Kay's Leasing Corporation Pty Ltd v Fletcher
116 CLR 124(Judgment by: KITTO J)
Between: KAY'S LEASING CORPORATION PTY LTD
And: FLETCHER
Judges:
Barwick CJ
McTiernan J
Kitto JTaylor J
Menzies J
Subject References:
Bailment
Hire-purchase
Statutory requirements
Agreements entered into in Victoria
Action brought in New South Wales
Legislative References:
Hire-purchase Agreements Act 1941 (NSW) - s 26C; s 31
Hire-Purchase Act 1959 (Vic) (No 6531) - s 2
Judgment date: 17 December 1964
SYDNEY
Judgment by:
KITTO J
The Court has before it two appeals, each by special leave, the one by the plaintiff and the other by the defendants in an action in the Supreme Court of New South Wales. The parties had stated a special case and by consent had obtained a prothonotary's order, under s. 55 of the Common Law Procedure Act, 1899 (N.S.W.) that the questions of law in the special case be stated for the opinion of the Court. There were five such questions. The order went on to provide (so far as material) that in the event of the fourth question being answered in the affirmative the defendants should pay the plaintiff PD3,134 3s. 5d., and that in the event of the fifth question being answered in the affirmative the plaintiff should pay the defendant PD1,099.
The former of these amounts was the unpaid balance of charges under an agreement by which the plaintiff agreed to lease a tractor to the defendants. The other amount was the aggregate of the payments which the defendants had made to the plaintiff under the agreement. The agreement was dated 22nd June 1960. Under the same date the parties entered into a second agreement whereby the plaintiff agreed, subject to conditions, that the defendants should have an option to purchase such goods of the same general description as the goods described in the first agreement as the plaintiff in its uncontrolled discretion should select, but so that the goods so selected should be of a type, quality and condition at least equal on the date of delivery to the type, quality and condition on such delivery date of the actual goods leased under the first agreement.
The body of the special case seems to have been drafted at a time when the only controversy between the parties was upon the question whether the two agreements taken together constituted a hire-purchase agreement within the meaning of the Hire-purchase Agreements Act, 1941-1957 of the State of New South Wales. This is the inference from statements in the special case in express and unqualified terms that if the agreements together constitute a hire-purchase agreement within the meaning of that Act they are void for non-compliance with s. 26C (2) and s. 31 of that Act. The questions in the special case, however, went further than this. Even if the agreements constituted a hire-purchase agreement within the meaning of the New South Wales Act, there nevertheless remained a question whether that Act applied to them in view of the facts (1) that after the defendants had executed the agreements at the plaintiff's registered office in New South Wales the plaintiff executed them at its principal place of business, which was in Victoria, and (2) that each agreement contained a provision that it should "take effect and be construed" in accordance with the law of Victoria. If the New South Wales Act did apply, the plaintiff was by its provisions disentitled to recover the PD3,134 3s. 5d. from the defendants and the defendants were thereby entitled to recover the PD1.099 from the plaintiff. But if it did not, the corresponding Victorian Act (the Hire-Purchase Act 1959) would have to be considered. The parties did not bother to include in the body of the case any statement that if the agreements formed a hire-purchase agreement within the meaning of the Victorian Act, and that Act applied to them, they were void for non-compliance with one or more of the provisions thereof; but by consent the case was treated before the Supreme Court as if it had contained some such statement.
The questions in the special case dealt with the position under each Act. They were not happily expressed. Although there was in fact no controversy between the parties as to the interpretation of the agreements, the first question asked was whether the law applicable to the interpretation of the agreements was the law of Victoria or the law of New South Wales. The Supreme Court answered: Victoria; but the reasons for judgment showed that the Court intended the answer to resolve a question which in truth was one of interpretation not of the agreements but of the respective Acts, namely whether it was for the purposes of the New South Wales Act or for those of the Victorian Act that it was necessary to decide whether the agreements constituted a hire-purchase agreement. The second and third questions were framed on an assumption that the answer to the first question would determine whether "the law of the contract" was the law of Victoria or the law of New South Wales. They asked, on the alternative hypotheses thus presented, whether the agreements constituted a hire-purchase agreement within the meaning of the Victorian Act (question 2) or a hire-purchase agreement within the meaning of the New South Wales Act (question 3). The Supreme Court answered question 2: Yes; and accordingly found it unnecessary to answer question 3.
With respect, I think that in view of the terms in which the first three questions were expressed it would have been better not to answer them. As framed, they were irrelevant and reflected some confusion of thought. I prefer to put them aside, and to turn to the fourth and fifth questions, namely whether the plaintiff is entitled to recover the PD3,134 3s. 5d., and whether the defendants are entitled to recover the PD1,099. These are in fact the ultimate questions in the case. They must both be answered favourably to the defendants (the fourth No, and the fifth Yes) if ss. 26C and 31 of the New South Wales Act apply to the agreements as together constituting a hire-purchase agreement, for sub-s. (4) of s. 26C and sub-s. (3) of s. 31 of that Act make a hire-purchase agreement void if entered into in contravention of certain provisions of those sections, and each sub-section contains a proviso enacting that all moneys paid by the purchaser under the (void) agreement shall be recoverable as a debt due to him by the vendor. On the other hand, if those sections do not apply but invalidating provisions in the Victorian Act (unspecified during the argument) do apply, then although the fourth question must still be answered No, in favour of the defendants the fifth must be answered No, in favour of the plaintiff; for none of the avoiding provisions of the Victorian Act is accompanied by a provision making moneys paid by a purchaser recoverable by him.
