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Australian Guarantee Corporation Ltd v Balding

Australian Guarantee Corporation Ltd v Balding

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Case Copied 14 April 1930 38 min read

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43 CLR 140

AUSTRALIAN

GUARANTEE

CORPORATION LIMITED BALDING

ON APPEAL FROM THE COURT OF BANKRUPTCY

(DISTRICT OF VICTORIA). Debts-Future Debts-Book debts-Assignment-Registration-Future instalments of

although not incurred or owing at the time of the assignment"-Hire-purchase agreement-Non-registration as assignment of MELBOURNE,

book debts-Invalidity of assignment-Assigned not entitled to general properly in or to charge or equitable security over property assigned-Instruments Ad 1915 (Vict.) (No. 2672), secs. 127, 180, 181-Instruments Act 1928 (Vict.) April 14.

(No. 3706), secs. 27, 80, 81.

Traders, who afterwards made a deed of arrangement, obtained advances upon the security of assignments of hire-purchase agreements which were framed that (i.) after the first period of hire the hirer's right to retain the

43 CLR 141

43 C.L.R.]

OF AUSTRALIA. chattel during each successive period of hire depended upon him paying in H. C. advance the instalment of hire for that period and the traders' right to repossess the chattel depended upon the hirer failing to pay such instalment in advance; (ii.) the hirer was at liberty during any such period of hiring to return the chattel and terminate the hiring, but, if he entered upon any period of hiring without paying the instalment therefor in advance, he became liable for the instalment which was recoverable from him.

Held, (1) that future instalments of hire were assigned but they answered the description "future debts

although not incurred or owing at the time of the assignment" in the definition of "book debts" in sec. 80 of the Instruments Act 1928 (Vict.), and the assignments were accordingly void in respect of such instalments for want of registration (2) the assignments of the agreements of hire-purchase did not operate to give the assignees of such agreements any property in the chattels to which they related nor to assign the right contained in such agreements to seize or repossess such chattels.

Held, further, that upon its proper interpretation a general agreement between the traders and the persons who made such advances gave the latter no legal or equitable right in or in respect of the chattels, which accordingly vested, subject to the hire-purchase agreements, in the trustee under the deed of arrangement.

Decision of the Court of Bankruptcy affirmed.

APPEAL from the Court of Bankruptcy (District of Victoria).

An agreement in writing dated 10th August 1922 was made between the Australian Guarantee Co. Ltd. (the predecessor of the appellant) and Turner Bros.

On 3rd July 1925 such agreement was adopted by the appellant, the Australian Guarantee Corporation Ltd. It was thereby agreed that the Corporation should finance Turner Bros. in time-payment sales of motor vehicles made by Turner Bros. Clause 5 thereof provided: In the event of default by any buyer or buyers in any way whatsoever you (Turner Bros.) undertake to indemnify this Company against any loss occasioned thereby, and if required by this Company SO to do to take possession of the motor vehicle and to hold same on behalf of and generally to act as agents for this Company in…

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: [1930] HCA 10
Decision Date: 14 April 1930

CaseChat Overview and Summary

The case of *Australian Guarantee Corporation Ltd v Balding* concerned an appeal from the Court of Bankruptcy in Victoria. The dispute arose between the Australian Guarantee Corporation Ltd (the appellant) and Edwin Gerald Balding (the respondent), who was the trustee under a deed of arrangement for Turner Bros. Turner Bros., a trader, had obtained advances from the appellant by assigning hire-purchase agreements for motor vehicles. These agreements were structured such that the hirer's right to retain the chattel for successive periods depended on advance payment of hire instalments, and Turner Bros.' right to repossess the chattel depended on the hirer's failure to pay.

The High Court of Australia was required to determine two primary legal issues. Firstly, whether future instalments of hire under these agreements constituted "future debts although not incurred or owing at the time of the assignment" as defined by the *Instruments Act 1928* (Vic.) for the purposes of book debt registration. Secondly, the court had to ascertain whether the assignments of the hire-purchase agreements conferred any proprietary interest in the chattels themselves or the right to repossess them upon the assignees.

The Court reasoned that the future instalments of hire fell within the definition of "future debts" under the *Instruments Act 1928* (Vic.), and therefore, the assignments were invalid for want of registration as book debts. The Court further held that the assignments of the hire-purchase agreements did not transfer ownership of the vehicles or the right to repossess them. Instead, these assignments were considered to be of contractual rights only. Consequently, the general agreement between Turner Bros. and the appellant did not grant the appellant any legal or equitable rights over the chattels, which, subject to the hire-purchase agreements, vested in the respondent as trustee.

The appeal was dismissed, affirming the decision of the Court of Bankruptcy.

Orders