Australian Guarantee Corporation Ltd v Balding

43 CLR 140

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(Judgment by: Starke J)

Australian Guarantee Corporation Ltd
v Balding

Court:

Judges: Isaacs J

Starke JDixon J

Subject References:
Contract
Hire purchase agreement
Assignment
Future debts
Non-registration
Invalidity of assignment

Legislative References:
Instruments Act 1915 (Vic) No 2672 - ss 127, 180, 181
Instruments Act 1928 (Vic) No 3706 - ss 27, 80, 81

Hearing date: MELBOURNE 20 February 1930;
Judgment date: 14 April 1930;

Sydney

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Judgment by:
Starke J

STARKE J. Turner Bros. carried on business as dealers in motor vehicles, and, as owners, made a number of hire-purchase agreements in respect of such vehicles with their customers as hirers. An agreement was also made, on 10th August 1922, with the Australian Guarantee Corporation Ltd to finance these hire-purchase agreements. The Corporation arranged to advance the total amount of the instalments payable during the ensuing twelve months after deducting therefrom 9 per cent on the total sum. Turner Bros. agreed to deliver to the Corporation the hire-purchase agreements, and, in the event of default of the hirers, to indemnify the Corporation against any loss, and, if required by the Corporation so to do, to take possession "of the motor vehicle and to hold the same on behalf of and generally to act as agents for the Corporation in connection with such vehicle." The hire-purchase agreements were delivered over to the Guarantee Corporation and there was indorsed on them an assignment in the following words: "For valuable consideration we the within-named Turner Bros. hereby assign all our right title and interest in and to the within hire contract to the Australian Guarantee Corporation Ltd " It was not disputed that this indorsement operated to transfer all the rights, obligations and moneys accruing or becoming payable to Turner Bros. under the hire-purchase agreements. The hire-purchase agreements were real hire-purchase agreements and not bills of sale (see Helby v Matthews ^[F15] ; McEntire v Crossley Bros. ^[F16] ; Lee v Butler ^[F17] ) Consequently, the provisions of the Instruments Act 1915 of Victoria relating to bills of sale are inapplicable.

And it is equally clear, in my opinion, that the assignment indorsed on these hire-purchase agreements did not operate as the assignment of any proprietary rights, but of contractual rights-the benefits of the hire-purchase agreements (In re Davis & Co ; Ex parte Rawlings ^[F18] , at p. 197, In re Isaacson; Ex parte Mason ^[F19] ).

But the Court below held that the assignment indorsed on the hire-purchase agreements has no validity at law or in equity, by reason of the provisions of the Instruments Act 1915 relating to book debts. That Act, in s. 181, provides that no assignment or transfer of book debts due or to become due to any person, whether such assignment or transfer is absolute or conditional, shall have any validity at law or in equity until such assignment or transfer has been registered by the Registrar-General. "Book debts" mean any debt due or to become due at some future time to any person on account of or in connection with any profession, trade or business carried on by such person, whether entered in any book or not, and include future debts of the same nature although not incurred or owing at the time of assignment or transfer. The assignment indorsed on the hire-purchase agreements was not registered pursuant to the Act. Whether it falls within it depends upon the nature of the obligations created by these agreements. The operative words of the agreements, it is said, create no obligation to pay any money on the part of the hirer, and the various periods of hire are made dependent upon an antecedent and non-obligatory payment of money; consequently, the argument concluded, no assignment of the rights of the owner under the agreements could or did operate as an assignment of any book debts. But the basis of the agreements is the payment of hire for the use of motor vehicles. The payments mentioned in the agreements are referred to as rent, and the hirer promises to pay all moneys payable under his particular agreement to the owner, in Melbourne. All this is wholly inconsistent with the argument presented to us, and completely destroys it.

The truth is that the draughtsman, appreciating the dangers lurking in a sale, or an agreement for the sale, of goods, has made the hire of the motor vehicles in successive periods optional on the part of the hirer. But if that option be availed of, then obligations arise to pay various sums of rent or hire, under and by force of the several agreements and in accordance with their terms. Such obligations would pass under any assignment by Turner Bros. of book debts due and owing, or which might become due and owing, to them in connection with their business as dealers in motor vehicles. (See Tailby v Official Receiver ^[F20] .) And they pass under the assignment to the Guarantee Corporation of all Turner Bros.' right, title and interest in and to the hire-purchase agreements. But they are not debts due or to become due: they are future debts, or debts which might become due or owing to the assignors in connection with their business. And they fall, in my opinion, within the words "future debts of the same nature although not incurred or owing at the time of the assignment or transfer" mentioned in the Instruments Act 1915, s. 181. Consequently, the assignment by Turner Bros. to the Guarantee Corporation of these obligations has no validity owing to its non-registration.

Lastly, some reliance was placed upon the finance agreement between Turner Bros. and the Guarantee Corporation as an assignment in equity of the motor vehicles to the Corporation. Clause 5 of that agreement, however, which provides for an indemnity to the Corporation in the case of any default by the hirers and a promise, if so required, to take possession "of the motor vehicle and to hold the same on behalf of and generally to act as agents for the Corporation in connection with the vehicle," confers no proprietary rights upon the Corporation in respect of any vehicle, but simply contractual rights as between the parties to the finance agreement, which were unexercised on 26th February 1929, the date of the assignment to Balding as trustee for the benefit of creditors.

The appeal in my opinion fails and ought to be dismissed.