DODD v CREGAN [1999] NSWSC 476

New South Wales Supreme Court CITATION : DODD v CREGAN [1999] NSWSC 476 CURRENT JURISDICTION : Supreme Court FILE NUMBER(S) : 10239/98 HEARING DATE(S) : 6 November 1998 JUDGMENT DATE : 25 May 1999

PARTIES : Appellant: Neil Dodd Respondent: John William Cregan JUDGMENT OF : Hulme J at 1

LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 896/95 LOWER COURT JUDICIAL OFFICER : Mr Lulham, Magistrate

COUNSEL : Appellant: E. Wasilenia Respondent: T.J. McGill SOLICITORS : Appellant: Stewart Levitt & Co Respondent: Kennedy & Cooke CATCHWORDS : Appeal from Magistrate; no question of principle DECISION : The Summons is dismissed; Order the Appellant to pay the Respondent's costs.

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION NO: 10239 of 1998 Tuesday, 25 May 1999 HULME J Neil DODD v John William CREGAN JUDGMENT

1 HIS HONOUR: These Reasons concern an appeal by way of stated case from a decision of Mr Lulham, Magistrate, made on 10 September 1997. 2 The Respondent to the appeal sued the Appellant for the sum of $33,000 plus interest and costs claimed to be owing as the balance of the sale price for the sale of the Respondent's interest in a Mack Prime Mover. The Magistrate found in favour of the Respondent as claimed. The Magistrate also rejected a cross-claim alleging fraudulent misrepresentation. 3 The agreement between the parties was constituted by, or included - a matter in issue in the stated case - a document which, so far as is relevant, was in the following terms:- "Neil Dodd 11 Foster Street QUEANBEYAN NSW 2620 TO WHOM IT MAY CONCERN This is to state that I Neil Dodd of 11 Fosters Street Queanbeyan. Will take over the contract from John Gregan (sic) Temora NSW for a MACK Prime Mover Reg No KPP-199 Chassis No A18 270 The contract is held with Esanda Finance Co. Contract No…………………………………… I will continue with this contract until the final payment is made. Payments must be within 21 days of the due date. If payments are not paid within the due time the contract in null & void. A payment of $33,000 is to be paid to Mal Rigby SYD (To be returned in the same condition.) Neil Dodd" 4 The words and figures set out in bold were handwritten in the document. There was an indication, and the magistrate found, that the words "to be returned in the same condition" were intended to form part of the paragraph commencing "payments must be". The document was signed by both parties. The Magistrate's Findings 5 Included within the Magistrate's findings of fact were the following (I have numbered them for convenience.):- "(1) The Defendant took possession of the vehicle, made about 12 payments to Esanda being the balance of the monthly payments. (2) The Defendant did not pay the residual payment of $42, 800 due to Esanda. The vehicle was repossessed and an agent, David Cannon (?) (sic) apparently paid out the sum of about $46,000 to Esanda and the vehicle was then transferred back to the Defendant and another person by that agent David Cannon. … (3) The effect of those transactions was that Esanda had been paid out in full but the payment of $33,000 directed to be paid to Mal Ridley (sic) was not paid and it is in relation to that non-payment that the Plaintiff brings his claim to recover that sum. … (4) The hire purchase agreement with Esanda contained the following terms "NOT TO PART WITH POSSESSION Clause E. (5) The lessee shall keep the goods under his personal control and shall not attempt or purport to sell, dispose or encumber the same or any interest therein nor without the lessor's prior written consent shall the lessee sell or encumber nor agree to sell or encumber any land to which the goods at any time be affixed. NOT TO ASSIGN Clause F (6) The lessee shall not assign this agreement or the lessee's rights hereunder." (7) The evidence indicates that Esanda were informed by the defendant that he was then paying the lease fees and had possession of the vehicle, and the evidence indicates that Esanda accepted that position. It may be that action by Esanda may have created an estoppel against Esanda …(but) that is not a matter for me to decide. (8) … the agreement does not refer specifically to any payment of the residual but the agreement did obviously not include all of the agreements reached between the parties, for instance it is clear that there was an agreement that the defendant whilst having the vehicle was to pay the registration and the insurance and to keep it in good condition. The agreement does of course refer to a final payment. (9) The plaintiff did inform the defendant of the existence of the residual payment and that the defendant was liable to pay it (10) … the only representation made by the plaintiff was to the effect that the truck was a good one or was in good