Kay's Leasing Corporation Pty Ltd v Fletcher

2. In the event of the Optionee exercising the said option to purchase, the Owner shall specify the specific goods the subject of such option and nominate a date for delivery thereof (being a date not later than the date of expiration of the unextended term of the Leasing Agreement or, as the case may be, not later than the date of expiration of the extended term thereof), by a notice in writing to reach the Optionee in the ordinary course of post at least one month prior to the expiration of the term (unextended or extended as the case may be) of the Leasing Agreement.

3. The Owner may at its uncontrolled discretion select as the specific goods the subject of such option either the actual goods leased under the Leasing Agreement or such other goods as in the opinion of the Owner satisfy the requirements of Clause 1 hereof.

(a) The Owner shall be bound to deliver the goods so specified in the Owner's notice under Clause 2 hereof on the date nominated in such notice, or in the event of the Owner pursuant to Clause 3 hereof selecting the actual goods leased under the Leasing Agreement as the subject of the said option then subject to payment of the purchase price the actual goods leased under the Leasing Agreement shall be deemed to have been delivered by the Owner to the Optionee under this Agreement on the date so nominated.

(b) Upon the Owner specifying the specific goods under Clause 2 hereof and delivering the same to the Optionee and upon payment of the purchase price thereof the property in the goods shall pass to the Optionee.

(b) Upon the passing of the property in the goods to the Optionee in accordance with Clause 5 (b) hereof all rights of the Optionee under the Leasing Agreement shall cease and determine and the Optionee shall be under no further liability under the Leasing Agreement other than such as shall have accrued at such rate.

8. Nothing herein contained shall give to the Optionee any right title or interest in any of the actual goods the subject of the Leasing Agreement save and except such right title or interest as the Optionee has by virtue of the operation of the Leasing Agreement and any right of the Owner to sell assign transfer mortgage encumber or otherwise deal with the actual goods the subject of the Leasing Agreement shall not be affected by this present Agreement and in particular no term shall be implied in this present Agreement that the Owner shall not so act as to make it impossible for the Owner to select the actual goods the subject of the Leasing Agreement pursuant to Clause 3 hereof.

The questions which now have to be decided arose in an action in which the appellant sued the respondents for arrears of hire to the extent of £3,134 and in which the respondents sought to recover by way of cross-action the sum of £1,099 which they had paid to the appellant for hire pursuant to the hiring agreement. The parties reached agreement concerning the relevant facts and an order was made by consent which set out those facts in the form of a special case and stated the following series of questions for the Full Court:

(1) Is the law applicable to the interpretation of the agreements of 22nd June 1960, between the plaintiff and the defendants the law of the State of Victoria or the law of the State of New South Wales?

(2) If the law of the contract is that of the State of Victoria, do the two said agreements of 22nd June 1960, or either of them, constitute a hire-purchase agreement within the meaning of the Hire-Purchase Act 1959 Vict.?

(3) If the law of the contract is that of the State of New South Wales, do the two said agreements of 22nd June 1960, or either of them, constitute a hire-purchase agreement within the meaning of the Hire-purchase Agreements Act, 1941-1957 N.S.W.?

(4) Is the plaintiff entitled to recover from the defendant the sum of three thousand one hundred and thirty-four pounds three shillings and five pence (£3,134 3s. 5d.)?

(5) Is the defendant entitled to recover from the plaintiff the sum of one thousand and ninety-nine pounds (£1,099)?

As appears from the case the two agreements were made in Victoria and the hiring agreement contained a provision that it should take effect and be construed in accordance with the law of the State of Victoria. Walsh J., who published the leading judgment in the Full Court, considered that the proper law of each agreement was the law of Victoria and in the result the Full Court answered question (1): Victoria. After some discussion concerning the ambit of the operation generally of the Hire-purchase Agreements Act, 1941-1957 N.S.W. Walsh J. said: "There is in the Act no express statement of the criterion upon which is to be determined to what hire-purchase agreements out of all such agreements throughout the world the Act should be regarded as intended to apply. In that situation I am of opinion that in so far as the Act regulates and changes the rights and obligations of the parties to a contract it should be treated as applying to all contracts of which the proper law, that is the law by which the parties intended or are to be presumed to have intended that their rights and obligations should be governed, is the law of New South Wales. To such contracts the provisions of the Act affecting the obligations of the parties are to be applied by a Court in New South Wales whether or not the contract was made in New South Wales. But they will not be applied to contracts which are to be governed by some other law, even if those contracts are made in this State." But with respect to that learned judge we think that, having regard to the relevant facts, question (1) was stated in a form which obscured the particular problem which arose in the case and this led to a much more general consideration of the operation of the Act, and its many and varied provisions, than was either necessary or desirable. We say this because it was agreed by the parties that if the agreements together were deemed to be a hire-purchase agreement either according to New South Wales law or Victorian law, which in this respect contained substantially identical provisions, they were void and the appellant's claim in the action was bound to fail whichever law was applied. But what remained for consideration was whether the respondents were entitled to succeed on their cross-action and this depended upon whether particular provisions of the Hire-purchase Agreements Act, 1941-1957 N.S.W. - provisions which do not appear in the Victorian Act - were applicable in the circumstances of the case. The question, therefore, was not one concerned with the ascertainment of "the law applicable to the interpretation" of the agreements in question but as to the ambit of the operation of these particular provisions.

