Gamer's Motor Centre (Newcastle) Pty Ltd v. Natwest Wholesale Australia Pty Ltd
163 CLR 23672 ALR 321
(Judgment by: Gaudron J)
Between: Gamer's Motor Centre (Newcastle) Pty Ltd
And: Natwest Wholesale Australia Pty Ltd
Judges:
Mason CJ
Brennan J
Dawson J
Toohey J
Gaudron J
Subject References:
Sale of Goods
Judgment date: 24 July 1987
Sydney (heard in Canberra)
Judgment by:
Gaudron J
The rights of the appellant and respondent to this appeal depend upon s 28(2) of the Sale of Goods Act 1923 (NSW) ("the Act"). By that sub-section it is provided that:
"Where a person having bought or agreed to buy goods obtains with the consent of the seller possession of the goods or the documents of title to the goods, the delivery or transfer by that person or by a mercantile agent acting for him of the goods or documents of title under any sale pledge or other disposition thereof to any person receiving the same in good faith and without notice of any lien or other right of the original seller in respect of the goods shall have the same effect as if the person making the delivery or transfer were a mercantile agent intrusted by the owner with the goods or documents of title."
By s 5(1) of the Factors (Mercantile Agents) Act 1923 (NSW) a sale, pledge or other disposition of goods in the ordinary course of business of a mercantile agent, by a mercantile agent entrusted with the possession of goods or the documents of title to goods is, subject to that Act, as valid as if he were expressly authorized by the owner of the goods to make the sale, pledge or other disposition.
In the present case, a used motor vehicle dealer, Evans & Rose Motors Pty. Limited ("the dealer"), obtained possession of eight (8) motor vehicles with the consent of the appellant, Gamer's Motor Centre (Newcastle) Pty. Ltd. ("the wholesaler") pursuant to an agreement or agreements to buy the same. The invoices relating to the sales specified, inter alia, that:
"Where payment is made other than in full settlement and in cash, all property rights in the vehicle remain in the vendor."
The dealer did not pay the wholesaler. Earlier the dealer had entered into an agreement called a "Used Vehicle Bailment Agreement" with the respondent, Natwest Wholesale Australia Pty. Ltd., previously known as Lombank Finance Pty. Limited ("the finance company") under which it was agreed that the dealer might from time to time sell to the finance company used motor vehicles previously acquired by the dealer as stock. The agreement did not effect a sale of any particular vehicles, but did set forth the terms upon which vehicles would be sold by the dealer to the finance company. One such term was that the dealer would take on hire every vehicle sold to the finance company under the Used Vehicle Bailment Agreement and keep the same in its own possession as bailee for the finance company. The agreement contained specific terms as to that bailment but they are not relevant to the determination of this matter.
Without having paid for the vehicles which the dealer agreed to buy from the wholesaler, the dealer completed and signed in respect of each vehicle a document entitled "Delivery Receipt for Trade-In or Used Vehicles" ("the Delivery Receipt") and delivered the document to the office of the finance company. Each document contained a brief description of the vehicle concerned, its purchase price, and a statement by the dealer acknowledging that it had taken delivery of the vehicle described in the Delivery Receipt in the terms of the Used Vehicle Bailment Agreement.
At some stage the dealer obtained possession of the eight motor vehicles. The evidence as to whether this was prior or subsequent to the handing over of the completed and signed Delivery Receipts is not entirely clear. However, in view of the way in which the argument proceeded, it is not necessary to pursue that issue, or the question whether s 28(2) operates in the circumstance in which a purchaser, not being in possession of the goods, enters into an agreement for the sale, pledge or other disposition of the goods, but subsequently obtains possession of the goods or documents of title, and thereafter delivers the goods or transfers the documents under the sale, pledge or disposition. In the present case, some days after the dealer obtained possession, the wholesaler, not having received the moneys payable in respect of the sale of the vehicles, retook possession of them. In consequence the finance company brought an action against the wholesaler in the District Court of New South Wales for damages for conversion and recovered judgment. An appeal against that judgment to the Court of Appeal of the Supreme Court of New South Wales was dismissed.
The question for determination is whether the actions of the dealer in completing and signing the Delivery Receipts and attending the office of the finance company, or any of them, constituted delivery of the motor vehicles within the meaning of that word as used in s 28(2) of the Act. For these actions, or any of them, to constitute delivery, "delivery" as used in s 28(2) must include constructive delivery for it is common ground that there was no actual delivery of the motor vehicles and no transfer of the documents of title to the motor vehicles.