condition. I am not satisfied on the evidence that the plaintiff made any other more specific representation. (11) I am satisfied on the evidence particularly on the evidence of Stan Wilson that at the time of the transfer the Plaintiff's interest in the truck, bearing in mind that it had done 1,000,000 kilometres, that the truck was in good condition mechanically, that it had been serviced properly and was in good condition on the exterior. (12) Further, even if I be wrong and in fact a more specific representation was made, … I am not satisfied on the evidence that any representation made by the plaintiff induced the defendant to enter into the agreement. The defendant was a truck operator experienced in the use and inspection of trucks. That was his business. He had a test drive, he had every opportunity for any inspection he required. I am not satisfied that it was any representation made by the plaintiff that induced the plaintiff to purchase the vehicle. 6 The magistrate's reference to a hire-purchase agreement would seem to have been in error. Although the document governing the rights inter se of the Respondent and Esanda was not tendered before me, it is referred to throughout the transcript of proceedings before the magistrate as a "lease". There was no suggestion in that transcript of before me that the Credit Act applied. Grounds of Appeal 7 The Stated Case records as the bases for the magistrate's Determination, and the Appellant's Contentions, the following:- Grounds of Determination 1. Upon the transfer of possession of the truck to the defendant, the lease agreement between the plaintiff and ESANDA was voidable at the option of ESANDA. 2. ESANDA was informed by the defendant that he was paying under the lease (Exhibit 1) and accepted that position. 3. The plaintiff and defendant entered into a legally binding agreement (Exhibit 3). 4. The said agreement (Exhibit 3) did not include all the terms therein. 5. The plaintiff informed the defendant that a residual payment of $42,800 was to be made to ESANDA. 6. The plaintiff made no representation about the truck other than it was a good one and in good condition. 7. The said representation did not induce the defendant to enter into the agreement. Appellant's Contentions 1. The plaintiff was bailee for reward from ESANDA as bailor pursuant to a written contract of hire in respect of a prime mover vehicle. 2. The plaintiff had no legal capacity right or entitlement to sell or otherwise transfer possession of the subject motor vehicle without the consent of ESANDA. 3. The plaintiff's transfer of possession of the subject motor vehicle to the defendant pursuant to an agreement for sale between them was in and constituted a breach by the plaintiff of the contract between the plaintiff and ESANDA. 4. ESANDA exercised their immediate right to possession of the subject motor vehicle against the defendant as a third party to the bailment between themselves and the plaintiff by reason of the plaintiff's failure refusal and/or neglect to pay monies due under the said contract of hire. 5. The agreement of sale of the subject motor vehicle from the plaintiff to the defendant was incapable of creating any legal relationship between them other than a sub bailment between the defendant as bailee and the plaintiff as bailor of the subject motor vehicle. 6. The agreement between the plaintiff and the defendant for the sale of the subject motor vehicle to the defendant was ineffective and void by reason of failed consideration, mistake and/or frustration. 7. The said agreement between the plaintiff and the defendant did not contain a term or condition, or otherwise impose any liability upon the defendant to pay any monies to ESANDA by way of "residual payment" or such similar payment in the amount of $42,000 or any amount at all. 8. The written agreement between the plaintiff and the defendant for the sale of the subject motor vehicle contained the whole of the terms thereof and could not be altered by parole (sic) evidence. 9. There was no evidence upon which a finding could be made that ESANDA accepted or consented to the defendant being the assignee of its lease to the plaintiff. 10. There was no evidence upon which a finding could be made that the plaintiff and the defendant entered into a binding agreement. 11. There was no evidence or insufficient evidence upon which a finding could be made that the defendant was not induced by the plaintiff to enter into the agreement. 