The Supreme Court decided that the New South Wales Act was not the Act to be considered in this case, and therefore answered question 5; No. Their Honours regarded ss. 26C and 31 of that Act as applying only to agreements the proper law of which, according to the principles of private international law observed in New South Wales, was the law of that State; and they held that the proper law of the agreements in question was the law of Victoria because of the express term in each agreement that it should take effect and be construed in accordance with the law of Victoria. With respect, I agree that the New South Wales Act does not apply, but I reach the conclusion for a different reason.
The New South Wales Act speaks of hire-purchase agreements in general terms. It does not specify in what way the generality of its language is to be reconciled with the geographical limitation to which the legislative power of the State Parliament is subject. The necessary reconciliation is not supplied by the provision in s. 17 of the Interpretation Act of 1897 to the effect that references to matters and things prima facie relate to matters and things "in and of New South Wales". The necessary restriction of the operation of ss. 26C and 31 is therefore to be implied or imported upon a consideration of the context and the subject matter. In the Supreme Court it was considered that the principle to be applied was that by which this Court determined cases such as Wanganui-Rangitikei Electric Power Board v Australian Mutual Provident Society. [F5] Such cases have dealt with legislation modifying or making void contractual rights and obligations of specified descriptions; but in each instance the modification or avoidance was enacted as an end in itself and not as a sanction for contravention of statutory requirements. It was held that in order to restrain the seeming universality of the relevant enactment it should be presumed that the intention was to affect only those rights and obligations the discharge of which was governed by the law of the enacting country according to the rules of private international law. The logical appropriateness of the presumption in a case of the kind can hardly be denied. But it was made clear, particularly in the judgment of Dixon J. in the Wanganui-Rangitikei Case, [F6] that the Court was applying a rule which was one of construction only, and that the context or subject matter of legislation might supply a different restriction upon the generality of the language.
Where a provision renders an agreement void for non-compliance by the parties or one of them with statutory requirements, especially where the requirements can be seen to embody a specific policy directed against practices which the legislature has deemed oppressive or unjust, a presumption that the agreements in contemplation are only those of which the law of the country is the proper law according to the rules of private international law has no apparent appropriateness to recommend it, and indeed, for a reason of special relevance here, it would produce a result which the legislature is not in the least likely to have intended. It would mean that provisions enacted as salutory reforms might be set at nought by the simple expedient adopted in the present case of inserting in an agreement a stipulation that validity should be a matter for the law of some other country. In Boissevain v Weil, [F7] Denning L.J. said: "Notwithstanding what was said in Vita Food Products Inc. v Unus Shipping Co, [F8] I do not believe that parties are free to stipulate by what law the validity of their contract is to be determined". [F9] I would respectfully say the same. In the Vita Food Case [F10] the proposition was laid down that the parties to a contract may conclusively determine for themselves what the proper law of the contract shall be, provided that their expressed intention is "bona fide or legal", and provided there is no reason for avoiding their choice on the ground of public policy. That seems to me the strongest possible reason for rejecting the proper law of the contract as the test for determining to what agreements enactments such as ss. 26C and 31 of the New South Wales Hire-purchase Agreements Act should be understood as intended to apply. In Dicey's Conflict of Laws, 7th ed. (1958) p. 759 the surmise is offered that statutes designed to implement a social policy, e.g. the Hire-Purchase Act, 1938 (U.K.), would in certain circumstances be applied by an English Court to a contract which, by agreement between the parties, was subject to a foreign law. A footnote refers to Mynott v Barnard. [F11] The judgment of Latham C.J. in that case [F12] should be noted, as also Koop v Bebb. [F13] In these authorities I find general reinforcement for the view above expressed.
The restriction which I think is to be inferred from the context and subject matter of ss. 26C and 31 is a restriction to hire-purchase agreements entered into in New South Wales. What makes a hire-purchase agreement void under s. 31 (3) is the conduct of the vendor which s. 31 (1) makes an offence, namely his entering into a hire-purchase agreement without having obtained from the purchaser a sufficient deposit. Under s. 26C (3), the invalidating circumstance is the entering into a hire-purchase agreement in relation to which the hiring charges exceed the prescribed rate. In each case it is at the point of the making of the agreement that the legislature is concerned to see that an objectionable practice is not being given legal effect. The intention, I think, must be that the statute shall step in at that point, and therefore whenever an offending hire-purchase agreement is entered into in New South Wales.
