Systech Pty Ltd v Hunter BNZ Finance Ltd

[1992] TASSC 101

COURT:  SUPREME COURT OF TASMANIA

CITATION:              Systech Pty Ltd v Hunter BNZ Finance Ltd [1992] TASSC 101; B24/1992

PARTIES:  SYSTECH PTY LTD
  v

HUNTER BNZ FINANCE LTD

FILE NO/S:  238/1987
DELIVERED ON:  17 June 1992
JUDGMENT OF:  Cox J

Judgment Number:  B24/1992
Number of paragraphs:  17

Serial No B24/1992

List "B"

File No 238/1987

SYSTECH PTY LTD v HUNTER BNZ FINANCE LTD

REASONS FOR JUDGMENT  COX J

17 June 1992

Sale of manufactured goods to hire purchase financier – Failure of financier to pay vendor – Whether title passed to financier by agreement or failed to do so by virtue of earlier delivery to proposed hirer under antecedent agreement with manufacturer.

1. This litigation arises out of an unsuccessful attempt to prove that the Tasmanian Thylacine is not extinct. During the first half of 1984 a company, Wildlife Search Pty Ltd ("Wildlife"), approached the plaintiff company ("Systech"), an electronic design and manufacturing company, about the manufacture of an animal surveillance system. Wildlife was organizing an expedition to a remote area of the Tasmanian Highlands where it intended to install a set of cameras to be activated by the passage of wildlife through light beams. The cameras were to be set up on three land bridges which were considered likely routes along which Thylacines, if they have survived, would withdraw from the high country when the snow sets in during mid–winter. Systech agreed to supply and install a system, procuring the necessary components, delivering them to the base camp from which the expedition was to be monitored, and linking them up and assisting, if necessary, in their placement on the animal tracks to be covered. In broad terms it was agreed in early June 1984 that Systech would be reimbursed the cost of the components, which was not to exceed $55,000.00, and would be paid for its labour at the rate of $6,000.00 per week for the first five weeks and thereafter, should the job not be completed, at a rate to be agreed upon. In fact, it took longer than the anticipated five weeks and the labour charge remained at the same rate by subsequent agreement.

1. Systech worked for several weeks acquiring the components and installing them on site in accordance with the instructions of one of Wildlife's directors, Mr Wright, who determined where each camera would be placed. Most of the components were purchased and paid for by Systech, but when Wildlife failed to make some payments in accordance with the agreement, Systech's directors indicated to it that they were not prepared to pay for some components ordered by them so as to enable delivery to be taken of them. Because Wildlife, or some of its directors, had accounts with some suppliers, that company made arrangements with the suppliers to deliver the components to Systech with Wildlife effecting the payments. In this way goods to the value of about $23,000.00, although ordered and picked up by Systech, were paid for by Wildlife.

1. By about the end of July 1984 Systech had installed eight of the ten cameras which formed the surveillance system and two were present but not completely assembled at Wildlife's base camp. A further week's work was still required on them. A director of Systech, who was primarily responsible for the technical aspects of the operation and who had worked on site for several weeks, Mr Puchner, had by now returned to Hobart, and other persons and organizations associated with the expedition, prompted by Wildlife's failure to meet financial obligations to them, had also withdrawn, taking with them the generator required to make the system work adequately. Systech had rendered accounts to Wildlife for $61,308.00 representing labour charges of $45,000.00 and equipment and sundry expenses amounting to $16,308.00. Of the latter sum it appears that an amount of $960.00 in respect of microphones and audio–cassettes had not been paid by Systech but paid direct by Wildlife, and the same was true of another amount of $2,862.48 for goods supplied by a company called Instrep Pty. Ltd. Wildlife had paid to Systech a total sum of $24,534.00. Making allowance for the two sums of $960.00 and $2,862.48 Systech was owed $32,951.52 by Wildlife.

1. Mr Puchner and his fellow directors decided to do no more work on the system because of Wildlife's failure to meet their invoices notwithstanding many promises from the Wildlife directors, Mr Wright and Mr Stephens. The latter, when pressed by Systech, told Mr Puchner in early August 1984 that he had arranged finance with the defendant company and asked Mr Puchner to telephone Mr Graham Stalker, an officer of the defendant, at its Melbourne office. This Mr Puchner did and Mr Stalker confirmed that a figure of $50,000.00 worth of finance had been agreed with Wildlife and that as the method of finance was to be by way of hire purchase, the defendant would require Systech to prepare an invoice addressed to it in such a way that the labour charges would be added in to the cost of the components themselves while allowance had to be made for the amount already paid by Wildlife in respect of components. In the course of a number of conversations between Mr Puchner and Mr Stalker, Mr Puchner explained how the system worked, where it had been established and said that Systech considered it was the owner of the equipment and that it would remain Systech's property until it was paid for. An agreement was reached with Mr Stalker that Systech would raise an invoice in a certain form, despatch it to the defendant, and the defendant would send a cheque to Mr Puchner for $50,000.00 from which he would deduct the balance owing by Wildlife of about $33,000.00 and would then forward the balance of $17,000.00 to Wildlife.