The first of these provisions is s. 31 (3) and it is in the following terms: "(3) A hire-purchase agreement entered into in contravention of this section shall be void: Provided that all moneys paid and the value of any other consideration provided by the purchaser under the agreement shall be recoverable as a debt due to him by the vendor". Now the leading provision of this section, which is sub-s. (1), provides that a vendor who enters into a hire-purchase agreement without having first obtained from the purchaser or proposed purchaser thereunder in current coin or bank notes or by cheque drawn by a banker or by the purchaser or proposed purchaser or the spouse of the purchaser or proposed purchaser on a banker a deposit of a specified amount shall be guilty of an offence. What sub-s. (3) treats as a hire-purchase agreement entered into in contravention of the section is, therefore, a hire-purchase agreement entered into by a vendor who commits in relation thereto the offence created by sub-s. (1) and the relevant question for determination is the intended scope of the operation of that sub-section. This is, we think, not a problem to be decided by ascertaining the proper law of the contract for the offence must be taken to have been committed if, in New South Wales, a vendor enters into a hire-purchase agreement without having first obtained from the purchaser or proposed purchaser a deposit of the specified amount. But it can have no application to the case of a hire-purchase agreement entered into outside that State.

The second provision in question is s. 26C (4) of the New South Wales Act which provides that a hire-purchase agreement to which s. 26B of the Act applies and which is entered into in contravention of sub-s. (2) of s. 26C shall be void and there is then added what is called a proviso in similar terms to that contained in s. 31 (2). Contravention of s. 26C (2), which specifies maximum "hiring charges", is not, however, a punishable offence as in the case of a contravention of s. 31 (1). Nevertheless the avoiding provisions of s. 26C (4) operate as a consequence of a contravention of the earlier sub-section and, as such, a sanction for the observance of the provisions of that section. In our view whether or not there has been such a contravention does not in any way depend upon the proper law of the contract; it falls to be determined by considering whether, within New South Wales, a person has, in relation to a hire-purchase agreement made defined "hiring charges" in excess of those prescribed by s. 26C (2) (cf. per Lord Radcliffe in Boissevain v. Weil [1] ). As the agreements in this case were made in Victoria and the "hiring charges" were made in that State we are of opinion that it is impossible to say, even if the two agreements together constituted a hire-purchase agreement, that the appellant contravened the provisions of s. 26C (1). In these circumstances we do not think it proper to answer the first question as framed and we proceed, therefore, to consider the substance of the second, fourth and fifth questions.

We agree with Walsh J. that the two documents constituted a hire-purchase agreement within the meaning of the Victorian Hire-Purchase Act 1959 and we agree with his reasons for reaching this conclusion. But we propose to make some additional observations and we do so simply because, as it seems to us, an additional argument was advanced by the appellant in this Court and because we do not assent to the proposition, somewhat tentatively expressed by his Honour, that the reasons given by Jones J. in Reg. v. R. W. Proffitt Ltd. [2] give some support to the appellant's argument.