In the present case, although the antecedent negotiations apparently all took place in New South Wales and the agreements were executed by the defendants (the purchasers) in New South Wales, the instruments were thereafter executed by the plaintiff (the vendor) in Victoria. Even if the agreements are to be treated together as a single agreement and as constituting a hire-purchase agreement within the meaning of the New South Wales Act, it is not possible to hold that the hire-purchase agreement was entered into in New South Wales. Accordingly, in my opinion, ss. 26C and 31 of the New South Wales Act do not apply, and the answer the Supreme Court gave to the fifth question was correct.
The only remaining question to be decided is whether the agreements together constitute a "hire-purchase agreement" within the meaning of the Victorian Act. It is provided in s. 2 (1) of that Act that the expression includes a letting of goods with an option of purchase and an agreement for the purchase of goods by instalments. The agreements in the present case, even if treated as one, could not be held to be a hire-purchase agreement by virtue of this provision, for it seems beyond question that an option of purchase means an option in the bailee to purchase the goods bailed and here the only option he has is to purchase unascertained goods of a given description. The defendants do not contend otherwise. They rely upon a separate provision in s. 2 (3) that where, by two or more agreements, none of which by itself constitutes a hire-purchase agreement, there is a bailment of goods and either the bailee may buy the goods or the property in the goods will or may pass to the bailee, the agreements shall, for the purposes of the Act, be treated as a single hire-purchase agreement made at the time when the last agreement was made.
The inspiration for this provision obviously came from the United Kingdom Act (1 & 2 Geo. 6, c. 53, s. 21) and the New South Wales Act. In those Acts, "hire-purchase agreement" is defined to mean "an agreement for the bailment of goods under which the bailee may buy the goods or under which the property in the goods will or may pass to the bailee". To this each Act appends a provision that where, by virtue of two or more agreements, none of which by itself constitutes a hire-purchase agreement, there is a bailment of goods and either the bailee may purchase the goods, or the property therein will or may pass to the bailee, the agreements shall for the purpose of the Act be treated as a single agreement made at the time when the last agreement was made. This appended provision has been carried into the Victorian Act as s. 2 (3) with the addition of the words "hire-purchase" between "single" and "agreement". This has been done notwithstanding that the definition in s. 2 (1) has not been made to correspond in terms with the main portion of the definition in the other Acts; and it has been done without repeating in s. 2 (3) two exceptive paragraphs to which the definition in s. 2 (1) is subject. The result no doubt is that cases may be imagined in which two or more agreements must together be treated as a single hire-purchase agreement although a single agreement containing all their terms would not be a hire-purchase agreement. But notwithstanding the lack of precise correspondence between the two provisions it seems as clear under the Victorian Act as it is under the United Kingdom and New South Wales Acts that the fundamental idea that pervades them is of an agreement, whether embodied in one instrument or in several, whereby one party obtains from the other (i) the possession of goods and (ii) a right to become the owner of the goods possessed, either certainly or upon the performance of conditions such as the payment of moneys. A complete desertion of this basic idea would be involved if the intention were to include the case where the bailee has no right in any event to become the owner of the goods bailed, unless the bailor chooses to appropriate those goods to a future sale to the bailee of unascertained goods by description. It is literally true that in a case like the present the property in the goods bailed may pass to the bailee; and in one sense it is true that, if they do pass to him in consequence of his exercising an option to purchase unascertained goods equal in type, quality and condition to the goods bailed and of the bailor's selecting the bailed goods to be the goods purchased, the property in those goods will pass to the bailee "by virtue of" the agreements. But it seems to me that proper force is not given to the expression in s. 2 (3) "by virtue of two or more agreements ... the bailee may buy the goods or the property in the goods will or may pass to the bailee" unless it is confined to the case where the agreements, by dealing with the bailed goods only, do all the selecting of specific goods that is necessary for the passing of the property therein to the bailee. The sense of the expression "by virtue of" two or more agreements seems to me to be that the selection of the goods to become the bailee's property is made by the agreements themselves, so that if the property in any goods ever passes by virtue of them it will be the property in the goods bailed. This conclusion does not depend at all upon the fact that in s. 2 (3) the expression "hire-purchase" is added before "agreement"-I should similarly construe both parts of the definition in the United Kingdom and the New South Wales Acts-but the addition seems to me to emphasize that so radical a departure could not have been intended as would be involved in erecting a single hire-purchase agreement out of two agreements which left the bailor to say whether the bailee might in any event become the owner of the bailed goods. In short, I would construe s. 2 (3) as referring only to agreements producing two results with respect to the one lot of specific goods. Some provisions in the Act, such as s. 3 (1) and the First Schedule, ss. 3 (2) (c) (v), 3 (2) (e), 18 (2), and 19 (1) (b), tend to support this conclusion. Other provisions, such as ss. 5 (1) (a) (b) (c), 5 (2), 10, 11, 14 and the Fourth Schedule, 15 and 23 (1), appear to me to make the conclusion quite inevitable.
For the foregoing reasons I would hold that the agreements in the present case are not within s. 2 (3) of the Victorian Hire-Purchase Act and are not agreements to which the avoiding provisions of that Act apply. I would therefore allow the appeal and answer question 4, Yes.