Groves & Anor v BMW Australia Finance Pty Ltd & Anor [2001] QCA 16

Judgment (90 paragraphs)

[1]

[1] McMURDO P: In 1992, the respondents leased a BWM 525(i) sedan and a BMW 325(i) convertible from the appellant under separate lease agreements. The respondents had previously leased motor vehicles from the appellant but this was the first occasion they had entered into this style of lease which was attractive to them because there was no residual payment required at the expiration of the leases. Under the lease agreements, if the vehicles were driven beyond 50,000 kilometres during the four year term of the lease, an excess usage fee of eight cents per kilometre applied; if the vehicles were driven in excess of 5,000 kilometres above the 50,000 kilometre allowance, the appellant was entitled to retake possession of the vehicles (cl 12.1(i)).

[2]

[2] The respondents' vehicles exceeded the kilometre allowance approximately half way through the four year lease term and, following correspondence between the parties, the respondents returned the vehicles to the appellant; the appellant subsequently sold the vehicles.

[3]

[3] The respondents commenced an action against the appellant and the second defendant[1] (the operators of Brisbane BMW car sales yard) for misleading and deceptive conduct on the part of the second defendant's sales staff. The appellant counterclaimed for moneys due and owing under the two leases. Both the action and the counterclaim failed, the latter because the leases were found to be uncertain or illusory. The primary ground of appeal is against that finding of uncertainty.

[4]

[4] The relevant provisions of the lease agreements were identical and this case turns on their construction. Clause 12 relevantly provided:

[5]

"12.1 BMW Finance shall be entitled to retake possession of the goods if:

[6]

(i) the goods are a motor vehicle and they are driven in excess of 5,000 kilometres more than the kilometre allowance specified in the schedule.

[7]

12.2 Upon the occurrence of an Event of Default the Recoverable Amount shall forthwith become due and payable by the Lessee to BMW Finance.

[8]

12.5 If BMW Finance having retaken possession of the goods pursuant to clause 12 disposes of the goods as soon as reasonably practicable at the best price BMW Finance can reasonably obtain at the time of disposal and the nett proceeds of such disposal (after allowing for all costs and expenses incidental to return repossession and disposal including car storage and selling expenses) exceed the Estimated Final Value stated in the Schedule the amount of excess shall be set off by BMW Finance against the Recoverable Amount provided always that the nett proceeds so set off shall not exceed the Recoverable Amount."

[9]

Pro-forma leasing orders constituted the schedules to the leases which contained the following:

[10]

being estimated value of goods at the expiration of the period of lease"

[11]

The Estimated Final Value was left blank in both schedules.

[12]

[5] "Event of Default" was defined as "Any of the events specified in clause 12.1".[2]

[13]

[6] "Recoverable Amount" was defined as the aggregate of a number of sums including the Discounted Balance.[3]

[14]

[7] "Discounted Balance" was defined as including:

[15]

[8] "Estimated Final Value" was defined as "BMW Finance's estimate of the value of the Goods at the date of the termination of the Lease."[5]

[16]

[9] "Estimated Final Value" as defined in cl 1.1 is determined at termination of the leases, whilst "Estimated Final Value stated in the Schedule" (cl 12.5) is described in the schedules as the estimated value at expiration of the leases. It was not submitted that anything turned on usage of the highlighted differing words.

[17]

"A certificate by any attorney or manager of BMW Finance or any other officer authorised by BMW Finance for such purpose stating the amount outstanding by the Lessee in respect of the Lease as at the date set out in the certificate and/or the measure of BMW Finance's loss and/or the occurrence of any of the events mentioned in clause 11 hereof shall for all purposes and in all courts be prima facie evidence of the facts set out in such certificate and a certificate by an attorney or manager of BMW Finance stating as at the date set out in such certificate the discount rate and/or the Relevant Rate and Discounted Balance and/or the amount of the administrative default cost and/or that there has been a total or substantial loss or destruction of the goods and/or the maintenance and management component of each rental instalment shall be conclusive evidence of such fact unless the Lessee shall establish that such certificate was given in bad faith."