"Delivery" is defined in s 5(1) of the Act as meaning, unless the context or subject-matter otherwise requires, the "voluntary transfer of possession from one person to another". It was established law, prior to the passing of the Sale of Goods Act 1893 (UK), upon which the New South Wales Act is based, that there could be a transfer of possession without physical delivery of goods. In Pollock and Wright's Possession in the Common Law, (1888), Sir Frederick Pollock observed, at p 72:
"The authorities both on acceptance and actual receipt within the Statute of Frauds and on the rights of unpaid vendors show that in several ways there may be a change of possession without any change of the actual custody."
The authorities referred to include Elmore v. Stone (1809) 1 Taunt 458 (127 ER 912); Marvin v. Wallis (1856) 6 El & Bl 726 (119 ER 1035) and Godts v. Rose (1855) 17 CB 229 (139 ER 1058). Although Elmore v. Stone was said to be overruled in Proctor v. Jones (1826) 2 Car & P 532, at p 534 (172 ER 241, at p 243) it was used by Lord Atkinson in Dublin City Distillery, Limited v. Doherty [1914] AC 823 , at p 844 as an example of "good constructive delivery".
The definition in s 5(1) of the Act is not restricted to a change in the actual custody of the goods. Its terms are wide enough to comprehend change in possession without change in custody. As was pointed out in the judgment of McHugh J.A. in the Court of Appeal, there are provisions in the Act which predicate that delivery may be effected without a change in actual custody. His Honour referred to ss 32(3) and 43(2) of the Act. Section 32(3) provides that:
"Where the goods at the time of sale are in the possession of a third person, there is no delivery by seller to buyer unless and until the third person acknowledges to the buyer that he holds the goods on his behalf ...."
Section 43(2) provides:
"The seller may exercise his right of lien notwithstanding that he is in possession of the goods as agent or bailee for the buyer."
In my view neither provision is, by itself, determinative of the meaning of "delivery" as defined in s 5(1) of the Act. Section 32(3) is capable of itself constituting a context requiring that "delivery" include constructive delivery, rather than the meaning assigned in s 5(1). Section 43(2) does not preclude the possibility that the seller has obtained possession by delivery and re-delivery.
However, s 30 provides that:
"It is the duty of the seller to deliver the goods, and of the buyer to accept and pay for them, in accordance with the terms of the contract of sale."
Section 30 provides no context requiring "delivery" to be understood differently from its definition in s 5. If the definition is limited in its operation so as to exclude constructive delivery, then much of commerce in relation to commodities which do not readily lend themselves to physical delivery would become unduly burdened. Accordingly, in my view, the definition of "delivery" in s 5(1) of the Act includes constructive delivery. It is therefore necessary to consider whether the context or subject-matter of s 28(2) of the Act requires that "delivery" when therein used should be limited in its meaning to actual delivery.
At least three cases, Nicholson v. Harper (1895) 2 Ch 415; Bank of New South Wales v. Palmer (1970) 2 NSWR 532 and N.Z. Securities & Finance Ltd. v. Wrightcars Ltd. (1976) 1 NZLR 77, have been accepted as authority by learned textbook writers that the delivery contemplated by s 28, or its equivalent in other legislation, is actual delivery (see, for example, Professor Sutton's Sales and Consumer Law in Australia and New Zealand, 3rd ed. (1983), pp.335-337). Of those cases, only N.Z. Securities was concerned with the situation covered by sub-s(2), which has operation when a purchaser obtains possession of goods or the documents of title, as distinct from the situation covered by sub-s(1), which has operation when a vendor continues or is in possession of goods or the document of title. Only Bank of New South Wales v. Palmer identified a context or subject-matter requiring a meaning of "delivery" when used in s 28, or its equivalent, different from its statutory definition.
The decision in Nicholson v. Harper is of long standing. As pointed out by McHugh J.A., it did not in terms decide that actual delivery is necessary for the operation of the equivalent of sub-s(1). What it did decide was that there must be "some delivery or transfer ... after the sale" (Nicholson v. Harper at p 418). In the result North J. held that the defendants had "been in possession of the goods ever since the sale, and there (had) been no delivery or transfer to them of any kind since the sale". I read the judgment of North J. as meaning not that there must be actual delivery, but that for the section to operate there must be two distinct events being first, a sale, pledge or other disposition, and second, a delivery or transfer.
