Orix Australia Corp Ltd v Peter Donnelly Automotive Pty Ltd [2007] NSWSC 977 | Case summary

4811/06 ORIX AUSTRALIA CORPORATION LIMITED v PETER DONNELLY AUTOMOTIVE PTY LTD JUDGMENT 1 HIS HONOUR: These proceedings concern the ownership and entitlement to possession of a Subaru Outback motor vehicle ("the vehicle"). The vehicle was purchased from the defendant, a Subaru dealer. It has wound up registered in the name of Andrew Barry Heffernan ("Andrew Heffernan"). He holds it under a lease from the plaintiff, a financier. The defendant has claimed to be entitled to retake possession of the vehicle. The plaintiff has obtained an interlocutory injunction to restrain the repossession of the vehicle and now seeks final declaratory and injunctive relief. Facts 2 The following facts are uncontested or easily found, although there is contest as to the conclusions which should be reached on the basis of those facts. 3 Andrew Heffernan is the Assistant Principal of a Catholic School at Shellharbour. In 2005, he wanted to acquire a new motor vehicle. His employer offered to assist him to acquire one through a lease arrangement with a financier. The employer would pay the lease instalments in return for a salary sacrifice by Andrew Heffernan. As a result of a suggestion by the Independent Teachers' Association, Andrew Heffernan, in June 2005, contacted Dane Parnell by telephone. 4 Dane Parnell and his father, Stephen Parnell, conducted between them two businesses under the name Buying Advisory Service. Certainly as of 2005, the businesses of Buying Advisory Service were locating, obtaining and arranging finance of vehicles for persons who desired to acquire them. The first of the two businesses conducted under this name was BAS Cars, which located and acquired the vehicles. In respect of this business, Stephen Parnell alone had held motor dealer's licence number MD5801 since 25 October 1979. The other business was BAS Finance, which arranged the finance. It seems likely that Dane Parnell was the proprietor of this business, although, as it turns out, this is probably immaterial. Dane Parnell was also clearly authorised to act on behalf of BAS Cars and it was he who principally dealt with Andrew Heffernan, the defendant and the plaintiff in respect of both the acquisition of the vehicle and the arrangement of finance. 5 Frank Bate was sales manager of the defendant. He had dealings in that guise with Buying Advisory Service from 2001. In the course of those dealings, he had dealt with both Stephen Parnell and Dane Parnell. Those dealings followed the same general pattern, although, of course, it is on the basis of the documentation relating to the transaction in respect of the subject vehicle that this case must be decided. 6 When Andrew Heffernan contacted Dane Parnell in June 2005, he indicated that he wished to acquire the vehicle, to be financed through a lease. The vehicle was to be registered in Andrew Heffernan's name. There was correspondence between Andrew Heffernan and Dane Parnell on 5 and 6 June 2005 concerning the finance possibilities. On 6 June 2005, the defendant submitted a quotation to Dane Parnell. No copy of that quotation is in evidence. There is no reason to think that (except as to price) it was different from the further quotation referred to below, which was in a standard form used by the defendant, either as to the general form of the document, or the specification of the customer and the person to whom the vehicle was to be delivered. On 7 June 2005, Andrew Heffernan emailed to Dane Parnell, "please accept my order as follows …". On 8 June 2005 by email Andrew Heffernan enquired of Dane Parnell as to "your fee". Dane Parnell replied on the same day: "There is no additional fee charged for our services. As we are Licensed Motor Dealers and Finance Brokers, we actually will be paid a small commission from the financier. … The only fee you may have to pay, is for the preparation of documents by the finance company." 7 On 7 June 2005, a written order for the vehicle was directed to the defendant at its Mittagong branch. The order was headed "buying advisory service". It contained a statement that the vehicle was for delivery to Mr Andrew Heffernan of Wollongong. It contained the words: "Terms 30 days". The order was signed at the foot as follows: "Yours sincerely,