[18]

[11] The account manager of BMW Finance signed Certificates of Indebtedness to the value of $48,073.96 and $60,417 respectively; they noted the "Estimated value" at $41,503.50 and $51,912 and the "Sale price" of the vehicles at $39,750 and $47,000 respectively. The appellant relied on these certificates to establish the quantum of its counterclaim. The certificates do not directly correspond to the words used in the lease in that they do not refer to an "Estimated Final Value", "Estimated Final Value stated in the Schedule" nor a "Recoverable Amount". The final figures in the certificates appear to be calculated by deducting the sale prices of the vehicles from the amount otherwise said to be owing. The respondents did not claim the amounts in the certificates were excessive or reached dishonestly.

[19]

[12] Mr Hackett, who appears for the appellant, submits that as there had been an Event of Default, the Recoverable Amount was then due and payable by the respondents to the appellant (cl 12.2) and that the Recoverable Amount was the amount set out in the tendered Certificates of Indebtedness (cl 17.2); the leases were not uncertain or illusory merely because the Recoverable Amount depended on the appellant's own estimate of the value of the vehicles at termination of the lease; the primary judge erred in concluding otherwise.

[20]

[13] Mr Griffin QC and Mr Somers, who appear for the respondents, submit that the amounts in the Certificates of Indebtedness were not recoverable under the leases which were illusory or void for uncertainty, first because there was no Estimated Final Value stated in the schedules (cl 12.5) and second, because any determination of the Recoverable Amount was dependent on the appellant's arbitrary estimate of the value of the vehicles at the date of termination of the leases.

[21]

[14] It was common ground on this appeal that the respondents were in breach of cl 12.1(i) of the leases in that the motor vehicles had been driven in excess of 55,000 kilometres. This constituted an Event of Default and the respondents were then liable to pay the Recoverable Amount to the appellant. The respondents admitted in their pleadings that the appellant demanded payment of the Recoverable Amount; the respondents did not pay that amount and they returned the vehicles to the appellant.

[22]

[15] The appellant then took possession of the vehicles and sold them. This must have been done under cl 12 for the reasons given by Davies JA at [45]-[47] of his reasons. The respondents do not suggest that the sale was not undertaken as soon as reasonably practicable and at the best price reasonably obtainable (cl 12.5).

[23]

[16] The definition in cl 1.1 of "Recoverable Amount", "Discounted Balance" and "Estimated Final Value" make no allowance for the appellant's receipt of money from the sale of vehicles in these circumstances. At one point, the appellant suggested that the final words of the definition of "Recoverable Amount" in cl 1.1 "less all moneys paid by the Lessee to BMW Finance in respect of the entire rent and legally retainable by BMW Finance" encompass moneys obtained by the appellant from the sale of the vehicles. Such an interpretation is inconsistent with the plain meaning of those words which refer to moneys paid for rent and I did not understand the appellant to press that contention. Only cl 12.5 provides for the taking into account of the proceeds from the sale of the vehicles.

[24]

[17] The learned primary judge found the following facts which are not disputed. The "Estimated Final Value stated in the Schedule" was left blank on the instructions of the appellant; the respondents were unaware of the nomination of any sum as the "Estimated Final Value stated in the Schedule" when they signed the leases or afterwards; their concern was that the leases must not provide for any residual value requiring payment at expiration. At or about the time the leases were signed the appellant determined quotation details on which the respondents' monthly instalments were based; these quotation details were to be the "Estimated Final Value stated in the Schedule" but the respondents were not notified of these sums which were similar to the sums referred to in the Certificates of Indebtedness as "Estimated value". Although the male respondent was a businessman experienced in financial matters with extensive commercial investments, this particular type of motor vehicle lease was novel to him.

[25]

[18] The "Estimated Final Value stated in the Schedule" was a matter fundamental to the respondents' obligations under the leases, for the smaller this amount, the greater the prospect that the sale of the vehicles would exceed it; any excess would be set off against the Recoverable Amount, limiting the respondents' liability to the appellant under cl 12.2. This mathematical exercise could not be completed under the agreements contained in the leases because there was no "Estimated Final Value stated in the Schedule".