Barely stated the question to be decided is whether the two agreements are fairly within the description contained in s. 2 (3) of the Hire-Purchase Act 1959: "Where, by virtue of two or more agreements, none of which by itself constitutes a hire-purchase agreement, there is a bailment of goods and the property in the goods will or may pass to the bailee, the agreements shall, for the purposes of this Act, be treated as a single hire-purchase agreement made at the time when the last agreement was made". Earlier, by the same section, "Hire-purchase agreement" is defined to include "a letting of goods with an option to purchase and an agreement for the purchase of goods by instalments". There are some exceptions prescribed but it is not material to refer to them. Most of the argument on this aspect of the case revolved round the expression in s. 2 (3) "and the property in the goods will or may pass to the bailee" and it was contended that the word "may" was not apt to embrace a situation where, as in the present case, the contingency upon which the property is conditioned to pass is in the control of the owner. The contrary view, it was said, would produce the anomalous result that the two agreements together would constitute a hire-purchase agreement whereas if the contractual relations to which they give rise had been defined in a single agreement that agreement would not be a hire-purchase agreement because it would not be "a letting of goods with an option to purchase". Accordingly, it was contended that the word "may" should be understood to mean "may" at the option of the hirer. An alternative interpretation was also suggested to cover contingencies not under the control either of the owner or the hirer and the qualification advanced by this suggestion was "independently of the assent of the owner". But we can see no ground upon which the wide language of the expression under consideration should be so qualified and reference to the legislative history of s. 2 (3) provides some affirmative ground for thinking that it should not. The sub-section is taken with the addition of one word from the definition of Hire-purchase agreement in s. 21 of the English Hire-Purchase Act, 1938: " "Hire-purchase agreement" means an agreement for the bailment of goods under which the bailee may buy the goods or under which the property in the goods will or may pass to the bailee, and where by virtue of two or more agreements, none of which by itself constitutes a hire-purchase agreement, there is a bailment of goods and either the bailee may buy the goods, or the property therein will or may pass to the bailee, the agreements shall be treated for the purposes of this Act as a single agreement made at the time when the last of the agreements was made: ". The addition made in s. 2 (3) of the Victorian Act was the introduction of "hire-purchase" between the words "single" and "agreement" which appear towards the end of the definition. The definition which is contained in the English Act appears also in the New South Wales Hire-purchase Agreements Act, 1941-1957 and, since the primary definition of hire-purchase agreement includes "not only an agreement for the bailment of goods under which the bailee may buy the goods" but also an "agreement for the bailment of goods under which the property in the goods will or may pass to the bailee", no question can arise either in England or New South Wales as to whether two agreements could constitute a hire-purchase agreement where the same composite transaction effected by a single agreement would not. What appears to have happened in Victoria is that in framing the 1959 Act, which repealed Pt X of the Instruments Act 1958, the draftsman, in substance, adopted the definition of hire-purchase agreement appearing in s. 97 of the latter Act and then adopted as s. 2 (3) that part of the English or New South Wales definition which commences with the words "Where by virtue of two or more agreements". In these circumstances we can see no reason for restricting the language of s. 2 (3) by reference to the ambit of the preceding definition. On the contrary the provision must, we think, be taken to have been adopted with its full significance and must, according to its language, be given full effect.

The question then is what meaning should be given to the words in s. 2 (3) "Where by virtue of two agreements there is a bailment of goods and the property in the goods will or may pass to the bailee"? The phrase which we have refrained from quoting - "and the bailee may buy the goods" - seems to us to contemplate a contractual right in the bailee to purchase the goods the subject of the bailment if he wishes to do so and is, of course, quite apt to cover the form of option found in conventional hire-purchase agreements. The word "will", in the phrase which we have quoted in the first instance, seems to fit the case of an agreement for the purchase of goods by instalments where the possession of but not the property in the subject goods has passed to the purchaser. The practical result, therefore, of the appellant's argument is that the word "may" really adds nothing to the phrase and contemplates merely that the holder of the option may or may not exercise it. But such a contingency is already covered by the earlier words "and the bailee may buy the goods". To our minds the word "may" used in contradistinction to "will" appears in order to deal with the situation where, upon the happening of some specified contingency or contingencies, the property in the subject goods will pass and we can see no reason for restricting the sub-section to cases where the contingency is solely within the control of the bailee.

In the present case the second agreement purports to give to the respondents an option to purchase from the appellant "goods of the same general description" as the hired goods and further provides that the owner shall have the right to select the specific goods. The goods selected are to be of a type quality and condition, at least, equal to the type quality and condition of the actual goods leased under the hiring agreement and the owner is entitled to select as the specific goods "the actual goods" the subject of the hiring. Upon such selection and upon payment of the purchase price "the property in the goods shall pass" to the hirer and the hiring agreement is to cease and determine. The passing of the property in the subject goods to the respondents is, therefore, subject to two contingencies. It will pass if the respondents exercise their option and if, thereafter, the appellant selects as the specific goods the goods the subject of the hiring. In effect, it seems to us, the agreement gave to the respondents the right, by the exercise of their option, to bring into existence a contract for the sale of unascertained goods by description leaving it to the seller to appropriate specific goods to the contract. Upon the exercise of the option the appellant may appropriate to the contract the goods the subject of the bailment and upon payment of the purchase price the property in the goods will, pursuant to cl. 5 (b) of the agreement, pass to the respondent. The subject goods "may", therefore, pass by virtue of the agreement and will, in fact, do so if, following the exercise by the respondents of their option, the appellant selects them as the specific goods. This is the critical contingency upon which the property may pass to the respondent and, in our view, the agreement is one properly described as an agreement by virtue of which the subject goods "may" pass to the respondent. The expression "may pass" contemplates a passing upon the occurrence of some event contemplated by the agreement and it is, we think, impossible to limit its significance to events solely within the control of the hirer or, for that matter, to events outside the control of the bailor.

A further subsidiary argument was addressed to us on behalf of the appellant. It was asserted that it could not be said that the property in the goods might pass by virtue of the agreement. It could, it was said, pass only by virtue of their selection by the appellant subsequently to the exercise by the respondents of their option. But the act of appropriation, or selection, would be an act contemplated by and performed in pursuance of the option agreement and would merely be the event upon the happening of which cl. 5 (b) of the agreement would, after payment, operate to pass the property in the goods.

