Ledger v Cleveland Nominees Pty Ltd - [2001] WASCA 269

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE FULL COURT (WA)

CITATION: LEDGER -v- CLEVELAND NOMINEES PTY LTD [2001] WASCA 269

CORAM: WALLWORK J
WHEELER J
BURCHETT AUJ

HEARD: 13 AUGUST 2001

DELIVERED : 30 AUGUST 2001

FILE NO/S: FUL 106 of 2000

BETWEEN: KIM FRANCIS LEDGER
Appellant
AND
CLEVELAND NOMINEES PTY LTD
Respondent

Catchwords:

Sale of goods - Vendor's claim, not for damages, but for the price - Whether should have been limited to damages - Whether the price was "payable on a day certain, irrespective of delivery" within s 48(2) of the Sale of Goods Act - Provision for payment by a day construed as assuming delivery would by then have taken place - Discussion of authorities

Legislation:

Sale of Goods Act 1895, s 48(2)

Result:

Appeal allowed, and new trial ordered on the question of damages, subject to terms

Category: A

Representation:

Counsel:

Appellant: Mr P I Jooste
Respondent: Mr J C Curthoys

Solicitors:

Appellant: Mony de Kerloy
Respondent: Lynette P Quinlivan

Case(s) referred to in judgment(s):

Colley v Overseas Exporters [1921] 3 KB 302
Consolidated Rutile Ltd v China Weal Pty Ltd [1998] QSC 170
Dunlop v Grote (1845) 2 Car & K 153; 175 ER 64
Howes Bros v Queensland Milling Co (1897) 8 QLJ 83
Martin v Hogan (1917) 24 CLR 234
McEntire v Crossley Brothers, Limited [1895] AC 457
Minister for Supply and Development v Servicemen's Co‑operative Joinery Manufacturers Limited (1951) 82 CLR 621
Muller Mclean & Co v Leslie & Anderson [1921] WN (Eng) 235
Pordage v Cole (1669) 1 WmsSaund 319; 85 ER 449
Sandford v Dairy Supplies, Limited [1941] NZLR 141
Shell‑Mex, Limited v Elton Cop Dyeing Company Limited (1928) 34 Com Cas 39
Stein Forbes & Co v County Tailoring Company (1916) 115 LT 215
Style Finnish (Qld) Pty Limited v Abloy Security Pty Limited [1994] 2 Qd R 203
White and Carter (Councils) Ltd v McGregor [1962] AC 413

Case(s) also cited:

Nil

WALLWORK J: I agree with the reasons for judgment of Burchett AUJ and with the orders proposed by his Honour. There is nothing I wish to add.
WHEELER J: I have had the advantage of reading in draft the reasons for judgment of Burchett AUJ. I agree with these and with the orders proposed by his Honour.
BURCHETT AUJ: This appeal raises an unusual point of the law of the sale of goods. At issue is whether the respondent, the vendor of a Porsche racing car who was the plaintiff in the District Court, became entitled, upon the appellant defendant failing to take delivery, to sue for the price. The appellant's contention is that the vendor was limited, in the circumstances, to an action for damages. The learned judge found that the contract was in writing, being a letter from the vendor to the purchaser, with the purchaser's acceptance subscribed. The letter bore the date 6 February 1995, but her Honour held there was an error in the typing of the year, which should have read "1997". Omitting the letterhead and two pages of attached inventory, the document reads as follows:
"6 February, 1995
Mr K F Ledger
C/- Chellingworth Porsche
252 Aberdeen Street
Northbridge WA 6005
Dear Kim,
Re: Porsche 944 Turbo Racing Car
Referring to our recent discussions regarding the 944 Turbo Racing Porsche I confirm our understanding as follows:-
You will purchase the entire car for the amount of $75,000. The purchase includes the parts set out on the attached list of inventory.
The purchase price is payable on or before the 1st June 1997.
Until the payment of the purchase price has been completed the vehicle will not be raced in any local or interstate event and you will insure the vehicle with the insurance company noting my interest as unpaid vendor.