[26]

[19] The courts have long recognised the desirability of construing business agreements such as these to give effect to the commercial bargain struck between the parties and recorded in the contract: York Air Conditioning and Refrigeration (A/sia) Pty Ltd v Commonwealth;[6] Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd[7] and Kendle v Melsom.[8]

[27]

[20] The question as to whether or not a contract is illusory or uncertain will turn on its own facts: Biotechnology Australia Pty Ltd v Pace[9] and Hillas (W.N.) and Co Ltd v Arcos Ltd.[10] A court will not uphold the validity of an agreement between parties where to do so is to spell out to an unacceptable extent that which the parties have themselves failed to agree; nor will a court clarify an agreement which is irremediably obscure in order to fill the gaps left unfilled by the parties: Biotechnology Australia Pty Ltd v Pace.[11]

[28]

[21] Whether parties have entered into contracts and, if so, on what terms must be determined objectively: Taylor v Johnson.[12] The objective intention of the parties in signing the leases was that their contractual obligations be wholly contained within the written leases and schedules. It is impossible to determine from those documents the respondents' liability once the vehicles were sold by the appellant. There was no "Estimated Final Value stated in the Schedule" in either lease; nor were the respondents aware when they signed the leases of any nominated sum which was to be added later. The respondents cannot have intended that their liability upon default and subsequent sale of the vehicles by the appellant be dependent on sums unknown to them which were not stated in the schedules. The respondents' rights and obligations in the event of the appellant retaking possession of the vehicles and selling them under cl 12.5 were matters at the heart of the parties' bargain: see Mercantile Credits Ltd v Comblas.[13] It is impossible to attribute any particular contractual intention to the parties as to the respondents' liability once the vehicles were sold by the appellant after termination of the contract. In such circumstances, the contract or at least part of it will fail: see Scammell (G.) & Nephew Ltd v Ouston;[14] Upper Hunter[15] and Meehan v Jones.[16]

[29]

[22] The leases make no other provision for accounting for the proceeds of the sale of the vehicles. To make the respondents liable for the Recoverable Amount under cl 12.2 without taking into account the sale price of the vehicles under cl 12.5 would be to hold the respondents to an agreement which they did not enter.[17]

[30]

[23] As the learned primary judge noted in his reasons, this was not a case where the appellant later notified the respondents by way of counter offer of "the Estimated Final Value stated in the Schedule", the subsequent lease payments constituting an acceptance: cf Custom Credit Corp Ltd v Gray.[18]

[31]

[24] As the leases did not contain an "Estimated Final Value stated in the Schedule" it was impossible to determine the respondents' liability to the appellant once the vehicles were sold under cl 12.5; in this respect that part of the contract is irremediably obscure and unable to be given a sensible meaning. The appellant was unable to establish its counterclaim and the judge was correct in dismissing it. The appeal must fail.

[32]

[25] It is unnecessary to consider whether the leases were also uncertain because of the definition of "Estimated Final Value" in cl 1 which gave the appellant a largely unfettered discretion to determine that figure.

[33]

[26] The appellant also appeals from the primary judge's order as to costs.[19] Without hearing argument, the primary judge ordered that the plaintiffs (the respondents on appeal) pay the defendants' costs of the claim to be assessed and that the first defendant (the appellant) pay the plaintiffs' costs of and incidental to the counterclaim to be assessed. The order was one of costs following the event and is unremarkable. It may well be, as Mr Hackett has argued, that the costs of the counterclaim were very limited, but this is a matter that can be adequately determined by the registrar when assessing the costs. I would refuse this ground of the appeal.

[34]

[27] The appeal should be dismissed with costs to be assessed.

[35]

[28] DAVIES JA: This is an appeal from a judgment in the District Court dismissing a counterclaim by the appellant for the sum of $108,490.96 claimed to be due and owing by the respondents pursuant to two agreements on the terms of two sets of written motor vehicle lease documents in identical terms except as to amounts and type of vehicle. The appellant was in each case said to be the lessor and the respondents the lessees. The amount claimed under one such agreement was $48,073.96 and under the other $60,417.00. The amounts were claimed, in each case, pursuant to cl 12.2 of the principal lease document.

