Pacific Motor Auctions Pty Ltd v Motor Credits (Hire Finance) Ltd

Pacific Motor Auctions Pty Ltd (PMA) and Motor Credits (Hire Finance) Ltd (MC) were the parties involved in a dispute concerning the ownership of certain motor vehicles. The case reached the Privy Council on appeal from the Supreme Court of New South Wales. The central issue revolved around whether PMA, a company engaged in the business of selling motor vehicles, had acquired good title to vehicles that had been previously sold by a dealer to MC under a hire-purchase agreement and then resold by the dealer to PMA.

The Privy Council was required to determine whether PMA, as a purchaser of goods from a seller in possession of those goods, acquired good title under the provisions of the Sale of Goods Act 1923 (NSW), notwithstanding that the seller did not have good title at the time of the resale. Specifically, the court had to consider the application of the exception to the nemo dat quod non habet rule, which protects a buyer in possession of goods from a seller who has a voidable title. The court also had to consider whether the hire-purchase agreement between the original seller and MC was a true sale or a security transaction, and the implications of this for the subsequent sale to PMA.

The Privy Council held that the hire-purchase agreement between the dealer and MC was not a sale but a bailment, and that MC did not acquire title to the vehicles. Consequently, the dealer did not have a voidable title to pass to PMA. The court applied the principle that a buyer in possession of goods from a seller who has a voidable title can acquire good title, but this exception does not apply if the seller's title is void from the outset. Therefore, PMA, having purchased from a seller who did not possess good title, could not acquire good title.

The appeal was dismissed, and the judgment of the Supreme Court of New South Wales was affirmed.