Akron Tyre Co Pty Ltd v Kittson

[1951] HCA 6

High Court of Australia|1951-07-01|Before: Kitto JJ, Fullagar J

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Source facts

Court

High Court of Australia

Decision date

1951-07-01

Before

Kitto JJ, Fullagar J

Source

Original judgment source is linked above.

Judgment (42 paragraphs)

[1]

High Court of Australia Latham C.J. Williams and Kitto JJ. Akron Tyre Co Pty Ltd v Kittson [1951] HCA 6

[2]

This is an appeal from a judgment of the Supreme Court of Victoria (Fullagar J.) in an action in which the plaintiffs (three individuals and a company) claim damages for wrongful conversion of motor vehicle tyres. His Honour gave judgment for the plaintiffs for £716 11s. 3d., the estimated value of forty-six motor tyres.

[3]

The plaintiff company, The Economic Cash Buying Company Proprietary Limited, let to one C. V. Vale a number of motor trucks, equipped with tyres, under hire-purchase agreements. As the result of transactions between the parties the three individual plaintiffs later let certain of the trucks to Vale under hire-purchase agreements. The hire-purchase agreements (not under seal) were in the same form in all cases. They provided that the hirer should be at liberty at any time to determine the hiring by returning the goods in good order, repair and condition. The documents, therefore, did not require registration under the legislation relating to bills of sale (Instruments Act 1928, Part VI., ss. 27 to 55; Helby v. Matthews [1] ). Vale took tyres off the vehicles and sold them (forty-six in number) to the defendant appellant company. The plaintiffs did not satisfy the learned trial judge that the tyres of which Vale so disposed were the tyres which were originally on the vehicles. The defendant contended, in the first place, that the plaintiffs had no property in substituted tyres and that the hire-purchase agreements did not apply to them. Secondly, the defendant contended that if any provision in the hire-purchase agreements is to be construed so as to give a title in those tyres to the plaintiffs, the agreements are assurances of personal chattels within the meaning of s. 30 of the Instruments Act 1928, and that, as the hire-purchase agreements were not filed as bills of sale under that Act, they are void, at least in so far as they might otherwise operate as an assurance of personal chattels which were not capable of identification at the time when the agreements were made.

[10]

A simple assignment of "future property", i.e., of property which does not exist or in which the assignor at the time of the assignment has no proprietary interest, is completely nugatory at law. At law it is an assignment of nothing. In equity also it is, at the time when it is made, completely ineffective as an assignment of anything. As Jessel M.R. said in Collyer v. Isaacs [1] , "A man cannot in equity, any more than at law, assign what has no existence" or, I add, "anything which he does not own". But a man may bind himself by a contract for valuable consideration to assign goods which he may thereafter acquire. If he makes such a contract and subsequently delivers the goods to the "assignee" or does some other act which, having regard to the terms of the contract, plainly shows an intention to pass the property, then the property will pass at law by reason of such act: see Lunn v. Thornton [2] . That case shows that, if there is an "assignment" of after-acquired goods, the mere acquisition of the goods by the assignors will not pass the property at law. But it is otherwise if there be "some new act" done by the assignor "in furtherance of the original disposition" [3] . In the present case there was such a "new act", namely, the attachment of the tyres to the trucks, which were the subject matter of the hire-purchase agreements. Building contracts provide an example of the application of this principle. The property in things brought on to land for building purposes may, if the building contract so provides, pass to the building owner even before they are incorporated in the building: see Reeves v. Barlow [4] , cited by my brother Williams, and other cases cited in Halsbury's Laws of England, 2nd ed., vol. III, pp. 298, 299, and in Benjamin on Law of Sale of Personal Property, 7th ed. (1931), pp. 140 et seq. It was argued for the appellant that property in personal chattels could be transferred only by deed, delivery of possession, or contract of sale or exchange. But the cases mentioned establish that the terms of a contract may be such that when a person acquires property and does "some new act" which the contract contemplates, the property in goods may be effectively transferred.