[36]

[29] The learned primary judge dismissed both claim and counterclaim, only the latter of which is before this Court. The principal question argued on the counterclaim at trial was whether, in each case, the failure to state an amount in the space provided for "Estimated Final Value" in the second of the lease documents, described as "the Schedule" in the principal document, rendered the agreements illusory or uncertain. The learned primary judge answered this question in the affirmative. However in this Court the respondents appeared also to argue that the parties' intention was that no contract would come into existence until that amount was stated and consequently that no contract ever came into existence.

[37]

[30] The documents were executed by the respondents on 30 March 1992 and by the appellant on 31 March 1992. When executed by the respondents a number of items in the schedule, in each case, were left blank to be completed by the appellant. The appellant completed all of these except for the amount for "Estimated Final Value". Copies of the documents as so completed and executed by the appellant were sent by the appellant to the respondents under cover of a letter dated 8 April 1992. Possession of the vehicle, in each case, was given to the respondents and they commenced to pay rental instalments, in each case, in accordance with the terms stated.

[38]

[31] The documents in each case provided that if the vehicle was driven more than 50,000 kms during the four year term of the lease an excess usage fee of eight cents per kilometre was payable; and if it were driven in excess of 5,000 kms more than 50,000 kms during that term the appellant was entitled to retake possession of the vehicle. It was common ground in each case that the 5,000 km limit was exceeded at about two years into the term of possession by the respondents thereby, if there were a binding agreement on the terms of the documents, creating an "event of default" under cl 12.1(i) of the principal document and conferring on the appellant an entitlement to retake possession.

[39]

[32] The principal lease document relevantly provided:

[40]

"12.2 Upon the occurrence of any Event of Default the Recoverable Amount shall forthwith become due and payable by the Lessee to BMW Finance.

[41]

12.3 BMW Finance shall not be entitled to retake possession of the goods prior to the expiry of the Lease Term if:

[42]

(a) the Lessee shall have paid to BMW Finance the Recoverable Amount; and

[43]

(b) the safety condition safekeeping or insurance of or over the goods is not in jeopardy or likely to be so.

[44]

12.5 If BMW Finance having retaken possession of the goods pursuant to clause 12 disposes of the goods as soon as reasonably practicable at the best price BMW Finance can reasonably obtain at the time of disposal and the net proceeds of such disposal (after allowing for all costs and expenses incidental to return repossession and disposal including care [sic] storage and selling expenses) exceed the Estimated Final Value stated in the Schedule the amount of the excess shall be set off by BMW Finance against the Recoverable Amount provided always that the net proceeds so set off shall not exceed the Recoverable Amount."

[45]

[33] The "Recoverable Amount" referred to in each of cl 12.2, cl 12.3 and cl 12.5 was defined in cl 1.1 to mean the aggregate of the "Discounted Balance", stamp duty payable on the discounted balance, costs and expenses of repossessing, the amount of rentals or other monies accrued and unpaid, restoration costs and any excess usage fee, storage costs following retaking of possession and interest on overdue amounts, less any monies paid by the lessee to the lessor in respect of rent legally retainable by the lessor. The "Discounted Balance" was, in turn, defined to mean the sum of:

[46]

"(i) the entire rent less any Maintenance Rebate; and

[47]

each rebated and discounted to reflect their present value by applying the Relevant Rate (as defined herein) to each payment in respect of the period by which the date for payment is brought forward."

[48]

"Estimated Final Value" was defined to mean the lessor's "estimate of the value of the Goods at the date of termination of the Lease". And "Relevant Rate" was defined as a rate calculated by reference to, amongst other things, the "Estimated Final Value".

[49]

[34] As already mentioned, the schedule referred to in cl 12.5 contained a heading "Estimated Final Value" and a designated space under it for insertion of an amount. Beside that space were the words "being estimated value of goods at the expiration of the period of lease". As also mentioned, the appellant failed to insert any amount in that space before executing the documents and providing copies of them to the respondents.