The remaining matter with which we wish to deal is concerned with the decision in Reg. v. R. W. Proffitt Ltd. [1] . There Jones J. had before him an agreement for the hire of certain goods which afforded to the hirer the opportunity "subject to the enactment of the necessary legislation" to purchase the goods the subject of the hiring. His Lordship held that the agreement was not a hire-purchase agreement within the meaning of the Hire-Purchase Act, 1938 U.K.. He said: "The conclusion to which I have come is that, to make it a hire-purchase agreement, the hirer should either have been given a right to buy the goods if he wanted to, or there should be such a provision that if the goods might pass to the bailee they might do so only by virtue of some right which has been conferred on him by this agreement. In my view, no such right has been conferred on him, because that right would have been acquired only if this new legislation were passed, and there is no certainty whatever whether the new legislation would be passed, or when it would be passed. In view of that, it seems to me that it cannot be said that this is an agreement for the bailment of goods under which the bailee may buy the goods or under which the property in the goods will or may pass to the bailee" [1] . But, in our view, these observations have no relevance to the present case. As we understand his Lordship's observations he was merely pointing out that, in that case, the bailee had neither a present right to buy the goods nor any present right by virtue of which the goods might pass and that the accrual of any such right was dependent upon an event which might or might not happen. Such a case is clearly distinguishable from the present case where the option agreement confers a present right upon the respondents to purchase goods of the same general description as the subject goods and the property in the subject goods will pass if, following the exercise of the option, they are selected by the appellant. This very event is contemplated by the agreement as one manner in which the appellant may fulfil the obligation which the exercise by the respondents of their option will cast upon it and his Lordship's observations, in our view, have nothing to do with such a case.

1. [1954] 2 Q.B. 35. 2. [1954] 2 Q.B., at p. 41.

For these reasons and the reasons expressed by Walsh J. on this branch of the case we are of the opinion that the two agreements together constitute a hire-purchase agreement within the meaning of the Hire-Purchase Act 1959 and, accordingly, we are of the opinion that both the appeal and cross-appeal should be dismissed. Upon the hearing we were informed that it had been agreed that the fate of these proceedings should also determine the fate of two other appeals and cross-appeals to this Court arising out of similar agreements and these should also be dismissed.

The Court has before it two appeals, each by special leave, the one by the plaintiff and the other by the defendants in an action in the Supreme Court of New South Wales. The parties had stated a special case and by consent had obtained a prothonotary's order, under s. 55 of the Common Law Procedure Act, 1899 N.S.W. that the questions of law in the special case be stated for the opinion of the Court. There were five such questions. The order went on to provide (so far as material) that in the event of the fourth question being answered in the affirmative the defendants should pay the plaintiff £3,134 3s. 5d., and that in the event of the fifth question being answered in the affirmative the plaintiff should pay the defendant £1,099.

The former of these amounts was the unpaid balance of charges under an agreement by which the plaintiff agreed to lease a tractor to the defendants. The other amount was the aggregate of the payments which the defendants had made to the plaintiff under the agreement. The agreement was dated 22nd June 1960. Under the same date the parties entered into a second agreement whereby the plaintiff agreed, subject to conditions, that the defendants should have an option to purchase such goods of the same general description as the goods described in the first agreement as the plaintiff in its uncontrolled discretion should select, but so that the goods so selected should be of a type, quality and condition at least equal on the date of delivery to the type, quality and condition on such delivery date of the actual goods leased under the first agreement.

The body of the special case seems to have been drafted at a time when the only controversy between the parties was upon the question whether the two agreements taken together constituted a hire-purchase agreement within the meaning of the Hire-purchase Agreements Act, 1941-1957 of the State of New South Wales. This is the inference from statements in the special case in express and unqualified terms that if the agreements together constitute a hire-purchase agreement within the meaning of that Act they are void for non-compliance with s. 26C (2) and s. 31 of that Act. The questions in the special case, however, went further than this. Even if the agreements constituted a hire-purchase agreement within the meaning of the New South Wales Act, there nevertheless remained a question whether that Act applied to them in view of the facts (1) that after the defendants had executed the agreements at the plaintiff's registered office in New South Wales the plaintiff executed them at its principal place of business, which was in Victoria, and (2) that each agreement contained a provision that it should "take effect and be construed" in accordance with the law of Victoria. If the New South Wales Act did apply, the plaintiff was by its provisions disentitled to recover the £3,134 3s. 5d. from the defendants and the defendants were thereby entitled to recover the £1,099 from the plaintiff. But if it did not, the corresponding Victorian Act (the Hire-Purchase Act 1959) would have to be considered. The parties did not bother to include in the body of the case any statement that if the agreements formed a hire-purchase agreement within the meaning of the Victorian Act, and that Act applied to them, they were void for non-compliance with one or more of the provisions thereof; but by consent the case was treated before the Supreme Court as if it had contained some such statement.

