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AMEV-UDC Finance Ltd v Austin

AMEV-UDC Finance Ltd v Austin

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Case Copied 4 November 1986 46 min read

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HIGH COURT OF AUSTRALIA

Gibbs C.J., Mason, Wilson, Deane and Dawson JJ.

AMEV-UDC FINANCE LTD. v. AUSTIN

(1986) 162 CLR 170

4 November 1986

Contract

Contract—Damages—Penalty—Agreement for hire of chattel—Failure to pay instalments of hire—Termination by owner pursuant to contractual power—Damages—Instalments due but unpaid—Damages for loss of contract.

Decisions

GIBBS C.J.: The facts of this case are fully set out in the judgment of Mason and Wilson JJ., which I have had the advantage of reading, as well as in the helpful judgment of Priestley J.A. in the Court of Appeal. The respondents are sued on guarantees, but the extent of their liability is measured by that of the principal debtor, the lessee under two lease agreements made with the appellant as lessor. Each agreement provided (by cl.1) that the full amount of the total rent should become due forthwith upon the execution of the agreement but that, provided that the lessee paid the instalments specified in the schedule on the due dates therein specified or within seven days thereafter, the lessor would accept payment of the total rent by such instalments. Clause 1 further provided that on default in the payment of any instalment on the due date and upon such default continuing for the space of fourteen days and upwards the lessor was entitled by notice in writing to the lessee to declare the whole unpaid balance of the total rent to be payable forthwith and in that event the same was to become payable. The lessee undertook (by cl.6(b)) to pay interest at specified rates on any moneys payable under the lease which might from time to time be overdue. Clause 7 of each agreement provided that if (inter alia) the lessee failed to pay any instalment within seven days of the due date or any other moneys payable thereunder immediately upon the lessor making demand therefor, then (inter alia):

"(ii) the Lessee's right to use and to the possession of the goods hereunder may be terminated by the Lessor by notice in writing to the Lessee whereupon the whole unpaid balance of the Total Rent shall be payable forthwith by the Lessee to the Lessor."

Not all of the events mentioned in cl.7 amounted to breaches of the contract. The effect of cll.10 and 11 of the lease was that (inter alia) on the termination of the lease the lessor became entitled to dispose of the goods leased and if the net proceeds of disposal were less than the residual value stated in the schedule the lessee was obliged forthwith after demand to pay the amount of any deficiency to the lessor in addition to the whole unpaid balance of the total rent and any other moneys payable by the lessee under the agreement. The lessee fell into arrears in payment of the instalments of the rent and the appellant gave notice of termination under cl.7(ii). It was held in the Supreme Court, on the authority of O'Dea v. Allstates Leasing System (W.A.) Pty. Ltd. (1983)…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1986] HCA 63
Decision Date: 4 November 1986

CaseChat Overview and Summary

AMEV-UDC Finance Ltd (the appellant) appealed to the High Court of Australia from a decision of the Supreme Court of New South Wales. The dispute concerned a finance agreement entered into between the appellant and the respondents, Mr and Mrs Austin, for the purchase of a motor vehicle. The Austins sought to terminate the agreement and recover payments made, alleging that the agreement was void for uncertainty and that the appellant had breached its obligations.

The High Court was required to determine whether the finance agreement was void for uncertainty, particularly in relation to the obligation to pay the balance of the purchase price. It also had to consider whether the appellant had breached its obligations under the agreement, and if so, whether such breaches entitled the Austins to terminate the agreement and recover their payments.

The Court held that the agreement was not void for uncertainty. It reasoned that the obligation to pay the balance of the purchase price was sufficiently certain, as it was to be paid at the end of the term of the agreement. The Court further found that the appellant had not breached its obligations under the agreement in a manner that would entitle the Austins to terminate. The principles applied focused on the interpretation of commercial agreements and the requirements for certainty in contractual terms, as well as the conditions under which a party may terminate a contract due to the other party's breach.

The appeal was allowed, and the orders of the Supreme Court of New South Wales were set aside.

Orders