Nelson v Suncorp Metway [2009] NSWSC 145 (16 March 2009)

Last Updated: 18 March 2009

NEW SOUTH WALES SUPREME COURT

CITATION:
Nelson v Suncorp Metway [2009] NSWSC 145


JURISDICTION:


FILE NUMBER(S):
15304/08

HEARING DATE(S):
20/10/08 and 28/11/08

JUDGMENT DATE:
16 March 2009

PARTIES:
Catherine Nelson (Plaintiff)
Suncorp Metway Advances Corporation Pty Limited (Defendant)
Dr Gordon Howe (Cross-Defendant)

JUDGMENT OF:
Hislop J

LOWER COURT JURISDICTION:
Local Court

LOWER COURT FILE NUMBER(S):
1054/07

LOWER COURT JUDICIAL OFFICER:
Morahan LCM

LOWER COURT DATE OF DECISION:
02/10/08


COUNSEL:
R D Marshall (Plaintiff)
W V Annis-Brown (Defendant)
G R Jensen (Cross-Defendant)

SOLICITORS:
Turnbull Hill (Plaintiff)
Lincoln Smith & Co (Defendant)
Bilbie Dan (Cross-Defendant)


CATCHWORDS:
Local Court Appeal - Sale of Goods Act 1923 - decision upheld.

LEGISLATION CITED:
Local Courts Act, 1982
Sale of Goods Act 1923

CATEGORY:
Principal judgment

CASES CITED:
Beale v GIO of NSW (1997) 48 NSWLR 430
Chocolate Factory Apartments v Westpoint Finance [2005] NSWSC 784
Hughes v ACCC [2004] FCAFC 319
Latec Investments Ltd v Hotel Terrigal Pty Limited [1965] HCA 17; (1965) 113 CLR 265
Pioneer Shipping Limited v BTP Tioxide Limited (1982) AC 724
Sogelease Australia Limited v Boston Australia Limited (1991) 26 NSWLR 1

TEXTS CITED:


DECISION:
See paragraph [30] of the judgment.



JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COMMON LAW DIVISION

HISLOP J

16 March 2009

15304/08 CATHERINE NELSON v SUNCORP METWAY ADVANCES CORPORATION PTY LTD

JUDGMENT

Introduction

1 Ms Nelson (“N”) and Dr Howe (“H”) commenced a close personal relationship in February 2006. During the course of the relationship H gave N a number of gifts. On 23 May 2006 N entered into a contract with Newcastle Toyota (“T”) for the purchase of a Toyota Prado motor vehicle (“the vehicle”) for $68,000.00. The purchase price was paid, as to $51,000.00, by a financier, Suncorp Metway Advances Corporation Pty Limited (“S”) upon H entering into an asset purchase agreement with S and, as to the balance, by the trade in of a motor vehicle belonging to N. On 6 June 2006 T forwarded an invoice in respect of the vehicle to S. H entered into the asset purchase agreement on 13 June 2006.

2 The contract between N and T provided, inter alia, that:

“Until the Dealer has received payment in full of the Purchase Price, title in the motor vehicle shall not pass to the Customer and the Customer shall hold possession of it as bailee only.

The Customer shall be deemed not to have paid the Purchase Price until the Dealer receives clear and unencumbered title to any trade in vehicle and all other payments are credited to the Dealer’s account”.

3 That contract also stated:

“The Customer requires credit to be provided before effect can be given to this contract and will take reasonable steps themselves to arrange credit without delay.”

4 The terms of the contract between N and T dated 23 May 2006 seemingly were varied on 14 June 2006. In particular the value of the trade in was reduced and the financier’s contribution increased so as to enable a refund to N of $5,500.00.

5 The $51,000.00 was paid by S by telegraphic transfer to T on 13 June 2006. The trade in was delivered by N to T on either 14 or 16 June 2006 when she obtained possession of the vehicle. N has retained possession of the vehicle since that date.

6 The relationship between N and H came to an end in November 2006. Thereafter there was a dispute between N and H, essentially, as to whether the vehicle and a payment by H of N’s credit card debt of approximately $17,000, were gifts from H to N.

7 These issues came before the Local Court when S commenced proceedings seeking the delivery up of the vehicle from N. N defended S’s claim and cross claimed against H seeking damages for breach of an alleged agreement not to encumber the vehicle. H filed a defence to the cross claim and a second cross claim in which, as later amended, he claimed under an alleged implied agreement that N would return the vehicle to him upon demand by him if their relationship ended. He also claimed the sum he had expended in paying out N’s credit card debt.