The questions in the special case dealt with the position under each Act. They were not happily expressed. Although there was in fact no controversy between the parties as to the interpretation of the agreements, the first question asked was whether the law applicable to the interpretation of the agreements was the law of Victoria or the law of New South Wales. The Supreme Court answered: Victoria; but the reasons for judgment showed that the Court intended the answer to resolve a question which in truth was one of interpretation not of the agreements but of the respective Acts, namely whether it was for the purposes of the New South Wales Act or for those of the Victorian Act that it was necessary to decide whether the agreements constituted a hire-purchase agreement. The second and third questions were framed on an assumption that the answer to the first question would determine whether "the law of the contract" was the law of Victoria or the law of New South Wales. They asked, on the alternative hypotheses thus presented, whether the agreements constituted a hire-purchase agreement within the meaning of the Victorian Act (question 2) or a hire-purchase agreement within the meaning of the New South Wales Act (question 3). The Supreme Court answered question 2: Yes; and accordingly found it unnecessary to answer question 3.

With respect, I think that in view of the terms in which the first three questions were expressed it would have been better not to answer them. As framed, they were irrelevant and reflected some confusion of thought. I prefer to put them aside, and to turn to the fourth and fifth questions, namely whether the plaintiff is entitled to recover the £3,134 3s. 5d., and whether the defendants are entitled to recover the £1,099. These are in fact the ultimate questions in the case. They must both be answered favourably to the defendants (the fourth No, and the fifth Yes) if ss. 26C and 31 of the New South Wales Act apply to the agreements as together constituting a hire-purchase agreement, for sub-s. (4) of s. 26C and sub-s. (3) of s. 31 of that Act make a hire-purchase agreement void if entered into in contravention of certain provisions of those sections, and each sub-section contains a proviso enacting that all moneys paid by the purchaser under the (void) agreement shall be recoverable as a debt due to him by the vendor. On the other hand, if those sections do not apply but invalidating provisions in the Victorian Act (unspecified during the argument) do apply, then although the fourth question must still be answered No, in favour of the defendants the fifth must be answered No, in favour of the plaintiff; for none of the avoiding provisions of the Victorian Act is accompanied by a provision making moneys paid by a purchaser recoverable by him.

The Supreme Court decided that the New South Wales Act was not the Act to be considered in this case, and therefore answered question 5, No. Their Honours regarded ss. 26C and 31 of that Act as applying only to agreements the proper law of which, according to the principles of private international law observed in New South Wales, was the law of that State; and they held that the proper law of the agreements in question was the law of Victoria because of the express term in each agreement that it should take effect and be construed in accordance with the law of Victoria. With respect, I agree that the New South Wales Act does not apply, but I reach the conclusion for a different reason.

The New South Wales Act speaks of hire-purchase agreements in general terms. It does not specify in what way the generality of its language is to be reconciled with the geographical limitation to which the legislative power of the State Parliament is subject. The necessary reconciliation is not supplied by the provision in s. 17 of the Interpretation Act of 1897 to the effect that references to matters and things prima facie relate to matters and things "in and of New South Wales". The necessary restriction of the operation of ss. 26C and 31 is therefore to be implied or imported upon a consideration of the context and the subject matter. In the Supreme Court it was considered that the principle to be applied was that by which this Court determined cases such as Wanganui-Rangitikei Electric Power Board v. Australian Mutual Provident Society [1] . Such cases have dealt with legislation modifying or making void contractual rights and obligations of specified descriptions; but in each instance the modification or avoidance was enacted as an end in itself and not as a sanction for contravention of statutory requirements. It was held that in order to restrain the seeming universality of the relevant enactment it should be presumed that the intention was to affect only those rights and obligations the discharge of which was governed by the law of the enacting country according to the rules of private international law. The logical appropriateness of the presumption in a case of the kind can hardly be denied. But it was made clear, particularly in the judgment of Dixon J. in the Wanganui-Rangitikei Case [1] , that the Court was applying a rule which was one of construction only, and that the context or subject matter of legislation might supply a different restriction upon the generality of the language.

1. (1934) 50 C.L.R. 581. 2. (1934) 50 C.L.R., at p. 601.