1. Mr Puchner raised the required invoice. It consisted of ten remote camera units charged at $2,800.00 each, ten remote receiver/transmitter control units at $1,800.00 each, twenty portable battery units at $200.00 each, ten sets of remote armoured cable at $750.00 each, eleven (sic) base receiver transmitter units at $2,400.00 each (this must mean ten because the subtotal carried forward is $24,000.00), computers and interface boards amounting to $4,500.00 and sundries of $2,500.00. The total system cost was invoiced at $88,500.00 from which a "deposit" of $38,500.00 was deducted leaving a residue of $50,000.00. When no cheque for this sum was received by Systech, Mr Puchner rang Mr Stalker who told him it was in train. Subsequently Mr Puchner discovered that the cheque, instead of being sent to his company as arranged, had been despatched to Wildlife's solicitor, who had in turn despatched it to Mr Stephens, one of the directors of Wildlife. None of the proceeds was received by Systech, although four months later Mr Stephens paid Systech $8,711.00.

1. In this action Systech claims from the defendant finance company the sum of $50,000.00 as the purchase price of goods invoiced to the defendant by it. The statement of claim is curiously pleaded:

"3By an agreement partly oral and partly to be implied made in and around the 22nd August, 1984 for valuable consideration the Plaintiff and Defendant agreed as follows:

(a)       In sofar as it was oral

(i)The Plaintiff agreed to forward to the Defendant an invoice to the Defendant in respect of certain camera equipment associated with a proposed thylacine search in the Central Highlands of Tasmania.

(ii)The Defendant would pay to the Plaintiff the sum of $50,000.00.

(iii)The Plaintiff would deduct from the sum of $50,000.00 the monies owing to it and forward the balance to Wildlife Search Pty Ltd and/or R Stephens.

Particulars of Oral Terms

The oral terms are constituted by approximately three telephone conversations between Mr Puchner for and on behalf of the Plaintiff and Mr Stalker for and on behalf of the Defendant, the substance of which is set out above.

(b)       Insofar as it was implied:

(i)The Plaintiff would sell and the Defendant would buy for the price of $50,000.00 the goods invoiced to the Defendant.

Particulars of Implied Terms

The implication arises out of the relationship of the Plaintiff as a manufacturer and supplier of goods and the Defendant as a financier of goods, by the request/direction of the Defendant for the Plaintiff to provide the invoice to it to enable the Defendant to hire the goods, the submission of the invoice by the Plaintiff to the Defendant.

4Pursuant to the said agreement the Plaintiff forwarded to the Defendant an invoice dated the 29th August, 1984.

5In breach of the oral and implied term of this agreement the Defendant has failed and/or refused to pay the sum of $50,000.00 to the Plaintiff."

1. The defendant, in substance, denies that there was any such agreement and says further that if there was an agreement as alleged, it was a term and condition thereof implied by the Sale of Goods Act 1896, s17, that the plaintiff had or would have the right to sell the goods at the time of the agreement or at the time the property and the goods was to pass, and that in breach of that condition the plaintiff did not have title because, by an agreement with Wildlife, it had agreed to design, manufacture, sell and deliver the goods to that company and had passed the title and property in the goods to Wildlife on or before the time of the agreement with the defendant.

1. The only witness called in the case was Mr Puchner. He was an impressive witness and I have no hesitation in accepting any of the evidence of factual matters which he positively asserted. He was the director primarily concerned with the technical aspects of the agreement with Wildlife and there were many matters to do with the financial detail and legal aspects of the discussions which he did not claim to specifically recollect. After some eight years that is not surprising.

1. I find that there was an agreement with the defendant for the sale to it of the system installed in situ by Systech together with the two camera units which were still not fully assembled at the base camp. I find that the defendant, by its agent Mr Stalker, knew that Systech claimed to be the owner of the property and that Wildlife wished to enter into a hire purchase agreement which would, of course, contain an option to purchase the goods from the defendant. I find that Mr Stalker and Mr Puchner agreed that the invoiced price should be $50,000.00 and that Systech should retain only $33,000.00 and should refund $17,000.00 to Wildlife. I find that the defendant failed to pay any part of the purchase price to Systech.

1. I turn now to the plea that the plaintiff had no title to the goods. It is, of course, for the plaintiff to prove its case but I note that no suggestion has been made that any person other than the defendant has, or asserts any claim to, title to the goods. No evidence at all was adduced by the defendant, let alone to the effect that it was somehow prevented from asserting its rights as owner of the goods by repossessing the same. Clearly, on the evidence that Wildlife arranged the transaction with a view to entering into a hire purchase agreement with an option to purchase, it was not at any material time asserting that it had a title to the goods superior to that of the defendant from which it was to hire them. No evidence was called by the defendant to contradict Mr Puchner's evidence as to the terms of the agreement made between Systech and Wildlife, nor was any explanation advanced as to why either Mr Wright or Mr Stephens, who were both present at the relevant meetings, could not have been called.

