Australian Guarantee Corporation Ltd v Ross
[1983] 2 VR 319(Judgment by: Murray J)
Between: Australian Guarantee Corporation Ltd
And: Ross
Judges:
Young CJ
Murray JMarks 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
Judgment date: 16 December 1982
Judgment by:
Murray J
I have had the advantage of reading the reasons prepared by Marks, J. and I am in general agreement with them save that I have some reservations in respect of his treatment of CL8 of the agreement.
It may well be quite correct to regard the provisions of s5(1)(b) Hire- Purchase Act 1959 together with the operation of CL8 as precluding any implication of a term that the owner should have any better title to the goods than a right to sell them at the time when the property in them is to pass which time, in the present case, never arrived. But it is my opinion fundamental to the agreement that both parties contracted upon the basis that the owner, at the time of entering into it, should have indefeasible rights to do so. This involves that the owner should have the right to hire the goods to the hirer and the right to confer upon the hirer the right to enjoy possession of the goods and to resist successfully any claims to possession by third parties while the contract remained on foot. On the agreed facts in this case the owner did not at any time have the legal right to hire the goods to the hirer nor to confer upon the hirer the right to take and continue to enjoy possession of them. The sub-stratum of the contract thus did not exist and whether the problem be approached on the basis of a total failure of consideration or a breach of a fundamental condition unaffected by CL8 is of title consequence.
A similar result would be achieved by viewing the case from the standpoint of mutual mistake. Both the hirer and the owner assumed and contracted upon the basis that the car in question was not stolen and this assumption was fundamental. In the discussion of the decision of the House of Lords in Bell v Lever Bros. Ltd., [1932] AC 161 which appears in Chitty on Contracts, 24th ed., p. 278 the learned author advances the view that the question of the effect of mutual mistake is basically one of the allocation of risk. He suggests that in cases in which the obligation sought to be enforced is fundamentally different from that which was originally contemplated at the time the contract was made and the terms of the contract, construed in the light of circumstances existing at the time it was made, do not indicate that one or other of the parties took the risk that the facts might turn out to be different than both parties had assumed them to be, the contract will be void for mistake. Upon this view in the present case it could not be said, in my opinion, that either the owner or the hirer should be taken to have assumed the risk that the car in question had been stolen and the contract is therefore void.
The learned County Court Judge based his decision upon the view that there was an anticipatory breach of the contract by the owner which entitled the hirer to rescind. This view seems to proceed upon the assumption that the owner would not, if the hirer had chosen to exercise her rights of early completion under s11 of the Act and call for a transfer of title, have been able to carry out its obligations. Although it seems likely that this assumption would have proved to be correct I do not think that it was inevitable or at least so highly probable as to enable the hirer to rescind upon the ground of anticipatory breach: see Universal Cargo Carriers Corporation v Citati, [1957] 2 QB 401 , at p. 438, per Devlin, J.; Bell v Scott (1922) 30 CLR 387 , at p. 394, per Isaacs, J.
I agree that the appeal should be dismissed.