By comparison with signatures on other documents in evidence, I find that the signature was the signature of Dane Parnell. The price in the order was $44,393.00. 8 It took some time to procure the vehicle. During that time, the price at which the defendant was prepared to supply the vehicle varied. On 22 September 2005, the defendant, under the name "Mittagong Mazda & Subaru", created a further written quotation for the vehicle ("the second quotation") indicating the customer as "Buying Advisory Service" and stating that the vehicle was for delivery to Andrew Barry Heffernan of Gerringong. The second quotation specified the total price of the vehicle as $45,003.91 and also mentioned that sum in a box against the legend "Cash on Delivery". On the same day, the defendant created a tax invoice for the vehicle containing the same information as the second quotation as to customer, delivery and price. The evidence shows that this invoice was not forwarded to anyone, but it was retained in the defendant's file concerning this transaction as a matter of record. 9 In the meantime, Andrew Heffernan had forwarded the finance application documents to Dane Parnell. On 9 August 2005, Dane Parnell advised Andrew Heffernan by email that formal approval of finance had been received from the plaintiff that morning. 10 It was arranged that the vehicle would be delivered by Dane Parnell to Andrew Heffernan at his Gerringong residence on 27 September 2005. That morning, Dane Parnell telephoned Andrew Heffernan concerning time difficulties that Dane Parnell had on that day and asked if Andrew Heffernan would go to the defendant's premises at Mittagong and receive delivery of the vehicle there. Andrew Heffernan agreed and went to Mittagong with his wife in his existing motor vehicle. There he met Stephen Parnell on the footpath outside the defendant's car yard. Andrew Heffernan and his wife went into the yard and looked at other vehicles, but did not deal with anyone there. Stephen Parnell went into the premises and drove the vehicle to the entrance of the premises, facing into the street. Stephen Parnell invited Andrew Heffernan to drive the vehicle off from that position. He either showed or told Andrew Heffernan that the document wallet was in the glove box. It had Andrew Heffernan's name on it. The key was in the ignition. This was the only occasion on which Andrew Heffernan met Stephen Parnell. He never met Dane Parnell face to face. 11 On the very same day, BAS Cars created a tax invoice in relation to the sale of the vehicle to the plaintiff for the total price of $45,272.33. The plaintiff paid that amount to BAS Cars on 26 October 2005 by deposit into a bank account in the name of Stephen Parnell. 12 There are in evidence both a lease agreement schedule and a novation agreement signed by Andrew Heffernan in relation to the finance. The lease between the plaintiff and Andrew Heffernan and the novation of the agreement with the Catholic Education Office - Wollongong, took effect on 26 November 2005. It is not clear when these documents were signed, nor does it matter. 13 Neither BAS Cars, nor anybody else, has paid to the defendant the amount invoiced by it as the price of the vehicle. On 27 January 2006, Mr G A Kinsey, solicitor for the defendant, wrote to Andrew Heffernan demanding payment of $45,003.91 in seven days, in default of which the defendant would commence legal proceedings against him "for recovery of the monies owing and/or the vehicle, without further notice." The plaintiff replied to Mr Kinsey on 31 January 2006 asserting that it had purchased the vehicle from BAS Cars; as the plaintiff had clear title to the vehicle, there was no basis for the defendant to make any demands on Andrew Heffernan or the plaintiff. Mr Kinsey replied on 2 February 2006 asserting that the defendant's "terms of trading are that title to the vehicle does not pass until it receives full payment. As our client has not received full payment for the vehicle, it retains title." 14 As to the defendant's assertion that it retained title, there is nothing in the documentation or otherwise in the evidence that could amount to a retention of title provision in the contract for the sale of the vehicle, other than the stipulation in the second quotation for the payment of the full price in cash on delivery. Although a retention of title clause was not originally contended for by the defendants, it was subsequently submitted that that this stipulation amounted to such a provision. The parties' contentions 15 In view of the small amount in issue in these proceedings and in light of ss 56(1) and 60 of the Civil Procedure Act 2005, I did not require amendment of the pleadings to match the issues ultimately fought. The issues in fact contested and on which the case was decided are those referred to in the parties' submissions and dealt with in these reasons for judgment. 16 The plaintiff's primary contention was that the true form of the transactions was that the defendant sold and delivered the car to BAS Cars; that BAS Cars sold the vehicle to the plaintiff; and that Andrew Heffernan leased the vehicle from the plaintiff. The defendant as unpaid vendor has a right to recover the price from the purchaser, but has no continuing right by way of lien or ownership to recover possession of the vehicle. The stipulation for cash on delivery in the second quotation does not operate as a retention of title clause in the context of this transaction, particularly in light of the allowance in the order of 7 June 2005 of 30 days for payment. 