1. The evidence of Mr Puchner is that there had been a lot of discussions as to the technical side of the enterprise before the meeting which culminated in agreement. To that meeting Systech's directors brought a written draft agreement prepared by the company's solicitors. It contained the following six clauses:

"1Systech shall construct and supply to Wildlife to Wildlife's specifications certain electronic animal monitoring equipment.

2Systech will supply all necessary components which it will invoice to Wildlife together with any direct costs of purchase such invoices being paid immediately upon presentation. Systech warrants that the costs under this clause will not exceed an aggregate of $55,000 (excluding sales tax).

3Wildlife will pay Systech the sum of Six thousand dollars ($6,000.00) per week payable weekly in advance for a period of five consecutive weeks the first of such payments shall be made on the 4th day of June One thousand nine hundred and eighty–four and thereafter on the Monday of each succeeding week. The said sum of Six thousand dollars (6,000) shall be in payment for the labour component in the manufacture and assembly of the said equipment.

4In the event of the job not being completed within five weeks any further labour costs shall be negotiated between the parties hereto and paid in manner hereinbefore provided.

5.The property in the said equipment shall pass to Wildlife immediately the money due and payable under this Agreement are paid in full.

6.Systech gives Wildlife no warranty as to the suitability of the equipment for any particular purpose nor to its adequacy."

1. It was never signed. Mr Puchner said there was no dissent by the directors of Wildlife to any of the terms of the agreement, save the last. Mr Wright had said, "What guarantee have I got that this thing is going to work?", while Mr Warren, another director of Systech, had said there could be no guarantees save that the camera would take pictures. Mr Puchner conceded that it might have been the case that Mr Wright had declined to sign the agreement with cl.6 in the form it was drawn. Mr Puchner, in cross–examination, said he could not recall specific discussion of cl 5 but that "we maintained all along that we would retain ownership until they paid us". In the absence of evidence to the contrary, I have no hesitation in accepting that by the end of the night when the parties shook hands and agreed to make an immediate start on the project one of the terms agreed upon was the title reservation in cl 5. Had there been any dissent from that condition, I believe Mr Puchner would have recalled it and would have said so in evidence. He is no longer associated with the plaintiff company and has no financial interest in the outcome of this case. It was a condition to which, on legal advice, Systech's directors had adverted and it is unlikely in the circumstances that they would have agreed to forego the protection which it offered.

1. The fact that Wildlife in some way, as to which the evidence is silent, arranged for some of the goods forming part of the system to be paid for by it rather than by Systech does not derogate from the latter's title. The evidence is quite clear that Systech ordered the goods, took delivery of them and worked upon them before installing them on site. I can see no reason not to draw the inference that Systech was the purchaser and took title to them even if Wildlife made payments in respect of them and thereby became entitled to a credit for the price.

1. The defendant placed much reliance upon the facts that Wildlife's officers dictated where the cameras were set up, had a de facto measure of control over them, siting them in some cases by helicopter or otherwise in remote situations without a representative of Systech being present, and that Systech, after leaving the expedition area, made no attempt to take possession of them notwithstanding Wildlife's failure to pay. Such facts might have lent some measure of credence to a claim set up by Wildlife or some other person allegedly deriving title from it, but no such claim has been set up; and in any event I am satisfied that the original agreement with Wildlife included a term that title to the goods should remain with Systech until payment in full had been made.

1. I find, therefore, as payment was not made in full prior to the sale to the defendant, that the plaintiff Systech did at that time have title in the goods and was not in breach of any condition of the agreement. The defendant has not justified its failure to pay the sum of $50,000.00 as agreed upon the basis that it did not acquire title to the goods.

1. What then should be the result? The plaintiff claims it is entitled to the full $50,000.00 without deduction, but it is clear that part of the agreement was that the plaintiff should retain only what it was owed on the original contract with Wildlife, namely $32,951.52, and would account to Wildlife for the balance and that there is no longer a need to account for any part of it to that company because it has already received, through its solicitor, the whole $50,000.00. Furthermore, the evidence is that Mr Stephens paid the plaintiff a further sum of $8,711.00 in December 1984, which I infer was intended to reduce the plaintiff's loss and pro tanto such claim as it might have against the defendant. I see no reason to suppose that Mr Stephens intended to confer upon Systech a benefit independently of any right or redress against others and so that it might enjoy the benefit, even if it enforced its right against the defendant (cf Redding v Lee (1983) 151 CLR 117 at p137 per Mason and Dawson JJ. and see also Monroe Schneider Associates (Inc) & Anor v No 1 Raberem Pty Ltd & Ors (1991) 104 ALR 397). On the contrary, the probabilities are that he had no such intention at all.

1. The plaintiff is entitled to judgment for what it agreed to receive and retain, namely $32,951.52, less the payment made by Mr Stephens of $8,711.00, a net figure of $24,240.52, together with interest at the rate of ten per centum per annum from the date of the writ, 3 March 1987.