Where a provision renders an agreement void for non-compliance by the parties or one of them with statutory requirements, especially where the requirements can be seen to embody a specific policy directed against practices which the legislature has deemed oppressive or unjust, a presumption that the agreements in contemplation are only those of which the law of the country is the proper law according to the rules of private international law has no apparent appropriateness to recommend it, and indeed, for a reason of special relevance here, it would produce a result which the legislature is not in the least likely to have intended. It would mean that provisions enacted as salutory reforms might be set at nought by the simple expedient adopted in the present case of inserting in an agreement a stipulation that validity should be a matter for the law of some other country. In Boissevain v. Weil [2] , Denning L.J. said: "Notwithstanding what was said in Vita Food Products Inc. v. Unus Shipping Co. [3] , I do not believe that parties are free to stipulate by what law the validity of their contract is to be determined" [4] . I would respectfully say the same. In the Vita Food Case [5] the proposition was laid down that the parties to a contract may conclusively determine for themselves what the proper law of the contract shall be, provided that their expressed intention is "bona fide or legal", and provided there is no reason for avoiding their choice on the ground of public policy. That seems to me the strongest possible reason for rejecting the proper law of the contract as the test for determining to what agreements enactments such as ss. 26C and 31 of the New South Wales Hire-purchase Agreements Act should be understood as intended to apply. In Dicey's Conflict of Laws, 7th ed. (1958) p. 759 the surmise is offered that statutes designed to implement a social policy, e.g. the Hire-Purchase Act, 1938 U.K., would in certain circumstances be applied by an English Court to a contract which, by agreement between the parties, was subject to a foreign law. A footnote refers to Mynott v. Barnard [1] . The judgment of Latham C.J. in that case [2] should be noted, as also Koop v. Bebb [3] . In these authorities I find general reinforcement for the view above expressed.

1. [1949] 1 K.B. 482 (affd. [1950] A.C. 327). 2. [1939] A.C. 277, at p. 290. 3. [1949] 1 K.B., at p. 491. 4. [1939] A.C. 277. 5. (1939) 62 C.L.R. 68. 6. (1939) 62 C.L.R., at p. 80. 7. (1951) 84 C.L.R. 629, at p. 640.

The restriction which I think is to be inferred from the context and subject matter of ss. 26C and 31 is a restriction to hire-purchase agreements entered into in New South Wales. What makes a hire-purchase agreement void under s. 31 (3) is the conduct of the vendor which s. 31 (1) makes an offence, namely his entering into a hire-purchase agreement without having obtained from the purchaser a sufficient deposit. Under s. 26C (3), the invalidating circumstance is the entering into a hire-purchase agreement in relation to which the hiring charges exceed the prescribed rate. In each case it is at the point of the making of the agreement that the legislature is concerned to see that an objectionable practice is not being given legal effect. The intention, I think, must be that the statute shall step in at that point, and therefore whenever an offending hire-purchase agreement is entered into in New South Wales.

In the present case, although the antecedent negotiations apparently all took place in New South Wales and the agreements were executed by the defendants (the purchasers) in New South Wales, the instruments were thereafter executed by the plaintiff (the vendor) in Victoria. Even if the agreements are to be treated together as a single agreement and as constituting a hire-purchase agreement within the meaning of the New South Wales Act, it is not possible to hold that the hire-purchase agreement was entered into in New South Wales. Accordingly, in my opinion, ss. 26C and 31 of the New South Wales Act do not apply, and the answer the Supreme Court gave to the fifth question was correct.

The only remaining question to be decided is whether the agreements together constitute a "hire-purchase agreement" within the meaning of the Victorian Act. It is provided in s. 2 (1) of that Act that the expression includes a letting of goods with an option of purchase and an agreement for the purchase of goods by instalments. The agreements in the present case, even if treated as one, could not be held to be a hire-purchase agreement by virtue of this provision, for it seems beyond question that an option of purchase means an option in the bailee to purchase the goods bailed and here the only option he has is to purchase unascertained goods of a given description. The defendants do not contend otherwise. They rely upon a separate provision in s. 2 (3) that where, by two or more agreements, none of which by itself constitutes a hire-purchase agreement, there is a bailment of goods and either the bailee may buy the goods or the property in the goods will or may pass to the bailee, the agreements shall, for the purposes of the Act, be treated as a single hire-purchase agreement made at the time when the last agreement was made.