8 The proceedings came on for hearing in Newcastle Local Court before His Honour, Magistrate Morahan. The only issue in dispute between S and N was “who is the owner of the vehicle”.

The Magistrate’s findings

9 His Honour found the following relevant facts:

(a) In June (sic May) 2006 N ordered a Toyota Prado vehicle from T.

(b) N traded in her own vehicle on the purchase. The little red book in the industry gave a valuation for the trade-in of $19,200.

(c) One of the unusual things about the purchase was that the value of the trade-in was juggled so that the defendant was refunded $5500, of which she repaid a loan to her father of $5000. The remaining $500 was the refund of her holding deposit.

(d) The first contract for the purchase of the vehicle was in the name of N.

(e) H arranged finance for the vehicle through a broker, the finance company being S.

(f) Upon application by H, S paid T the sum of $51,000 for the vehicle upon condition that he enter an asset purchase agreement with S.

(g) Following delivery of the vehicle to N, S entered into an asset purchase agreement with H. (The parties agree that this finding involves a slip by his Honour and that the asset purchase agreement was entered into before delivery of the vehicle to N.) The asset purchase agreement was terminated on 27 July 2007.

(h) The asset purchase agreement contained the usual stipulation that title in the vehicle vests in the financier until the debt is paid when an option to purchase is created and the vehicle may be purchased. N was not mentioned as a party to the asset purchase agreement. Obviously T would not release the vehicle until it had been paid for, in this case, by S.

(i) There is no dispute that because of her trade in, N has equity in the vehicle. Even if he had intended to do so, H did not “own” the vehicle and so was not in a position to gift it to N. His Honour did not accept N’s evidence that the vehicle was given to her by way of a gift. N would know that the financial arrangements in relation to the vehicle were not consistent with a gift.

10 His Honour, in his judgment recorded the submissions for N that

“...she has better title to the vehicle than the plaintiff, that the first contract in time was between her and Newcastle Toyota and presumably her trade-in vehicle was part consideration for the contract. The defendant’s case is that it is irrelevant that the cross defendant arranged the finance and made the monthly payments. She claims title prior in time.”

His Honour continued:

“I agree with the submission of Mr Annis-Brown, solicitor for the plaintiff, that the legal title of this vehicle is to be decided by applying the law and not relying on purported conversations between the defendant and the cross defendant as to ownership, encumbrances, gifts etc. When one looks at the documentation, the legislation and the relevant case law, to my mind there is no doubt that title in this vehicle rests with the plaintiff.”

11 The relevant case law was identified as his Honour expressly referred to a passage in Hughes v ACCC [2004] FCAFC 319 dealing with the distinction between an agreement to sell and a sale under the Sale of Goods Act 1923. The legislation was identified as the Sale of Goods Act 1923 and “the documents” referred to included the contract between N and T dated 23 May 2006 and the invoice from T to S dated 6 June 2006.

12 His Honour concluded:

“The unusual facts of this case have resulted in the plaintiff seeking the return of the vehicle and not its monetary value. In my view, the plaintiff has title to the vehicle and the vehicle should be returned...On the claim, I direct that the defendant is to return the subject vehicle to the plaintiff within seven days.”

His Honour adjourned the cross-claims to enable further evidence to be adduced to enable him to calculate the final amount of the judgment on them.

The appeal

13 N has appealed to this court from his Honour’s determination that S has title to the vehicle and that the vehicle should be returned to it. The grounds of appeal are:

“1. On the findings of fact made by the Magistrate, the Magistrate erred in not finding that Mrs Nelson’s contract with Newcastle Toyota to purchase the Prado vehicle, as first in time, had priority in title over any contract that Suncorp had with Newcastle Toyota in regard to the Prado.

2. The Magistrate gave inadequate or no reasons as to why Suncorp should be considered to have better title to the Prado than Mrs Nelson.

3. Had the Magistrate made findings as to Mrs Nelson’s contract with Newcastle Toyota, being an agreement to sell, the magistrate was also bound to make the same finding about the contract Suncorp had with Newcastle Toyota, and that as a result of the sale of each not being completed until the whole price was paid (including the trade-in), the Magistrate was bound to find that Mrs Nelson had better title to the Prado because her contract was first in time.”

14 The appeal to this court, so far as relevant, is limited to error in point of law (Local Courts Act, 1982, s 73(1)), or, by leave, on a ground that involves a question of mixed law and fact (Local Courts Act, 1982, s 74). There is no appeal against the determination of a question of fact.