Title to the vehicle will at all times remain with me until full payment of the purchase price has been received by me.
You will transport the vehicle and the inventory from its current location at Wespeed to your Aberdeen Street premises and hold same in safe keeping for me pending the completion of the payment of the purchase price. You will at your expense prepare the vehicle to qualify as a Group A Porsche Cup racecar.
Yours faithfully,
Cleveland Nominees Pty Ltd
ACN 008 816 233
(Signature)
Clive Hartz
I confirm my agreement to purchase the vehicle on the above conditions.
(Signature)
K F Ledger"

Although the contract provides that the price "is payable on or before the 1st June 1997", such a term, being a stipulation "as to the time of payment", is "not deemed to be of the essence" of the contract: The Sale of Goods Act 1895, s 10. However, the term is the central provision of the contract for the purposes of the argument in this case, because it was held by the judge to attract the operation of s 48(2) of the Act, which reads:
"Where, under a contract of sale, the price is payable on a day certain, irrespective of delivery, and the buyer wrongfully neglects or refuses to pay such price, the seller may maintain an action for the price, although the property in the goods has not passed, and the goods have not been appropriated to the contract."
Under The Sale of Goods Act, it may be said that, in general, the seller's remedy for a breach of the contract by the buyer is an action for damages, not for the price. The statutory exceptions are pursuant to s 48(1), which applies "[w]here, under a contract of sale, the property in the goods has passed to the buyer", and pursuant to s 48(2), "[w]here, under a contract of sale, the price is payable on a day certain, irrespective of delivery".
Section 48(2) is not brought into operation merely by a provision for payment of the price "on a day certain"; for so to construe it would be to ignore the words "irrespective of delivery". These words are not otiose. They require that the contract be in terms adequate to exclude the ordinary effect of s 28 of the Act, by which, "[u]nless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions", and to show a right to full payment which may be in advance of delivery. The right, where s 48(2) does apply, is properly to be regarded as an "exception". It is so described by Isaacs and Rich JJ in their joint judgment, and also by Higgins J who added the word "rare", in Martin v Hogan (1917) 24 CLR 234. Having pointed out that a provision in the form of s 48 "represents the common law", Isaacs and Rich JJ said (at 262):
"The common law proceeds on a just principle. If the consideration for the price passes, the price can be recovered simpliciter. But in a sale of goods the consideration does not pass unless the property passes. If, again, there has been an agreement to pay the money on a day fixed by the contract, irrespective of the consideration passing - then, again, the sum can be recovered. But apart from that exception, the common law says, however strictly a man may have promised to pay the price on any given event, his failure to pay on that event is to be compensated for by ascertaining the amount of damage the promisee has sustained."
Higgins J, after referring (at 265 - 266) to the case where the property in the goods has passed to the buyer as entitling the seller to the full price, continued (at 267 - 268):
"There is, however, a second case in which, according to this Act, the full price is recoverable. It is the rare case [emphasis added] where, under the agreement, the price is payable 'on a day certain irrespective of delivery' although the property in the goods has not passed and the goods have not been appropriated to the contract (sec 49(2)). Now, in this case the contract fixed no 'day certain irrespective of delivery.' At the time of the contract, it could not be said that the price was to be paid on 9th August or any other particular day, delivery or no delivery. The words of the section are not 'at a definite time,' but 'on a day certain irrespective of delivery.' The case on which the learned draughtsman of the Act based the exception [emphasis added] (see Sale of Goods Act 1893, by Judge Chalmers) is the case of Dunlop v Grote [2 Car & K 153]. In that case the defendants had on 3rd March 1845 bought of the plaintiffs 1,000 tons of a certain kind of pig‑iron to be delivered to the defendants; delivery was to be taken on or before 30th April; and if delivery were not required by the defendants on or before 30th April, the defendants promised nevertheless to pay on that day. The defendants presently got 600 tons and paid for it; but they did not require delivery of the remaining 400 tons on or before 30th April. Under these circumstances, the defendants were held bound by their contract to pay on 30th April. That was the day for payment, delivery or no delivery, before that day. It was as if the seller had said: 'We shall not promise to give you at your price 1,000 tons of our pig‑iron to be delivered as you require unless you promise to let us have all the money not later than 30th April.' There is no such exceptional [emphasis added] provision in this case, and therefore the ordinary rule would apply of payment when the goods are appropriated by the seller with the consent of the buyer, payment when the property passes. It is true that in the contract these words are used: 'Terms.- Cash against documents'; but these words are consistent with the ordinary condition that, previously or simultaneously, the goods are specifically appropriated to the contract by mutual assent. If the buyers had fulfilled their promise, and accepted the documents, and assented to the appropriation of the K Z chaff, the goods could at once have been taken up by the defendants from the shipping company; but the buyers did not fulfil this promise. They refused to accept the documents, refused to assent to the appropriation, refused to accept the goods; and an action would lie, not for the price, but for damages from non‑acceptance. In fact, the words 'cash against documents' were used on the assumption that the documents would, as usual, be accepted, and the goods thereby appropriated to the buyer; but as the documents were not accepted, the seller cannot sue as if there had been an appropriation."