Sub-sections (1) and (2) validate delivery or transfer, and not the sale, pledge or other disposition (see Cahn v. Pockett's Bristol Channel Steam Packet Company [1899] 1 QB 643 and City Fur Manufacturing Company, Ltd. v. Fureenbond (Brokers) London, Ltd. [1937] 1 All ER 799 ), and in my view, necessarily contemplate that delivery or transfer will be constituted by something additional to or independent of the sale, pledge or other disposition. In other words the sale, pledge or other disposition cannot constitute the delivery required by the sub-section. Such a construction limits the circumstances in which constructive delivery will be validated by the sub-section, but does not entirely exclude such validation if the constructive delivery is constituted by some event independent of or additional to the sale, pledge or other disposition.
In Bank of New South Wales v. Palmer, Helsham J., whose reasoning was adopted by O'Regan J. in N.Z. Securities v. Wrightcars Ltd., expressly held (at p 536) "... that the words of the section must be read in a way that restricts their operation to cases in which such a change in physical possession of goods or title deeds occurs ...". His Honour reached that conclusion because "... the section does not in terms refer to property in goods being the subject of any transfer, nor does it expressly refer to any transaction which is ordinarily accompanied only by a transfer of the property in goods rather than the goods themselves." I agree with that observation, but such observation requires only that the delivery be constituted by some event other than the passing of property by sale, pledge or other disposition, as I understand North J. to have held in Nicholson v. Harper. The statement in his judgment (at p 418) that the delivery should be "after" or "since" the sale, serves to illustrate that delivery must be effected by some act separate from the sale. Ordinarily it will take place after sale.
Accordingly I am of the view that "delivery" in s 28(2) of the Act does not exclude constructive delivery, provided that the constructive delivery is effected by some act or event independent of or additional to the sale, pledge or other disposition by a purchaser in possession of goods with the consent of a seller. Thus it would be sufficient delivery for the purpose of s 28(2) if the bailee of the purchaser who obtained possession with the consent of his vendor attorned to a sub-purchaser.
It remains to be considered whether the actions of the dealer in the present case constituted such delivery. Before dealing with that question it is convenient to consider the argument advanced on behalf of the respondent that delivery was effected by the dealer's acknowledgment that he held the motor vehicles as bailee for the finance company in accordance with the Used Vehicle Bailment Agreement. The acknowledgment was an acknowledgment by the dealer that it had taken delivery of the vehicle described in the Delivery Receipt in the terms of the Used Vehicle Bailment Agreement. Although the Used Vehicle Bailment Agreement provided for the sale of motor vehicles previously acquired by the dealer as stock, the acknowledgment did not touch the question of delivery by the dealer to the finance company, that being the delivery relevant to the operation of s 28(2).
The acknowledgment may have set up, as between the dealer and the finance company, a conventional estoppel whereby neither could assert as against the other that there had been no delivery by the dealer, as vendor, to the finance company, as purchaser, because that delivery was assumed as the conventional basis of their transaction (see per Dixon J. in Grundt v. Great Boulder Pty. Gold Mines Ltd. (1937) 59 CLR 641 , at p 676). However, an estoppel as between the dealer and the finance company cannot affect the position of the wholesaler. Accordingly, the acknowledgment did not constitute a delivery, constructive or otherwise, by the dealer to the finance company.
The only other actions which could constitute delivery by the dealer to the finance company are the completion, signing and handing over by the dealer of the Delivery Receipts. Those actions were not independent of or additional to the sale by the dealer to the finance company, but were steps in the sale of the vehicles on the terms contained in the Used Vehicle Bailment Agreement, the sale being completed when the finance company handed over the cheques for the purchase price to the dealer. Such actions cannot constitute delivery within the meaning of s 28(2) of the Act.
The appeal should be allowed; the order of the Court of Appeal of the Supreme Court of New South Wales set aside, and in lieu thereof an order should be made setting aside the judgment of the District Court. In lieu thereof there should be judgment for the appellant. The respondent should pay the costs of the proceedings in the District Court, the Court of Appeal and this Court.