Australian Guarantee Corporation Ltd v Ross

[1983] 2 VR 319

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Between: Australian Guarantee Corporation Ltd
And: Ross

Court:

Judges: Young CJ
Murray J
Marks J

Subject References:
HIRE PURCHASE
AGREEMENT
Defect in title of 'owner'
Repossession by true owner
Rescission of agreement by hirer
Subsequent acquisition of title by lessor
Total failure of consideration
Implied terms as to title and possession
Fundamental breach

Hearing date: 17-22 November 1982
Judgment date: 16 December 1982

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S5(1) of the Hire-Purchase Act 1959 provides:--

"(1)

In every hire-purchase agreement there shall be--

...

(b)

an implied condition on the part of the owner that he will have a right to sell the goods at the time when the property is to pass;..."

Duhig Ford Pty. Ltd. ("Duhig") bought a stolen vehicle on 16 January 1980 in good faith and purported to sell it in good faith to Australian Guarantee Corporation Ltd. ("AGC") on 1 February 1980. On 5 February 1980 Ross entered into a hire-purchase agreement with AGC in respect of the vehicle and took possession of it. On 7 September 1980 the police seized the car from Ross, and on 11 September 1980 Ross purported to rescind the agreement. On 31 October 1980 Duhig obtained good title to the vehicle, which was not released by the police until 11 August 1981.

CL8 of the hire-purchase agreement provided:--

"If the goods are secondhand, and it is so stated in the Schedule all conditions and warranties as to quality and all conditions and warranties as to fitness and suitability are to the maximum extent that the law allows expressly negatived. So far as the law permits all other conditions and warranties which might be implied are also negatived and excluded. Nothing contained in this instrument shall be construed as an express condition or warranty on your part."

In the County Court it was found that Ross was entitled to rescind the agreement and to repayment of the instalments made thereunder. On appeal to the Full Court:--

Held, dismissing the appeal:

(1)

Having regard to the terms of s5(1)(b) of the Hire-Purchase Act 1959 and CL8 of the agreement, there could not be implied in the agreement a condition that, at the time of the agreement and during the currency thereof, AGC had or would have title to the vehicle.

(2)

The hirer was entitled to rescind the agreement and to recover all that she had paid because there had been a total failure of consideration or a fundamental breach of the agreement in that AGC was unable to give the hirer the right to possession of the vehicle for the whole period of the agreement. Per Murray J.: A similar result would be achieved by viewing the case from the standpoint of mutual mistake. The nature of a hire-purchase agreement discussed.

Appeal

The facts are stated in the judgments of Young, CJ and Marks, J.