[50]

[35] The "Estimated Final Value" was therefore relevant under any agreement constituted by these documents in two respects:

[51]

1. in the calculation of the amount which had to be paid pursuant to cl 12.2 on the occurrence of an "Event of Default" under cl 12.1 and pursuant to cl 12.3 to avoid a retaking of possession consequent upon such "Event of Default"; and

[52]

2. in the calculation of the amount payable by the lessee in the event that, the lessor having retaken possession of the goods pursuant to cl 12.1, it disposed of them with the consequence that the nett proceeds of that disposal, as defined in cl 12.5, exceeded the estimated final value.

[53]

That is not to say that such amounts could not be calculated if no amount were included in the lease agreement for estimated final value; they would merely be different amounts if that were so.

[54]

[36] It was common ground between the parties that the respondents returned the vehicles to the appellant on 28 December 1994. The appellant had demanded their return, because of the event of default under cl 12.1(i), as the learned primary judge found, on 25 October 1994.[20] However by the time of their return the respondents had themselves alleged breach of the agreements by the appellant and, by letter of 23 December, purported to elect to terminate the agreements. In their statement of claim they alleged in effect, that it was in consequence of that election that they returned the vehicles on 28 December; but this was before they pleaded uncertainty which occurred in their reply to the appellant's counterclaim.

[55]

[37] The appellant initially conceded and indeed submitted that "Estimated Final Value" had the same meaning for all purposes in the lease. It was only during the course of his oral argument that counsel for the appellant resiled from that submission and contended that it had different meanings for the purposes of determining the "Recoverable Amount" under cl 12.2 and making the calculations under cl 12.5. It would be surprising if that were so and no sensible basis was suggested for giving that term different meanings for different purposes in cl 12.

[56]

[38] Clause 12.5 envisaged that the estimated final value would be stated in the schedule and the schedule itself also envisaged that. Again it would be surprising if an amount relevant to a calculation of the financial rights and obligations of the parties in the event of default by the lessee was not intended to be stated in the contract. But it does not follow, in my opinion, from the failure to include in the schedule any amount for estimated final value that there was no agreement between the parties or that any such agreement was uncertain or illusory.

[57]

[1] [39] On the contrary, in my opinion, a lease agreement was, in each case, entered into and partly performed. The appellant gave possession of the motor vehicles to the respondents on or shortly after the dates of execution of the documents by the parties and the respondents, for more than two years, paid instalments of rent in accordance with the terms of the written documents, copies of which, in their final form, both parties had in their possession.[21] No doubt if the respondents had not defaulted in the way in which they did they would have continued to pay and the appellant would have continued to receive instalments of rent in accordance with the terms of those documents and the respondents would have been permitted by the appellant to continue to retain possession of the motor vehicles until expiry of the term stated therein. The lease agreement which was entered into and performed in each case was one upon the terms of the written documents to the extent that they were capable of constituting a contract of lease between the parties. What then was the effect of the omission of an amount in the schedule, in each case, for estimated final value?

[58]

[40] It was, in my opinion, that there was no estimated final value for any purpose of the contract between the parties for there could have been no estimated final value except one "stated in the Schedule".[22] It was, in effect, the same as if, in the space provided, "nil" or some equivalent term had been inserted. It remains to consider the consequence of that in the present case.

[59]

[41] On or shortly before the first day of trial the appellant produced certificates of indebtedness pursuant to each lease agreement. These were produced pursuant to cl 17.2 of the principal document which made any such certificate prima facie evidence that the amounts stated as the amounts outstanding were correct. As these certificates were in almost identical form except as to amounts it is sufficient to set out the substance of one only of them. It provided:

[60]

"I further certify that the costs set out in the calculation were expended by BMW Australia Finance Limited:

[61]

[1] [42] The certificate does not appear on its face to be one purporting to be a certificate either under cl 12.2 or under cl 12.5. It is not one purporting to calculate the recoverable amount under cl 12.2 because that clause does not require credit to be given for the proceeds of sale of the vehicle which seems plainly to be included in that certificate. And it does not appear to be a certificate purporting to calculate the amount under cl 12.5 because that clause would be applicable only when the nett proceeds of sale exceed estimated final value and, on the estimated final value given in that certificate, that was not the case. However apart from the inclusion of an amount in it for "Estimated Value", which must mean the estimated final value or the discounted estimated final value, the respondents did not dispute the correctness of any of the amounts contained in the certificate.