I should mention that, in Martin v Hogan, the High Court was evenly divided as to the result, Barton, Gavan Duffy and Powers JJ holding that the buyers failed on a point of pleading. As they were the appellants, they failed, but their failure on such a ground does not detract from the statements of the law of the sale of goods by Isaacs, Rich and Higgins JJ to which I have referred.
The position, with respect to an action for the price of goods sold, is stated in similar terms by Lord Keith of Avonholm in White and Carter (Councils) Ltd v McGregor [1962] AC 413 at 437:
"I would refer first to contracts for the sale of goods which were touched on in the course of the debate, for the reason that one of the remedies provided to the seller by the Sale of Goods Act, 1893, is an action for the price. This, however, applies only in two cases. One is where the property in the goods has passed to the buyer. But property cannot pass without the intention of the buyer as well as that of the seller and, except in some such cases as fraud or lack of consensus in idem or breach of contract by the seller, no question of repudiation can arise. The contract is completed and finished apart from delivery and nothing remains but payment of the price. The only other case is where parties have contracted for payment on a day certain, irrespective of delivery or the passing of property. This is a clear case of a contractual debt unconditioned by any question of performance by the other party."
In Stein Forbes & Co v County Tailoring Company (1916) 115 LT 215, the contract note included a term:
"Payment: Net cash against documents on arrival of the steamer."
Payment being refused and s 49(2) of The Sale of Goods Act 1893 (UK), equivalent to s 48(2), being relied on, Atkin J (as Lord Atkin then was) said (at 216):
"But this is not a case where the price is payable on a day certain irrespective of delivery. On the contrary, it is payable expressly against delivery."
In another case where the agreement provided for "cash against documents", the same view was taken by Roche J (as Lord Roche then was): Muller Mclean & Co v Leslie & Anderson [1921] WN (Eng) 235, more fully reported in (1921) 8 Ll LR 328. Roche J added a strictly unnecessary explanation that, when Atkin J, in Stein Forbes & Co v County Tailoring Company, treated "cash against documents" as making payment of the price "expressly against delivery", this was because his Lordship took the documents to represent the goods, as indeed a bill of lading does.
In Colley v Overseas Exporters [1921] 3 KB 302 at 306, McCardie J said:
"An action for the price of goods is, of course, essentially an action for a liquidated sum. It involves special and technical elements. By special bargain the price of goods may be payable before delivery or before the property has passed from vendor to buyer: see Pordage v Cole [(1669) 1 Wms Saund 320]; Leake on Contracts, 6th ed, pp 467-8; Workman, Clark & Co v Lloyd Brazileno [[1908] 1 KB 968]; and s 49 of the Sale of Goods Act, 1893. In ordinary cases and unless otherwise agreed delivery of the goods and payment of the price are concurrent conditions: see s 28 of the Sale of Goods Act 1893."
This decision was followed by Fair J in the New Zealand case Sandford v Dairy Supplies, Limited [1941] NZLR 141. Colley v Overseas Exporters was also referred to, and the logic of the ordinary operation of the Sale of Goods Act was applied, in Shell‑Mex, Limited v Elton Cop Dyeing Company Limited (1928) 34 Com Cas 39, a decision of Wright J (as Lord Wright then was). The contract, which provided for sales of oil to fuel a factory, contained, by its cl 15, a term: "Sellers have a right at any time to invoice to buyers the due quantities of oil not taken up, and to demand payment of the invoice amounts …." Wright J said (at 43 - 44):
"As a rule, the price of goods sold is only payable in respect of delivery, or in a case where the property has passed, so that the seller or other bailee of the goods holds for the buyer; or where, irrespective of delivery, there is a specific term of the contract that the price is payable at a time certain (which means at a time specified in the contract not depending on a future or contingent event, The Merchant Shipping Company v Armitage [[1873] LR 9 QB 99]), irrespective of the passing of the property or delivery. In the present case it is clear no property passed, because such is the rule where there is no specific appropriation of the bulk; this established rule has recently been again enunciated in Re Wait [[1927] 1 Ch 606]. No time certain is specified for payment in clause 15, and no delivery has been made or is contemplated, because the defendants have repudiated the contract, and the contract period has long expired."
His Lordship interpreted cl 15 (at 44 - 45) as follows:
"I think clause 15 remains a term in a contract for the sale of goods, and the price invoiced under it still remains the price as of goods sold and delivered. … I think, … under clause 15, if the buyers say they will neither pay nor take the goods and thus repudiate the contract, the sellers can still only claim damages for non‑acceptance of the goods, or for repudiation of the contract. Clause 15 does not in terms say that the buyers have to pay the invoice price as a debt at any specified time, or on delivery of the invoice, or at any specified time after delivery. What is invoiced under clause 15 is still the price payable under the contract, which includes the sellers' services in actually delivering the goods to the buyers' works. The sellers have never earned the price as such, and can only claim damages because they have been prevented from fulfilling their contract."