15 Section 75(1) of the Local Courts Act, 1982 provides that the Supreme Court may determine an appeal made under section 73 (1) or 74:

“(a) by varying the terms of the judgment or order, or

(b) by setting aside the judgment or order, or

(c) by setting aside the judgment or order and remitting the matter to the Court for determination in accordance with the Supreme Court’s directions, or

(d) by dismissing the appeal.”

Submissions on appeal

16 N’s primary submissions on appeal were:

(a) The contract between N and T was an agreement to sell, being conditional upon the payment of $51,000 to T and the receipt and acceptance of the trade-in by T.

(b) The contract between S and T was also an agreement to sell, as it was implicitly subject to the same conditions as the contract between N and T.

(c) Thus, the final condition for each contract was met at the same time, namely when the trade-in was delivered and accepted.

(d) His Honour found that the contract between N and T was first in time.

(e) The competition between N and S for the better title was to be resolved by reference to the rule that if the merits are equal, priority in time is considered to give the better equity - Latec Investments Ltd v Hotel Terrigal Pty Limited [1965] HCA 17; (1965) 113 CLR 265 at 276 per Kitto J.

(f) The merits were equal. His Honour had found that N’s conditional contract was first in time. Thus N had title to the vehicle in priority to S.

(g) The appeal should be upheld.

(h) Additionally the appeal should be upheld as his Honour had failed to give adequate reasons for his decision.

17 S submitted the appeal should be dismissed as:

(a) His Honour’s conclusion was correct for the reasons primarily submitted by S at the trial namely N’s contract with T was conditional. The final condition was not fulfilled until the 14 or 16 June 2006. S’s contract with T was unconditional. It constituted a sale and property passed to S when the contract was made on 6 June 2006. The invoice from T to S refers to the trade-in vehicle and gives a credit for its value against the price. There is nothing in that document or in the evidence that suggests any transfer of the title to S was conditional upon the trade-in being delivered and accepted. Accordingly S’s title prevailed.

(b) His Honour’s reasons were adequate as it was apparent from those reasons and his Honour’s conclusion that he accepted S’s primary submission. His Honour made no finding which would indicate that he had upheld S’s alternative arguments namely that N was acting as H’s agent when she signed the agreement with T, that the contract signed by N dated 23 May 2006 was discharged and replaced by a contract signed on 14 June 2006, that the contract N entered into was for the acquisition of future goods and property could not pass to her until the goods had been ascertained by which time property in the vehicle had been transferred to S, S’s title prevailed over that of N by virtue of the operation of s 28(1) of the Sale of Goods Act 1923) or that the contract between S and T was conditional.

(c) His Honour’s conclusion was one of fact from which no appeal lay.

(d) If, contrary to S’s submission his Honour had found each contract was conditional the merits were not equal as there was no contractual relationship between S and N, N conceded S knew nothing of her or her involvement whereas N knew H was obtaining credit for the purchase of a vehicle and that credit was being provided by S.

18 H submitted the appeal involved mixed questions of law and fact. Leave to appeal was required but should be refused as the matter had been fully heard by the magistrate, the amount in dispute was not great and no substantial wrong had been occasioned to the parties by his Honour’s decision which was open to him on the evidence. Further, the merits were not equal between S and N. S’s merits were greater than N’s for the reasons referred to in S’s submissions and as S’s contribution to the overall price of the vehicle was considerably larger than N’s.

Determination

19 The issue confronting his Honour involved the construction of written agreements. Such matters are traditionally classified as questions of law – Pioneer Shipping Limited v BTP Tioxide Limited (1982) AC 724 per Diplock LJ at 736, Chocolate Factory Apartments v Westpoint Finance [2005] NSWSC 784 at [102]. I do not accept S’s submission that the issue should be classified as simply involving a question of fact from which no appeal lies.

20 In so far as the matter may be categorised as involving issues of mixed law and fact I would not refuse leave to appeal on such issues as, in my opinion, there is a real issue to be determined which is of importance to the parties. Accordingly, insofar as it is required, I grant leave to appeal on issues of mixed law and fact.

21 In respect of the alleged failure to give adequate reasons:

(a) Generally speaking the failure to provide adequate reasons for judgment may constitute an error of law.

(b) The content of the reasons required depends on the particular circumstances of the matter being considered by the court. The reasons need not necessarily be lengthy or elaborate.

(c) There are three fundamental elements of a statement of reasons:

(i) the judicial officer should refer to relevant evidence though there is no need to refer to the relevant evidence in detail especially when it is clear the evidence has been considered.