[62]

[43] The question then is, accepting the correctness of amounts stated in the certificate, other than that for estimated final value, was there any amount due and owing to the appellant under either lease agreement? In my opinion this depends on whether the appellant retook possession pursuant to its entitlement to do so under cl 12.1. If it did then, there being no amount included for estimated final value stated in the schedule, the nett proceeds of sale exceeded estimated final value (nil) and it was consequently correct of the appellant to reduce the amount otherwise owing by the amount of the sale price obtained. It was not contended that the sale was not as soon as practicable or at the best price reasonably obtainable.[23]

[63]

[44] The interest certified to be due and owing in the certificate was from 10 April 1995 until 13 March 2000. The last of these dates was apparently the first day of trial. The first of them, the appellant's counsel assured us, was the date of sale of the vehicle by the appellant. But on the assumption which I think is correct that there was no estimated final value, no interest would have accrued because the sale price exceeded the balance, even disregarding the rebate on it, at 10 April 1995; and it exceeded the balance together with the other costs for entry fee, engineer's report, advertising, transport and detailing.

[64]

[45] The learned trial judge did not decide whether the appellant retook possession of the motor vehicles within the meaning of cl 12.[24] It was unnecessary for him to do so because he found the agreements uncertain. Nor was all of the evidence relevant to that issue put before this Court. However there are a number of reasons why, in my opinion, the appellant should not succeed in its contention that it did not retake possession of the vehicles pursuant to that clause.

[65]

[46] The first is that such a contention is inconsistent with the way in which it conducted its case at trial. There it contended that the respondents defaulted under cl 12.1(i), that the appellant demanded return of the motor vehicles and that the respondents handed over possession of them because of the appellant's entitlement to retake possession. It denied the respondents' competing contention that they returned the vehicles consequent upon their election to terminate the agreements. On the contentions of the appellant at trial there was, in my opinion, a retaking of possession pursuant to cl 12.

[66]

[47] Secondly there appears to be little substance in the respondents' competing contention referred to. If, as I have concluded, there was in each case a lease upon the terms of the documents the appellant was not liable for the cost of maintaining the vehicles beyond the kilometre allowance specified in the schedule.[25] Yet the basis of the respondents' purported election and consequent return of the vehicles was the failure of the appellant to accept liability for such a cost incurred after that allowance had been exceeded.[26]

[67]

[48] Once the respondents' competing contention is rejected the reasonable inference from the correspondence between the parties and their representatives, which was in evidence at the trial but not part of the appeal record, is that the respondents returned possession of the vehicles to the appellant pursuant to the latter's entitlement to retake possession of them. The appellant's demand for possession of the vehicles of 25 October 1994 was unequivocally made pursuant to its entitlement to retake possession for breach of cl 12.1(i). Because the respondents had by then commenced these proceedings the appellant agreed not to enforce its demand, pending determination of the proceedings, only upon certain undertakings being given. It is unclear whether these undertakings had been given by the time the vehicles were returned but it is plain from the respondents' solicitors' letter of 23 December 1994 that they no longer intended to honour them.

[68]

[49] For those reasons, in my opinion, I would not be prepared to accede to the appellant's contention, made for the first time in this Court, that it did not retake possession of the vehicles pursuant to cl 12. Accordingly it failed to establish that, there being no amount for estimated final value, there was any amount owing to it pursuant to either agreement.

[69]

[50] The other question argued in this appeal was that of the costs of the trial. I agree with the President's reasons for rejecting the appellant's contentions in this respect. In my opinion the appeal should be dismissed with costs.

[70]

[51] PINCUS JA: The nature of the dispute and the relevant facts are set out in the reasons of the President and those of Davies JA.

[71]

[52] The lease agreement is a puzzling document. Assume that a car costing $100,000 is let for a period, the rental paid being $50,000. It is then repossessed and sold for $50,000. The lessor is out of pocket, on these figures, and one would expect the lessee to have to pay something extra to compensate the lessor, at the least, for the fact that it paid out $100,000 initially to buy the car and has received back the same amount at later dates. Under this lease, on repossession the lessor is entitled to various sums including the entire rent payable and the "Estimated Final Value"; this is defined to be the lessor's "estimate of the value of the Goods at the date of termination of the Lease". So the more valuable the car is at the date of termination of the lease, the more the lessee has to pay; one would expect that if the value of the repossessed car were, say, nil, the lessee would have to pay more after repossession than if it were $50,000. This part of the lease makes no commercial sense.

