Gamer's Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia Pty Ltd - [1987] HCA 30 - HCA 1979 case summary — Zoe

CTHHCA

Gamer's Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia Pty Ltd

[1987] HCA 30

High Court of Australia|1979-07-14|Before: Gaudron JJ

View original source

At a glance

Source facts

Court

High Court of Australia

Decision date

1979-07-14

Before

Gaudron JJ

Source

Original judgment source is linked above.

Judgment (158 paragraphs)

[1]

High Court of Australia Mason C.J. Brennan, Dawson, Toohey and Gaudron JJ. Gamer's Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia Pty Ltd [1987] HCA 30

[2]

This appeal raises the important question whether the reference in s. 28(2) of the Sale of Goods Act 1923 NSW ("the Act") to "delivery" of the goods by the person who has bought or agreed to buy them under any sale, pledge or other disposition to a person receiving the same in good faith and without notice of any lien or other right of the original seller in respect of the goods, is confined to actual delivery and excludes forms of constructive delivery.

[3]

The appellant, Gamer's Motor Centre (Newcastle) Pty. Ltd. ("Gamer"), is a motor vehicle wholesaler whose business is that of selling motor vehicles to retail dealers. One such dealer was Evans & Rose Motors Pty. Ltd. ("the dealer"). In July 1979 Gamer agreed to sell to the dealer and the dealer agreed to buy from Gamer the eight motor vehicles title to which is in issue in these proceedings. On or about 14 July 1979 the dealer took delivery of seven of these vehicles, the representative of the dealer then receiving and signing an invoice for the seven vehicles. The invoice set out a number of conditions and warranties one of which read: "Where payment is made other than in full settlement and in cash, all property rights in the vehicle remain in the vendor." On 17 July the dealer took delivery of the eighth vehicle and a further invoice in the same form for that vehicle was signed by the dealer's representative. The dealer did not pay any part of the purchase price for the vehicles.

[54]

I do not think that s. 28(2) is limited to cases where the sale, etc., is made by a buyer "in the ordinary course of business of a mercantile agent". The object of the sub-section is to protect innocent third parties dealing with any buyers without title, not only buyers who are mercantile agents. The operation of the sub-section depends on the hypothesis "as if the person making the delivery or transfer were a mercantile agent", so that the business of that person is hypothetically translated into the business of a mercantile agent. Therefore s. 28(2) attracts to a delivery or transfer in the ordinary course of business by that person the same effect as s. 5 of the Factors Act attributes to a transfer or delivery under a sale, pledge or disposition by a mercantile agent in the ordinary course of business as a mercantile agent. That was the view taken by Reed J. in Langmead v. Thyer Rubber Co. Ltd. [43] , and by Gresson P. and Cleary J. in Jeffcott v. Andrew Motors Ltd. [44] . If the buyer were in fact a mercantile agent, what work would s. 28(2) have to do that would not be done by s. 5 of the Factors Act? The effect of such a s. 28(2) delivery is therefore the effect which a delivery would have if the sale, etc., under which it was made had the validity attributed to a sale, etc., by that part of the text of s. 5(1) of the Factors Act which commences with the words "subject to " set out above. In other words, when there is no applicable qualification to be derived from other provisions of the Factors Act and when the proviso to s. 5(1) of the Factors Act does not apply, a delivery of goods falling within s. 28(2) has effect as though the buyer were delivering the goods under a sale, etc., which he had been expressly authorized by the owner of the goods to make. In the circumstances of the present case, if s. 28(2) applies, a delivery of the eight cars whose title is in question by Evans & Rose Motors Pty. Ltd., the dealer, to Natwest under a sale to Natwest, would have effect as though the sale had been made by the dealer with the express authority of Gamer. 1. [1947] S.A.S.R. 29, at p. 39. 2. [1960] N.Z.L.R. 721, at p. 729.

[55]

The Agreement between the dealer and Natwest related to used motor vehicles previously acquired by the dealer as stock: cl. 1(a). It provided that the property in a motor vehicle to be sold should pass to Natwest upon payment by Natwest to the dealer of 90 per cent of the agreed price: cl. 2. The dealer agreed "[t]o take on hire every used display unit provided hereunder and keep the same in my own possession as bailee for [Natwest] for display purposes only on my showroom floor". Section 28(2) does not operate directly on the Agreement as though it applied s. 5 of the Factors Act to the Agreement and deemed it to have been made with Gamer's express authority. If s. 28(2) operated in that way, the property in the motor vehicles would have been transferred to Natwest pursuant to cl. 2 of the Agreement at the time when the parties to the Agreement intended it to be transferred: s. 22(1). The property in the motor vehicles would have been transferred to Natwest, but not by reason of their delivery. Section 28(2) has a different operation. Clearly it is intended to confer on innocent third parties - sub-buyers, pledgees and disponees - who deal with the buyer in possession a measure of protection against the true owner, but the statutory protection is more than a mere right in the third party to retain possession as against the true owner. Section 28(2) and its statutory analogues have always been understood to be effective to enable the buyer mentioned therein who sub-sells to give not only possession but title to an innocent sub-buyer though the sub-seller has no title himself to give. In Cahn v. Pockett's Bristol Channel Steam Packet Co. [45] , a buyer who obtained possession of a bill of lading with the consent of the seller but who, not having paid for the goods, had no authority to deal with the bill of lading, transferred the bill of lading to an innocent sub-buyer for a price. It was held that the sub-buyer had acquired title and that the unpaid seller was not entitled to stop the goods in transit. Against this conclusion it was objected that the sub-sale had been made before the buyer (the sub-seller) got possession of the bill of lading, the point being presumably that the sub-sale could acquire no validity if the sub-seller did not have possession of the bill of lading at the time. Collins L.J. disposed of the objection [46] :