[31]

We are not prepared to accept the construction of clause 12 contended for by either side. The schedules to the hire-purchase agreements would describe the chattels specifically hired, and the function of clause 12 is to include in the agreements accessories or goods which do not form part of the chattels included in this description. These accessories or goods are to be supplied &c. at the cost of the hirer. The clause refers to accessories or goods supplied with the vehicle so that it contemplates the supply of accessories or goods contemporaneous with the delivery of the vehicles. The vehicles would presumably not be delivered until after the agreements had been signed by the hirer, and the hirer would presumably not purchase the accessories or goods until after this time. No particular accessories or goods are specified, so that the accessories or goods might not be in existence or, if in existence, might not belong to the hirer at the date of the agreement. But it would not matter if the accessories or goods were then in existence and belonged to the hirer because the present agreements, unlike most agreements relating to future property, do not operate upon the property as soon as it is acquired by the hirer, but only upon the accessories or goods when they are supplied with or for or attached to the hired chattel. The futurity therefore relates, not to the future acquisition of the accessories or goods, but to future acts by the hirer. The word "shall" in the expression "shall become part of the goods" is a word of futurity, but it can be given its natural meaning if the clause is construed, as in our opinion it should be, as referring to accessories or goods which are intended to become part of the hired property by an act of the hirer done pursuant and therefore subsequently to entering into the agreement. The clause is intended to operate throughout the whole term of the hiring. It is wide enough to include accessories or goods supplied &c. by the hirer at the same time as the vehicle is delivered to the hirer or supplied &c. by the hirer at any future time whilst it is in possession of the vehicle under the hiring. Clause 12 provides that upon being supplied &c. the accessories or goods shall become part of the goods hired and therefore the property of the plaintiff company but subject to the contractual rights of the hirer under the agreement. It might be difficult in some cases to ascertain what is meant by accessories or goods supplied with or for the hired goods, but no such difficulty arises in the present case because the tyres are plainly accessories or goods attached to the vehicles within the meaning of the clause.

[33]

It is therefore necessary to consider whether clause 12 was effective to pass the legal ownership of the tyres to the plaintiff company and, in that event, whether it was a bill of sale within the meaning of Part VI. of the Instruments Act. There is no evidence that the tyres were in existence, or, if they were, that they were the property of Vale at the date of the agreement. Clause 12 provides that the accessories or goods shall, on the happening of any one of certain specified events, become part of the hired property. It was contended by counsel for the defendant that, while this provision was effectual at law to pass the property in chattels proved to belong to Vale at the date of the agreement, its only operation in respect of chattels of which Vale became the owner after that date was to make him a trustee of them for the plaintiff company and thus to give the plaintiff company not the legal, but only an equitable, title. It was therefore contended that the plaintiff company did not have the legal ownership and right of possession of the tyres necessary to maintain the action. It was submitted that the property in chattels may be transferred at law by delivery of possession, by deed, by contract of sale or exchange, and in equity by declaration of trust and not otherwise: Halsbury's Laws of England, 2nd ed., vol. 25, p. 212 et seq. Clause 12 is not a deed or a declaration of trust. It is a contract but not a contract of sale or exchange. In the case of a deed it is clear that at law no personal property can pass by grant other than property which belongs to the grantor at the date of the execution of the deed: Lunn v. Thornton [1] ; Joseph v. Lyons [2] ; Hallas v. Robinson [3] . But we cannot accept the contention that at law a contract can only be effective to pass the property in future chattels where the contract is one of sale or exchange. Such a contention is opposed to the decision of the Court of Appeal in Reeves v. Barlow [4] . There the contract provided that all building and other materials brought by the intended lessee upon the land should, whether affixed to the freehold or not, become the property of the intended lessor, and it was held that the property passed at law in all such materials when brought upon the land. The fact that the contract related to land appears to us to be immaterial. Bowen L.J., delivering the judgment of the Court, said [5] : "The contract was only to apply to goods when brought upon the premises, and until this happened there was no right or interest in equity to any goods at all. Upon the other hand, the moment the goods were brought upon the premises the property in them passed in law, and nothing was left upon which any equity as distinct from law could attach. No further performance of the contract was necessary, nor could be enforced. The builder's agreement accordingly was at no time an equitable assignment of anything, but a mere legal contract that, upon the happening of a particular event, the property in law should pass in certain chattels which that event itself would identify without the necessity of any further act on the part of anybody, and which could not be identified before". See also Hart v. Porthgain Harbour Co. Ltd. [6] ; Goodman v. Napier Harbour Board [7] . Brett M.R. was a member of the Court of Appeal in Reeves Case [4] , and it is evident from his Lordship's remarks in Joseph v. Lyons [8] that he would have applied the same principles to the stock-in-trade of a jeweller if the deed there in question had not been an immediate assignment but a contract that stock-in-trade brought on the jeweller's premises in the future should, upon the happening of that event, pass to the plaintiff. But his Lordship said that the deed was not open to this construction. Cotton L.J. was more guarded, but he said [9] that it was a rule at common law that the property in future acquired goods should not pass, except, perhaps, where there was a contract that the property in them should pass.