The inspiration for this provision obviously came from the United Kingdom Act (1 & 2 Geo. 6, c. 53, s. 21) and the New South Wales Act. In those Acts, "hire-purchase agreement" is defined to mean "an agreement for the bailment of goods under which the bailee may buy the goods or under which the property in the goods will or may pass to the bailee". To this each Act appends a provision that where, by virtue of two or more agreements, none of which by itself constitutes a hire-purchase agreement, there is a bailment of goods and either the bailee may purchase the goods, or the property therein will or may pass to the bailee, the agreements shall for the purpose of the Act be treated as a single agreement made at the time when the last agreement was made. This appended provision has been carried into the Victorian Act as s. 2 (3) with the addition of the words "hire-purchase" between "single" and "agreement". This has been done notwithstanding that the definition in s. 2 (1) has not been made to correspond in terms with the main portion of the definition in the other Acts; and it has been done without repeating in s. 2 (3) two exceptive paragraphs to which the definition in s. 2 (1) is subject. The result no doubt is that cases may be imagined in which two or more agreements must together be treated as a single hire-purchase agreement although a single agreement containing all their terms would not be a hire-purchase agreement. But notwithstanding the lack of precise correspondence between the two provisions it seems as clear under the Victorian Act as it is under the United Kingdom and New South Wales Acts that the fundamental idea that pervades them is of an agreement, whether embodied in one instrument or in several, whereby one party obtains from the other (i) the possession of goods and (ii) a right to become the owner of the goods possessed, either certainly or upon the performance of conditions such as the payment of moneys. A complete desertion of this basic idea would be involved if the intention were to include the case where the bailee has no right in any event to become the owner of the goods bailed, unless the bailor chooses to appropriate those goods to a future sale to the bailee of unascertained goods by description. It is literally true that in a case like the present the property in the goods bailed may pass to the bailee; and in one sense it is true that, if they do pass to him in consequence of his exercising an option to purchase unascertained goods equal in type, quality and condition to the goods bailed and of the bailor's selecting the bailed goods to be the goods purchased, the property in those goods will pass to the bailee "by virtue of" the agreements. But it seems to me that proper force is not given to the expression in s. 2 (3) "by virtue of two or more agreements the bailee may buy the goods or the property in the goods will or may pass to the bailee" unless it is confined to the case where the agreements, by dealing with the bailed goods only, do all the selecting of specific goods that is necessary for the passing of the property therein to the bailee. The sense of the expression "by virtue of" two or more agreements seems to me to be that the selection of the goods to become the bailee's property is made by the agreements themselves, so that if the property in any goods ever passes by virtue of them it will be the property in the goods bailed. This conclusion does not depend at all upon the fact that in s. 2 (3) the expression "hire-purchase" is added before "agreement" - I should similarly construe both parts of the definition in the United Kingdom and the New South Wales Acts - but the addition seems to me to emphasize that so radical a departure could not have been intended as would be involved in erecting a single hire-purchase agreement out of two agreements which left the bailor to say whether the bailee might in any event become the owner of the bailed goods. In short, I would construe s. 2 (3) as referring only to agreements producing two results with respect to the one lot of specific goods. Some provisions in the Act, such as s. 3 (1) and the First Schedule, ss. 3 (2) (c) (v), 3 (2) (e), 18 (2), and 19 (1) (b), tend to support this conclusion. Other provisions, such as ss. 5 (1) (a) (b) (c), 5 (2), 10, 11, 14 and the Fourth Schedule, 15 and 23 (1), appear to me to make the conclusion quite inevitable.

For the foregoing reasons I would hold that the agreements in the present case are not within s. 2 (3) of the Victorian Hire-Purchase Act and are not agreements to which the avoiding provisions of that Act apply. I would therefore allow the appeal and answer question 4, Yes.

The validity of the agreements here in question, which were made in Victoria by a Victorian company with parties in New South Wales and which were expressed to be governed by the law of Victoria, is, I agree, to be determined in accordance with that law and not that of New South Wales. I turn, therefore, to the validity of these agreements according to Victorian law.

It is provided by s. 2 sub-s. (3) of the Hire-Purchase Act 1959 (which I shall call "the Act") that: "Where, by virtue of two or more agreements, none of which by itself constitutes a hire-purchase agreement, there is a bailment of goods and either the bailee may buy the goods or the property in the goods will or may pass to the bailee, the agreements shall, for the purposes of this Act, be treated as a single hire-purchase agreement made at the time when the last agreement was made." The effect which the decision of the Full Court has attributed to this provision is to constitute as a single hire-purchase agreement two agreements with provisions such that, had they been embodied in one agreement, that agreement would not have been a hire-purchase agreement as defined in s. 2 (1) of the Act. The joint effect of the two agreements under consideration is not an agreement for the purchase of goods by instalments, nor is it a letting of goods with an option to purchase them. Accordingly, one agreement with the effect of the two would not fall within the statutory definition of a hire-purchase agreement. The reason for this is that, although by the first agreement there is a bailment of goods and by the second agreement there is an option to purchase goods, the option is not to purchase the goods let under the first agreement but unspecified goods according to description.

The appellant seeks to put a construction upon sub-s. (3) of s. 2 which, in this case, would not extend its operation beyond constituting two or more independent agreements entered into at different times a hire-purchase agreement unless the joint effect of the agreements, if it had been achieved by one agreement, would have resulted both in a bailment of goods and the right of the bailee to purchase them or to receive or obtain property in them. The construction adopted by the Full Court, disregarding altogether the definition of a hire-purchase agreement, means that the sub-section establishes, as a new category of hire-purchase agreement, an agreement which may fall altogether outside the substantive part of the statutory definition. The Full Court's reasoning would also involve, so it seems to me, treating agreements as described in the sub-section as constituting a hire-purchase agreement not-withstanding that such an agreement would actually fall within the precise exemptions (a) and (b) thereto: for instance, where the hirer, the party to the two agreements described in sub-s. (3) of s. 2, is a person who is engaged in the trade of selling goods of the same nature as the goods comprised in the agreement. This is because, in construing s. 2 (3), no necessity has been felt to pay any regard to the statutory definition. A construction which would produce such results is one which should not be given to the sub-section unless some other meaning more consistent with the statutory definition of a hire-purchase agreement is not reasonably open. An additional reason for seeking an alternative construction to that adopted by the Full Court is that other provisions of the Act, such as ss. 3, 5, 11, 14, 15, 18 and 23, are clearly enough framed for transactions where it is the same goods which are both let and to be purchased. Indeed, it is not apparent to me how some of the provisions of the Act could be applied to an agreement where the goods for purchase are not the same as the goods the subject of the bailment. A hire-purchase agreement providing for the hire of some goods and the purchase of what are or may be goods other than those hired appears to me to be an unlikely monstrosity. Nevertheless, the decision under appeal fathers such a hire-purchase agreement upon s. 2 (3).