[59]

The traditional mode of transferring property in personal chattels is by delivery of possession and that might be symbolic or constructive as well as actual: King v. Greig [47] ; Dublin City Distillery Ltd. v. Doherty [48] . Having regard to the purpose of s. 28(2), there seems to be no compelling reason why delivery of goods under the sub-section should not include symbolic or constructive delivery of possession, as well as actual delivery of possession. "It is well established", said Williams and Kitto JJ. in Akron Tyre Co. Pty. Ltd. v. Kittson [49] , "that constructive delivery sufficient to pass the title in chattels may be effected by a change in the character of an uninterrupted custody": see also Minister for Supply & Development v. Servicemen's Co-operative Joinery Manufacturers Ltd. [50] . The term "delivery" is defined by s. 5(1) of the Act to mean "voluntary transfer of possession from one person to another" unless the context or subject-matter otherwise requires, and there is no doubt that not only title but also legal possession of a personal chattel may be transferred as effectively by symbolic or constructive delivery as by actual delivery: Dublin City Distillery Ltd. v. Doherty [51] . Although Pacific Motor Auctions Pty. Ltd. v. Motor Credits (Hire Finance) Ltd. [52] establishes that the purpose of s. 28 is to protect an innocent purchaser who is deceived by the vendor's physical possession of the goods or documents of title and that the section operates when the buyer or seller without title is in actual possession of the goods or documents, it would be at odds with authority and commercial experience to attribute to the term "possession" in the definition of "delivery" the meaning of actual possession. It is a matter of daily occurrence that a seller performs his obligation to deliver the goods he sells by constructively giving delivery of possession to the buyer. One way in which goods are constructively delivered to a buyer is when the person having custody of them (whether as seller, bailee or otherwise) acknowledges that he holds the goods for the buyer: see Elmore v. Stone [53] ; Official Assignee of Madras v. Mercantile Bank of India Ltd. [54] ; and cf. s. 32(3) of the Act. That is what happened here. The dealer, in whose custody the motor vehicles remained at all material times, agreed to keep the motor vehicles as bailee for Natwest from the time when Natwest paid the dealer 90 per cent of the agreed price: see cl. 8 of the Agreement.

[62]

I read the Act to mean that there must be a delivery of the goods by the seller in possession, or, where there is no delivery of the goods, the transfer of documents of title - well-known mercantile documents, defined by the Act by reference. With that view, I respectfully agree. But his Lordship seemingly went on to hold that continuity of actual custody - in that case actual custody of the goods by the second buyer - is inconsistent with delivery of possession, saying [54] : In point of fact, the defendants have been in possession of the goods ever since the sale, and there has been no delivery or transfer to them of any kind since the sale. In Bank of New South Wales v. Palmer [56] , the original seller retained actual custody of the goods. Helsham J. drew attention to the fact that s. 28 does not speak of transfer of property in goods but transfer of goods, and said [57] : What does matter is that the section does not in terms refer to property in goods being the subject of any transfer, nor does it expressly refer to any transaction which is ordinarily accompanied only by a transfer of the property in goods rather than the goods themselves. That being so, I can see no reason for reading the words of the section in a way that would extend their operation beyond situations which are referred to, namely the delivery or transfer of goods or their documents of title. I am respectfully unable to accept these views. They leave out of account the statutory context. Section 28 is not speaking of a delivery of goods in vacuo; it is speaking of a delivery of goods under a sale, and it is undoubted that delivery under a sale may be effected constructively. The dealer did therefore deliver the motor vehicles to Natwest under the sale, the dealer had possession of the motor vehicles with the consent of Gamer when the sale was made, Natwest was an innocent sub-buyer and on delivery it acquired the title it would then have had if the delivery had been effected under a sale which Gamer had authorized. 1. [1895] 2 Ch. 415, at p. 418. 2. [1935] A.C. 53, at pp. 58-59. 3. [1970] 2 N.S.W.R. 532; 91 W.N. (N.S.W.) 580. 4. [1970] 2 N.S.W.R., at p. 536; 91 W.N. (N.S.W.), at p. 584.