Similarly, in the early Queensland decision, Howes Bros v Queensland Milling Co (1897) 8 QLJ 83, Griffith CJ (with whom Cooper J agreed) construed a contract providing for "free storage for one month" by the seller of bran and pollard and "terms, net cash in thirty days from date" as governed by the ordinary rules as to sales of goods. He rejected a construction (contended for at 86) that would require payment of "the whole price … on the thirtieth day, whether any bran or pollard had then been delivered or not". He accepted that "although payment was to be made within thirty days, it was only to be made in exchange for the bran and pollard, and that the contract was an ordinary contract for the sale of goods". Griffith CJ held (at 86):
"The contract now in question is a contract for the sale of goods. It is, therefore, except so far as that construction is modified by the express terms, to be construed as meaning that the delivery of the goods and the payment of the price are to be concurrent. … On the other hand, cash was to be paid on delivery, but within thirty days from the date of the contract. I think that the meaning and the intention of the parties, gathered from the words they have used, was that the contract was for a specified quantity of bran and pollard, for which the purchasers were to get credit for a period not longer than thirty days from the date of the contract, at whatever period during that time the delivery might be made. The purchasers could not, by refusing to take delivery of the goods purchased within that time, escape the obligation to pay on that date, but I do not think that the vendors were entitled on the thirtieth day to demand payment of the money unless they were in a position to deliver the goods. There is nothing to show that in that case the rule declared by the statute was to be excluded [ie, that delivery of the goods and payment of the price are to be concurrent]."
The cases show that, apart from what the authorities I have been discussing treat as a statutory exception (under s 48(2)) to the normal position, there may also be contracts specially framed so as to create their own exceptional right in the seller to receive payment of the price, not indeed "on a day certain, irrespective of delivery", but at some time that is clearly intended to be before delivery, and before the passing of the property. As Lord Herschell LC made clear in McEntire v Crossley Brothers, Limited [1895] AC 457 at 463, the time when the property passes "depends upon the intention of the parties", as expressed in the contract. In Minister for Supply and Development v Servicemen's Co‑operative Joinery Manufacturers Limited (1951) 82 CLR 621 at 636, Latham CJ, after referring to Pordage v Cole (1669) 1 WmsSaund 319; 85 ER 449 and Dunlop v Grote (1845) 2 Car & K 153; 175 ER 64, said:
"In the present case there was an express contract that the price should be payable before the delivery of the goods and the Commonwealth [the seller] was therefore entitled to demand, and, if it chose to do so, to sue for, the price before any delivery of goods had been made under the contract."
In the same case, Williams J said (at 640):
"In my opinion the term 'net cash before delivery' imposed a condition that the goods were to be paid for before the property should pass by delivery."
See also Style Finnish (Qld) Pty Limited v Abloy Security Pty Limited [1994] 2 Qd R 203; Consolidated Rutile Ltd v China Weal Pty Ltd [1998] QSC 170.
In the light of these principles, it is necessary to determine whether the contract in the present case provides that "the price is payable on a day certain, irrespective of delivery" within s 48(2). That is the sole question, for if the construction that the payment is to be made irrespective of delivery cannot be sustained, there is no room for a construction that would require the payment to be made before delivery, so as to render applicable the decision in Minister for Supply and Development.
The contract provides that "[t]he purchase price is payable on or before the 1st June 1997". But it goes on immediately to provide that "[u]ntil payment of the purchase price has been completed the vehicle will not be raced in any local or interstate event". That seems to assume the purchaser, who was proposing to convert the car to what was called in the evidence "a Group A racing car", would have possession before paying the price. The final paragraph of the agreement also makes this plain, for it requires the purchaser to "hold [the vehicle] in safe keeping for [the seller] pending the completion of the payment of the purchase price", and also provides that the purchaser "will at [his] expense prepare the vehicle to qualify as a Group A Porsche Cup racecar". Bearing these matters in mind, I would conclude that when the contract provides for payment on or before 1 June 1997, it does so on the footing that the car will have already been delivered to the purchaser. It is true that he undertook the burden of transporting it to his premises. But the very fact that those premises, being suitable for the storage of a vehicle (they were the premises of a Porsche motor dealer), were specifically nominated in the contract, shows that actual delivery before completion under the contract was contemplated; otherwise, the seller would have had no concern with where the purchaser might choose to take his own property.