12. There was no evidence or insufficient evidence upon which a finding could be made that the plaintiff informed the defendant that a residual payment of $42,800.00 was to be made to ESANDA." Conclusions 8 It will be convenient to deal with the above grounds and contentions largely seriatim. Ground 1 9 It was agreed that this proposition is correct. Ground 2 10 It was submitted that there was no evidence to support this finding. In fact in a statement by the Appellant which was before the magistrate, the Appellant said:- "Several days later (than taking of delivery of the vehicle) I telephoned Esanda and said that I was making the payments on the lease. The person that I spoke to was pleased that the payments were to be made, and that the arrears would be brought up to date." 11 The Appellant in fact made payments virtually monthly from early October 1993 to late May 1994. Clearly there was evidence to justify the conclusions referred to in this ground. In any event the conclusions were not essential to the magistrate's conclusions. Ground 3 12 The challenge to this finding is dealt with under Contentions 5, 6, 7 and 10 below. Ground 4 13 A challenge to this finding, and Contention 8 were abandoned. Ground 5 14 In a number of places the transcript records the Respondent giving evidence to this effect. It was challenged and the subject of contrary evidence but the magistrate was entitled to accept what the Respondent said. The challenge to this finding, contained in Contention 12 is hopeless. Grounds 6 & 7 15 The challenge to these matters is dealt with under Contention 11 below. Contentions 1 - 6 16 It is convenient to consider these Contentions together. The propositions advanced in Contentions 1 to 4 may be accepted as flowing from the nature and terms of the lease agreement between the Respondent and Esanda, and the events which occurred as found by the magistrate. However the same cannot be said of the matters asserted in contentions 5 and 6 and these propositions do not necessarily follow from the those contained in Contentions 1 to 4. Although they could not thereby affect Esanda's interests, against the background of them, the Appellant and Respondent were at liberty under the general law to make whatever agreement they liked concerning the prime mover and the obligations and rights the Respondent had under the Hire Purchase agreement. Contrary to the proposition in Contention 5, the parties were able to create a contractual relationship binding between themselves. 17 Of course, any contract entered into might fail for want of consideration, mistake, frustration or other causes but whether it did would depend on its terms. Here the written document expressly recognised the existence of the contract between Esanda and the Respondent. It is a necessary consequence that, by implication, the written document also recognised the terms of the Esanda contract, whether in fact they were known to the Appellant. In that situation, one would not readily infer any contractual intention as between the Appellant and Respondent to over-reach Esanda's rights. As a matter of construction the written document does not attempt to do so. There is nothing in the document which either in terms or by implication purports to confer on the Respondent any title or right to possession as against Esanda. The document does say that "Neil Dodd … will take over the (Esanda) contract" but in light of the overall document those words cannot be regarded otherwise than as qualified along the lines "subject to its terms" or "for what rights that contract gives". 18 There was no want of consideration and, given the contract's terms, no basis for any conclusion that the contract failed due to mistake or frustration. 19 The contract does say that "if payments are not paid within the due time the contract is null and void." However, given the respective benefits obtained, and obligations imposed, by the contract, this must mean "null and void at the option of the Respondent. On the proper construction of the contract, the Appellant could not take advantage of his own failure to make payments to avoid the contract. 20 Grounds 1 to 4 would seem to be made out but of themselves they are of no present benefit to the Appellant. Grounds 5 and 6 fail. Contention 7 21 This raises a simple question of construction of the written document. Except by reference to the Esanda contract, the written document nowhere identifies the payments or obligations under the Esanda contract which the Respondent was to "continue" or undertake. It is clear that there were some payments he had to make and the undertaking to "continue with this (Esanda) contract until the final payment is made" carries the consequence that these payments were all, not merely whatever monthly or other instalment, payments to which Esanda was entitled. As a matter of statutory construction , this is so whether or not the Respondent was informed of the final $42,000 payable to Esanda. Contention 8 22 This Contention - a challenge to the finding referred to in ground 4 above, was abandoned.