(ii) a judicial officer should set out any material findings of fact and any conclusion or ultimate findings of fact reached.

(iii) the judicial officer should provide reasons for making the relevant findings of fact (and conclusions) and reasons in applying the law to the facts found.

(d) In determining the content of reasons regard must be had to the burden that the provision of reasons imposes on the judicial system

- Beale v GIO of NSW (1997) 48 NSWLR 430 per Meagher JA at 441 – 444.

22 His Honour demonstrated by his factual findings that he had considered the relevant evidence. His conclusion was clearly stated. I accept his Honour was somewhat frugal in his ultimate reasons for judgment. No doubt his Honour was subject to the usual heavy work load placed upon Magistrates. Nevertheless the documents, legislation and case law relied upon by his Honour in reaching his conclusion were clearly identified in the judgment. In my opinion it sufficiently appears from his Honour’s reasons and conclusion that he accepted S’s primary submission and rejected the alternative submissions, particularly as he made no findings of fact that would have grounded the other submissions. I do not accept that appealable error has occurred by reason of the alleged failure to provide adequate reasons for judgment.

23 If, contrary to my conclusion, his Honour’s reasons were inadequate, I would nevertheless dismiss the appeal as, in my opinion, his Honour’s conclusion was correct for the reasons which follow:

(a) T had, by the express terms of the contract with N, provided that title in the vehicle would not pass to N until T had received clear and unencumbered title to the trade-in and all other payments were credited to its account. As a consequence title in the vehicle could not pass to N until the conditions imposed by T were fulfilled. Counsel for N, quite properly, accepted that the contract between N and T was a conditional contract under which title would not pass to N until the dealer received clear and unencumbered title to the trade in vehicle and all other payments were credited to the dealer’s account.

(c) Counsel for N also accepted that the invoice dated 6 June 2006 between S and T constituted a contract between them. The invoice on its face contains no conditions. On the contrary the concluding words of the document were as follows:

“Balance payable $51,000.00

Please note our trading terms are strictly net, cash or bank cheque on delivery. Please note that the vehicle will not be released until confirmation that cleared funds have been received.”

(d) The Sale of Goods Act 1923 provides in s 23 r 1:

“Unless a different intention appears, the following are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer.

Rule 1. Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment or the time of delivery, or both, be postponed...”

(e) Accordingly even though it may be that the vehicle would not have been handed over until the dealer received clear and unencumbered title to the trade-in that was immaterial for the purposes of the passing of title to S as no intention different to that in r1 appeared in the contract between S and T or other evidence.

24 A finding that the contract between N and T and the contract between S and T were each conditional upon receipt by T of a clear and unencumbered title to the trade-in, in my opinion would have been erroneous. If such a finding had been made it would have been open to his Honour to conclude that the merits favoured S rather than N.

25 It may also be arguable that S would have had priority by reason of the application of the principle that “if a loan is made to enable completion of a purchase on the understanding that a charge or security will be given, the purchaser acquires legal title to the property subject to that security” – Sogelease Australia Limited v Boston Australia Limited (1991) 26 NSWLR 1 at 5. However, it is unnecessary and inappropriate to further consider this issue as I have upheld his Honour’s decision on other grounds and this issue was not the subject of submissions to his Honour in the court below.

Conclusion

26 In my opinion the appeal fails.

27 However, as the time appointed by his Honour for the return of the vehicle has expired, it will be necessary to vary the order appropriately.

28 Additionally, his Honour is yet to determine the cross claims between N and H and the proceedings will have to be remitted to his Honour for that purpose.

29 The issue the subject of appeal and the other issues yet to be determined are intermingled and for that reason it is appropriate that the order for costs at first instance be made by the learned magistrate upon the completion of the hearing of the cross-claims. The costs of the appeal however are distinct and in my opinion should follow the event.

Orders

30 I make the following orders:

1. I vary his Honour Magistrate Morahan’s order made on 2 October 2008 and direct that the plaintiff (Mrs Nelson) is to return the Toyota Prado motor vehicle to the defendant (Suncorp Metway Advances Corporation Pty Ltd) by 4:00pm on 24 March 2009.

2. The proceedings are remitted to the learned magistrate for the completion of his determination of the cross claims and the question of costs at first instance.

3. The plaintiff (Mrs Nelson) is to pay the costs of the appeal of the defendant (Suncorp Metway Advances Corporation Pty Ltd) and the cross defendant (Dr Howe).

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LAST UPDATED:
17 March 2009