Helby v Matthews and Ors

[1895] A.C. 471

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(Judgment by: Lord Shand)

Between: Helby - Appellant
And: Matthews and Ors - Respondents

Court:

Judges: Lord Herschell LC
Lord Watson
Lord MacNaghten
Lord Morris

Lord Shand

Subject References:
FACTOR
SALE OF GOODS
Agreement for
Possession of Goods under Agreement with option to buy
Hire and Purchase Agreement
Disposition of Goods by Person having option to Purchase
'Person having agreed to buy Goods'

Legislative References:
Factors Act 1889 (52 & 53 Vict. c. 45) - s. 9

Judgment date: 30 May 1895

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Judgment by:
Lord Shand

My Lords, I am also of the same opinion. The right of the defendant to refuse delivery of the piano in question under the 9th section of the Factors Act depends on his being able to shew that Brewster in whose possession it was had either bought it or agreed to buy it from Mr. Helby the plaintiff and appellant, and the decision of this question depends entirely on the true construction of the agreement between the plaintiff and Brewster under which the latter got possession of the instrument. It is true that by that agreement Brewster undertook to pay to the appellant not only a first instalment of 10s. 6d. described as a "rent or hire instalment," but to pay the same amount on the 23rd of each succeeding month and that it was provided that on the payment of thirty-six monthly instalments the piano should become his property. If these stipulations had been unqualified there would have been an absolute obligation or agreement by Brewster to acquire the instrument in property, and by purchase, although the instalments were described as for rent or hire, and the case of Lee v. Butler ^[F8] would have directly applied. But the whole obligations by Brewster were qualified by the stipulation: "That the hirer may terminate the hiring by delivering up to the owner the said instrument." This provision appears to me to make it clear that there was no purchase and no agreement to purchase. The hirer need not continue the hiring a day longer than he desired; and he need not allow the transaction to become one of purchase unless he desired to do so.

An agreement to purchase would infer an obligation to pay a price, the payment of which could be enforced by action, while here it is plain that no action for any balance of the alleged price could be maintained if Brewster thought fit at any time to return the instrument to its owner. The substance of the transaction was a hiring of the piano for the use of which monthly instalments were to be paid with a provision that the arrangement might ultimately result in a purchase, but that this should be entirely at the option of the hirer, and should depend entirely on his thinking fit to make payment of thirty-six monthly instalments. The contract of hiring only was to cease at his option on the instrument being returned to the owner.

It was maintained that under the general words of undertaking to pay future instalments there was an agreement to purchase within the meaning of the Factors Act, although there was power to resolve the agreement or to bring it to an end by returning the instrument. It seems to me to be very difficult to hold that even if in form the agreement could be correctly thus described this would satisfy the provision of the Factors Act which it has been forcibly maintained requires an absolute obligation to purchase and pay a price, or, at least, an obligation which is not merely dependent on the will or wish of the alleged purchaser.

In this case, however, I think there was an agreement of hiring only with an option to the hirer to become the purchaser; and that although there was an obligation to sell if the hirer should avail himself of the right of option to purchase, there was no obligation or agreement to purchase. I cannot hold that there is such an agreement on the part of one who having the beneficial use of the property of another agrees to pay instalments described as rent or hire instalments, and which he is entitled to treat as payments for hire only, because it is also stipulated that by continuing to make the payments for a certain time he shall acquire the property, he having at the same time the power at any moment and at his own will by returning the property to the owner to put an end to any obligation to pay any further instalments.

Order appealed from reversed, and judgment of the Queen's Bench Division restored with costs here and below; Cause remitted to the Queen's Bench Division.

Lords' Journals 30th May 1895.