[35]

In our opinion the passage cited from the judgment of Bowen L.J. exactly explains the legal effect of clause 12. The clause is not an agreement which invokes the equitable principle discussed in cases such as Holroyd v. Marshall [1] ; Tailby v. Official Receiver [2] ; and In re Lind; Industrials Finance Syndicate Ltd. v. Lind [3] that an assignment of future property operates in equity by way of agreement, binding the conscience of the assignor, and so binding the property from the moment when the contract becomes capable of being performed on the principle that equity regards as done that which ought to be done. In In re Lind; Industrials Finance Syndicate Ltd. v. Lind [4] Swinfen Eady L.J. said: "The assignor, having received the consideration, becomes in equity, on the happening of the event, trustee for the assignee of the property devolving upon or acquired by him, and which he had previously sold and been paid for." In the same case Phillimore L.J. said [5] : "Either then no further act of assurance from the assignor is required, or if there be something necessary to be done by him to pass the legal estate or complete the title, he has to do it because it is due from him as trustee for his assignee." This is another way of saying that where necessary equity acts in personam to compel the assignor to give complete effect to his promise. In the present case there is no need and no room for the application of this equitable principle. The agreement was that if and when any accessories or goods were supplied with or for or were attached to the vehicles, they should become part of the hired property. When Vale placed the tyres on the wheels of the vehicles the happening of this event operated in accordance with the agreement of the parties to pass the property at law and in equity from Vale to the plaintiff company. No intervention of a court of equity was required to give full effect to the bargain. Nothing was left upon which any equity as distinct from law could attach and no further performance of the contract was necessary or could be enforced.

[39]

The final question is whether clause 12, so construed, is a bill of sale within the meaning of Part VI. of the Instruments Act. If it is, s. 30 is fatal to the action because it provides, so far as material, that no bill of sale whereby the grantee (in this case the plaintiff company) has power, either with or without notice, either immediately or at any future time, to seize or take possession of any property comprised in or made subject to the bill of sale, shall be operative or have any validity at law or in equity unless it is in the form prescribed by the Act and unless it is lodged for registration with the Registrar-General within fifteen days after the making or giving of the bill of sale. Bills of sale include assignments, transfers, declarations of trust without transfer and other assurances of personal chattels. They also include licences to take possession of personal chattels as security for any debt. The meaning of these expressions was discussed by Holroyd J. in Bank of Victoria Ltd. v. Langlands Foundry Co. Ltd. (In Liquidation) [4] . It was held in Brown v. Bateman [5] that the words "other assurance of personal chattels" must be construed ejusdem generis with the preceding words. Personal chattels include goods, furniture, fixtures and other articles capable of complete transfer by delivery (either at the time of the making or giving of the bill of sale of the personal chattels specified in the bill or at any time thereafter). In King v. Greig; Rechner, Claimant [1] Cussen A.C.J., in a judgment with which Mann J., as he then was, agreed, held that an agreement for the assignment of after-acquired property was not an assignment or other assurance of personal chattels within the meaning of the Act. We entirely agree with this opinion. It was attacked because the Act defines personal chattels to include goods, furniture, fixtures and other articles capable of complete delivery at any time after the making or giving of the bill of sale as well as articles capable of complete delivery at the time the bill of sale is made or given. It was contended that this reference to future delivery indicates that the legislature must have intended to include assurances of future chattels in the definition of bills of sale. But it appears to us that the definition of personal chattels is intended to refer to the physical condition of the articles which can be the subject of a bill of sale: In re W. F. Cornu Ltd.; The Liquidator v. Federal Traders Ltd. [2] ; Motor Credits Ltd. v. Wollaston Ltd. (in Liquidation) [3] , and that the words "at any time thereafter" do no more than make it clear that personal chattels include all chattels which are or can be rendered capable of complete delivery by transfer, even if at the time of the making or giving of the bill something still remains to be done to make them so deliverable, as, for instance, the severance of fixtures. Accordingly, on the authority of King v. Greig [4] , clause 12, which is concerned with future property, is not a bill of sale within the meaning of Part VI. of the Instruments Act.