If the contract contemplated, as I think it did, that delivery would take place prior to the payment on or before 1 June 1997 (a date that was not made of the essence), then the payment was not stipulated for "irrespective of delivery". To construe the time provision as operating irrespective of delivery would be to construe it as creating an exception it does not express from the normal rule that "delivery of the goods and payment of the price are concurrent conditions" (s 28). That something would be required in the contract sufficient to show an exception was held by Isaacs and Rich JJ, and also by Higgins J, in Martin v Hogan. While in that case (as in Stein Forbes & Co v County Tailoring Company and Muller Mclean & Co v Leslie & Anderson), the formula "cash against documents" failed to satisfy the words "payable on a day certain" as the courts have construed them, Higgins J showed that it also failed to satisfy the words "irrespective of delivery", since a proper construction of the contract could not ignore the exceptional nature of a term for payment irrespective of delivery, and should understand the provision so expressed as assuming the ordinary condition that delivery would be effected concurrently with the payment. There is nothing in the agreement to attach to the obligation to pay the character, in the words of Lord Keith of Avonholm in White and Carter (Councils) Ltd v McGregor, of a "debt unconditioned by any question of performance by the other party". The reasoning of Higgins J in Martin v Hogan is echoed by that of Wright J in Shell‑Mex, Limited v Elton Cop Dyeing Company, Limited, where it is pointed out that the clause providing for payment remained a term in a contract for the sale of goods, and the payment remained "the price as of goods sold and delivered". What his Lordship was saying, as I understand him, was that the right to demand payment, far from being irrespective of delivery, was associated with the obligation to deliver. Similarly, Griffith CJ and Cooper J, in Howes Bros v Queensland Milling Co interpreted the seemingly unqualified words "net cash in thirty days from date", bearing in mind that the contract related to the sale of goods, and under such a contract delivery and payment would ordinarily be concurrent, so that the term should be understood as having the effect that "cash was to be paid on delivery, but within thirty days from the date of the contract".
It follows that the seller, being unable on this contract, and in the circumstances, to maintain an action for the price, was limited to a claim for damages. Accordingly, the appeal must be allowed, and the orders made below, except as to costs, must be set aside.
The question then arises, what consequential orders should be made? In my opinion, the appropriate order is that which Higgins J would have made in Martin v Hogan (at 269): that the respondent plaintiff have leave to amend on proper terms, and that there be a new trial on the question of damages. If the respondent wishes to exercise that leave and to proceed with a new trial, since it was its choice to claim the price rather than damages that led to the need for a new trial, it should bear its own costs and should pay the appellant's costs of the new trial in any event. The respondent must also pay the costs of the appeal.