17 The plaintiff's alternative case was that good title to the car had been passed to it through the mechanism of either s 28(2) of the Sale of Goods Act 1923 ("the SGA") or s 5(1) of the Factors (Mercantile Agents) Act 1923 ("the Factors Act"). 18 The defendant made a number of alternative submissions. A primary submission was that it sold the vehicle not to BAS Cars but to Andrew Heffernan. Alternatively, it said there was no sale of the vehicle at all, because of the failure of the process of offer and acceptance, so that title remained with the defendant. Alternatively, it said that BAS Cars had no title to the vehicle to transfer to the plaintiff, because it had already transferred to Andrew Heffernan, at the entrance to the defendant's car yard, any title that it had to the vehicle before its purported sale of the vehicle to the plaintiff. Furthermore, it relied on the existence of a retention of title clause, so that it said that BAS had no title to pass to the plaintiff when it purported to do so. It made submissions concerning the operation of s 28(2) of the SGA and s 5 of the Factors Act, if they became relevant. 19 In response to the submission concerning the retention of title clause, the plaintiff not only denied the incorporation in the contract of such a provision, but, if it were held that such a provision was incorporated, relied on s 28(2) of the SGA. Alternatively, it relied on the provisions of the Registration of Interests in Goods Act 1986. Conclusions 20 The plaintiff's primary contention is that there was a contract by which the defendant sold the vehicle to BAS Cars, rather than a contract of sale to Andrew Heffernan or no contract of sale at all. 21 I find that the intent of the order of 7 June 2005 is that it was an order by BAS Cars MD5801, despite the mention of both Stephen and Dane Parnell's names at the foot of the order and the signature of the order by Dane Parnell. It is clear that Stephen Parnell was the sole proprietor of that business. It is equally clear that Dane Parnell was authorised to deal and sign on behalf of that business; the typed mention of his name of the foot of the order was very likely because of his signature of the order on behalf of BAS Cars. It was BAS Cars with which the defendant had previously dealt. It was not intended that Dane Parnell should himself be a buyer of the vehicle. 22 Despite the lack of a copy of the quotation of 6 June 2005 to which the order of 7 June 2005 responded, I infer that the order corresponded with the quotation. Perhaps it does not matter whether it did or not, since I find that that order did not in the end have contractual effect, either as an acceptance or an offer. The reason is that the second quotation of 22 September 2005 constituted an offer by the defendant to supply the vehicle, whether that document be regarded as a counter offer or a fresh offer. The evidence does not show any written or oral response to that offer, but it does show the subsequent attendance of Stephen Parnell at the defendant's premises on 27 September 2005. The correct inference in my view is that Stephen Parnell went into the premises and took delivery of the vehicle from the defendant on behalf of BAS Cars. The Heffernans entered the defendant's yard, but dealt with no one on behalf of the defendant. I find that the defendant delivered the vehicle to Stephen Parnell by handing him the key or directing him to the vehicle with the key already in it. Stephen Parnell then drove the vehicle to the entrance of the premises, clearly taking possession of the vehicle. He there delivered it to Andrew Heffernan in the fashion indicated in the evidence. 23 I bear in mind the "last shot" principle discussed by Professor Sutton in Sales and Consumer Law (4th ed, 1995) at [1.5]; and see Butler Machine Tool Co Ltd v Ex-cell-O Corporation (England) Ltd [1979] 1 WLR 401. I bear in mind that a contract can be inferred from conduct: Brogden v Metropolitan Railway Company (1877) 2 App Cas 666 at 686 per Lord Hatherley; Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 at 535 per McHugh JA; Brambles Holdings Ltd v Bathurst CC (2001) 53 NSWLR 153 at 195 per Ipp AJA; and see generally Carter on Contract (looseleaf) [02-060]. 