The argument for a different construction of s. 2 (3) begins with emphasis upon the statutory definition of a hire-purchase agreement as indicating that the Act is dealing with agreements having carefully defined characteristics, and, in an endeavour to accommodate s. 2 (3) as closely as possible to that indication in its application to the facts under consideration, proceeds to attribute to the words "the bailee may buy the goods or the property in the goods will or may pass to the bailee" a meaning which would not extend the operation of the sub-section beyond agreements of the kind described which, if taken together, would relate to the bailment, the purchase or the passing of property of identical goods.

As I have already said, there is not here a letting of goods with an option to purchase those goods. The option is to purchase unspecified goods by description. Nevertheless, the effect of the one agreement was to create a bailment of goods and, by reason of the transaction of sale contemplated by the other agreement, it could, in one eventuality, happen that the bailee would buy the goods bailed or the property in those goods would pass to the bailee. The eventuality is that the owner of the hired goods should, in the future, decide to appropriate those goods to the other agreement, providing as it does for the sale of goods by description. The particular question of construction here, as I see it, is whether, because of this contingency, it ought to be said that "the bailee may buy the goods" bailed or "the property in the goods" bailed "will or may pass to the bailee".

I have reached the conclusion that the possibility of the bailee buying the goods the subject of bailment because in the future the owner might appropriate them to the other contract does not establish that "by virtue of" the two agreements "the bailee may buy the goods". I am satisfied that the provision is concerned with legal rights conferred by the agreements and not with something that could happen in the future only if the owner were to do something outside his obligations under the agreements. I would, therefore, without any departure from normal usage, read the words "may buy" as equivalent to "entitled to buy", and I find support for doing so in the earlier phrase "by virtue of". Similarly, when it is said that "by virtue of" the two agreements "the property in the goods will or may pass to the bailee", I would understand the reference to be to the passing of property by virtue of the terms of the agreements and not by reason of something that the party other than the bailee may, as owner and without obligation to the bailee, do in relation to the goods the subject of the bailment. I regard the words under consideration as not going beyond a purchase or a passing of property by virtue of the agreements either without more, or by virtue of the exercise by the bailee of rights conferred upon him by the agreements in respect of the goods the subject of the bailment. I read the sub-section, therefore, as operating when the agreements, taken together, constitute a bailment and either (1) give the bailee a right to buy those goods, or (2) provide for the passing of property in those goods (i) without the exercise of any further right, as in the case of a purchase by instalments (in such a case, the property "will" pass); or (ii) by virtue of a possible exercise by the bailee of rights conferred by the agreements (in such a case, the property "may" pass). If so to construe the sub-section results in some overlapping, I regard that as of less importance than disregarding altogether the statutory definition in the construction of the sub-section. Of course, I recognize that there may be difficulty in confining the operation of the sub-section to agreements as described with a joint effect exactly that of a hire-purchase agreement as defined. It may be, for instance, that the sub-section would apply if the joint effect of two agreements were to constitute a bailment and pass the property in the goods to the bailee at the conclusion of the bailment, if he should so elect. Recognition that there may be cases of this sort which might be thought to fall outside the strict terms of the statutory definition is, however, no reason for not construing the sub-section to accord as closely as possible with the statutory definition.

To read s. 2 (3) as creating a category of hire-purchase agreement relating to the hiring of some goods and the purchase of other goods would, I think, be out of keeping with the Act as a whole and, for the reasons I have given, I do not think that the language of the sub-section itself constrains me to come to the conclusion that it has that effect in this case. It would no doubt be more difficult to limit s. 2, sub-s. (3), in a case where its actual terms are clearly fulfilled, yet the result of its literal and unrestricted application would be to constitute as a hire-purchase agreement an agreement falling within one of the exemptions to the statutory definition; nevertheless, if and when that case should arise, literalism might not prevail. In the meantime, I prefer to the construction adopted by the Full Court one which is not less literal but is, I think, much more in keeping both with the general purposes, and the other provisions, of the Act.

I would therefore allow the appeal and dismiss the cross-appeal and, in accordance with the understanding upon which these two appeals were heard, I would deal with the other appeals in accordance with this judgment.