[72]

[53] And the same may be said of cl 12.5. Under that clause, if the lessor retakes possession of the car for default and sells it for, say, $60,000 being $10,000 more than the Estimated Final Value, the $10,000 is set-off against the amount the lessor can recover. The drafter's intention is not quite clear, but what does seem clear is that the set-off does not apply if the sale price is equal to or less than the Estimated Final Value; so if the sale price after repossession does not exceed $50,000, it does not matter how much the price is - the lessee derives no advantage from the vehicle's having been sold.

[73]

[54] I accept that the Court should try to make practical sense of a business document, but when it appears to be based on no intelligible scheme I do not see why the Court should strain to read it in such a way as to produce the figure which commonsense might have suggested could reasonably be recoverable. The oddity of the lease provisions is not confined to the points just made. I note that the "Discounted Balance" includes the entire rent, rebated, and the "Recoverable Amount" includes the Discounted Balance plus unpaid rent. Further, the definition of "Discounted Balance" contemplates rebating and discounting of the Estimated Final Value, but the basis on which this should be done is quite uncertain.

[74]

[55] But the most important obscurity in the document, for present purposes, is whether the intention is that there shall be two meanings of "Estimated Final Value", or only one. In favour of the former proposition, there is the fact that the definition of "Estimated Final Value" in cl 1.1 is the appellant's "estimate of the value of the Goods at the date of termination of the Lease", whereas cl 12.5 refers to the "Estimated Final Value stated in the Schedule" which schedule contained a box for insertion of the relevant amount; that was left blank. Like Davies JA, I am of the view that one should treat the document as intending only one meaning for "Estimated Final Value" and this is done by describing the concept in two ways which are consistent with one another; it is both the estimate of the value of the car at the date of termination of the lease and also the amount stated in the schedule. Admittedly, this is not a conclusion one could reach with confidence, in a document of this character; it is simply the best guess I can make about the true intention of these provisions.

[75]

[56] The result is that, no figure being stated in the schedule, the appellant has not the right to include in the sums due a figure for Estimated Final Value. An attempt was made at the hearing to advance an alternative and lesser claim than that made, but leave to do so was refused.

[76]

[57] I agree with the President and with Davies JA that the appeal should be dismissed with costs to be assessed.

[77]

[1] The second defendant is not a party to this appeal.

[78]

[6] [1949] HCA 23; (1949) 80 CLR 11, 26.

[79]

[7] [1968] HCA 8; (1968) 118 CLR 429, 437.

[80]

[9] (1988-1989) 15 NSWLR 130 per Kirby P 135.

[81]

[10] [1932] UKHL 2; [1932] All ER 494; (1932) Comm Cas 23, 29.

[82]

[12] [1983] HCA 5; (1983) 151 CLR 422, 429-430.

[83]

[13] (1982) 56 ALJR 499, 501.

[84]

[14] [1941] AC 251.

[85]

[16] [1982] HCA 52; (1981-1982) 149 CLR 571, 578.

[86]

[18] [1992] VicRp 36; (1992) 1 VR 540.

[87]

[19] The leave of the primary judge to appeal against a costs order imposed in the District Court is unnecessary: see Clift v Timms Appeal No 1095 of 1996, 25 March 1997 and District Court Act 1967, s 118; cf Supreme Court Act 1995, s 253.

[88]

[21] Cf Brogden v Metropolitan Railway Company (1877) 2 App Cas 666; Empirnall Holdings v Machon Paull (1988) 14 NSWLR 523.

[89]

[24] However his Honour did conclude that the "relevant letter terminating the said agreements was [the appellant's letter] dated 26th October, 1994": at [68].

[90]

[26] The learned trial judge's conclusion at [68] also rejected this contention.

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Judgment (90 paragraphs)

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Cases Cited (7)