24 It is my conclusion that a sale to BAS was effected and effected in the following way. The second quotation by the defendant of 22 September 2005 (considered in the light of preceding communications) constituted an offer to sell the vehicle to BAS Cars for $45,003.91. Stephen Parnell was the sole proprietor of BAS Cars. On the evidence, that offer was accepted by BAS Cars by Stephen Parnell taking delivery of the vehicle from the defendant on 27 September 2005. That there was a contract for sale to someone on that day for $45,003.91 is acknowledged by the defendant's demand for that sum in its solicitor's letter of 2 February 2006. There is no evidence to the effect that the vehicle was being delivered on that day otherwise than in accordance with that offer. 25 Despite the earnest submissions of Mr Galitsky, counsel for the defendant, I cannot on all the evidence, including the documentation tendered, which clearly specifies Buying Advisory Service as the customer and BAS Cars as the entity which placed the order, infer from the fact that it was noted that the vehicle was to be delivered to Andrew Heffernan that Andrew Heffernan was the customer, or that there was any contractual relationship between the defendant and Andrew Heffernan. I find that the defendant sold and delivered the vehicle to BAS Cars. 26 Equally, I cannot accede to Mr Galitsky's alternative submission that by a failure of the process of offer and acceptance, there was no contract at all, so that property in the vehicle never left the defendant. This conclusion would lack commercial sense and should be reached only on clear evidence to that effect. There is certainly no clear evidence compelling that conclusion. 27 Thus, I find that the defendant entered into a contract to sell the vehicle and the contract was with BAS Cars. I find that BAS Cars, on the day it took delivery, onsold the vehicle to the plaintiff. I do not accept the defendant's submission that, at that time, BAS Cars was unable to pass title to the vehicle, because it had already given title to Andrew Heffernan by delivering to him the vehicle and documentation relating to it. In that respect, Mr Galitsky referred me to Gamer's Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Aust Pty Ltd (1987) 163 CLR 236. In that case, Brennan J indicated at 255 that the usual method of passing title to goods was the delivery (actual or notional) of the goods and/or documents of title to the transferee. That is, of course, correct. But there is a distinction between the contract by which goods are sold and the passing of title by delivery, if that is the way that title comes to be passed. On the evidence, there was no transaction by which BAS Cars was to give title to the vehicle to Andrew Heffernan. Indeed, there were already clearly in place arrangements by which BAS Cars was to give the title to the vehicle to the plaintiff, which would lease it to Andrew Heffernan. Although that transaction was not formalised for some weeks, the arrangement among BAS Cars, the plaintiff and Andrew Heffernan was that Andrew Heffernan was to have possession of the car in the meantime, while the arrangement between him and the plaintiff was being documented, as indeed it was. 28 Although complicated submissions have been made to me about the passing of title through Stephen Parnell acting as a mercantile agent within the meaning of the Factors Act, I do not need to follow that pathway in view of my clear conclusion as to the nature of the transactions that took place. Those transactions were a sale of the vehicle from the defendant to BAS Cars; an onsale of the vehicle by BAS Cars to the plaintiff; and a lease of the vehicle by the plaintiff to Andrew Heffernan. It may well be that, if I am wrong about the nature of the transaction and it is necessary to go down that pathway, it may lead to the same ultimate result, but that I do not need to do. 29 However, I do need to deal with the defendant's alternative submission that, if there were a contract between the defendant and BAS, it contained a retention of title clause, so that title to the vehicle would not pass until the price was paid and this never occurred. As I have said, the sole basis advanced for the incorporation of such a clause was the stipulation for cash on delivery in the second quotation. 30 The basic rule is that in case of an unconditional contract for sale of specific goods in a deliverable state, property passes on contract: SGA s 23 Rule 1; see also Rule 5(1). But these Rules may yield to a contrary intention. Stipulations for payment on delivery have been held in a number of modern cases to amount to retention of title clauses. In Ward Ltd v Bignall [1967] 1 QB 534, Diplock LJ said at 545: "…. in modern times very little is needed to give rise to the inference that the property in specific goods is to pass only on delivery or payment."

Orix Australia Corp Ltd v Peter Donnelly Automotive Pty Ltd

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Judgment (17 paragraphs)

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