJ scenario will arise, but if so, then evidence can be adduced to show that the ring was of satisfactory quality when the customer took it away.  So on a balance of probabilities it was more likely that the consumer did mis-treat the ring after the sale thereby causing the defect.

Those retailers who do not manufacture their goods, but act purely as the vendor of another’s goods and/or those who offer no fitting/styling/adjustment type services then it will be prudent to ensure, so far as it is possible, an indemnity clause within the contract of purchase with the supplier. A consumer can often choose to pursue the supplier (perhaps under a guarantee) but his statutory rights lie against the retailer, who is accordingly at risk.