Compac Industries Pty Ltd v Fairbrother
[1996] QDC 294
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- Unreported Judgment
- Compac Industries Pty Ltd v Fairbrother[1996] QDC 294
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Compac Industries Pty Ltd v Fairbrother[1996] QDC 294
Compac Industries Pty Ltd v Fairbrother[1996] QDC 294
DISTRICT COURT | Plaint No 1238 of 1995 |
CIVIL JURISDICTION
JUDGE ROBIN QC
COMPAC INDUSTRIES PTY LTD | Plaintiff |
and
IAN DOUGAL FAIRBROTHER, JENNIFER ANN FAIRBROTHER, LANCE WILLIAM FAIRBROTHER and LEANNE MAREE DUNDAS | Defendants |
BRISBANE
DATE 20/11/96
CATCHWORDS: | Contract – sale of goods – retention of title – Romalpa Clause – proceedings against third party (purchaser in “on-sale”) for possession of goods or damages for conversion – defendant had paid in full prior to delivery of goods by plaintiff, which had received only a deposit from its own purchaser – first purchaser insolvent – first purchaser held to have implied power to confer title on defendant. |
JUDGMENT
HIS HONOUR: This “two day” trial has been conducted extremely expeditiously and economically thanks to the parties' legal advisers. It concerns the effect, if any, a Romalpa clause inserted by the plaintiff in its contractual documents has as against the defendants who are the proprietors of the Kynuna Roadhouse, a service station in Townsville; they were not directly the customers of the plaintiff, but purchasers from its customer.
That clause is as follows:
“7 PROPERTY
The Conditional buyer acknowledges the acceptance of this quotation that:
7.1 This quotation and the acceptance thereof by the buyer is given on the clear understanding by both parties that the property of the goods does not pass to the buyer until the total purchase price has been paid to the company.
7.2 The buyer acknowledging 7.1 is responsible for any damage to the said goods and will indemnify the company against loss or expense incurred through seizure of the said goods under any other legal process or repossession thereof by the company until such time as the goods become the buyers sole property as designated in 7.1.
7.3 The company may at any time without demands or notice retake possession of the goods and for this purpose the buyer gives leave and licence to the company and its agent to enter any premises to search for, to take possession of, dismantle and remove the goods without liability to the buyer and anyone claiming under the buyer and anyone claiming under the buyer.”
The plaintiff took careful steps to draw the clause to the attention of those with whom it was likely to come into contractual relations regarding its products. In this case a company called Fannon Pty Ltd, which traded as B & P Pump Repairs (or BNP Pump Repairs). It was engaged by the plaintiff to service its products which are, relevantly, petrol bowsers and associated computer equipment of the kind used in self service petrol outlets.
B & P Pump Repairs was entitled to a 10 per cent discount on products it acquired from the plaintiff and was probably entitled to such a discount in respect of bowser systems of the kind just described. Whether or not that is so, B & P Pump Repairs was in a position to apply a mark-up to bowsers as it did in the present transaction, which involved it supplying equipment obtained from the plaintiff to the defendants. The case as finally presented did not involve looking into any of the questions of any single or double agency exercised by B & P Pump Repairs. Mr Hackett, in opening described it as a del credere agent operating for both parties.
The defendants accepted its quotation for certain equipment, a quotation which involved application of a mark-up to the quote which had earlier been given by the plaintiff. The plaintiff knew that B & P Pump Repairs did not require the product for itself, but rather for on-sale to someone else; knowledge of just who that was was available to the plaintiff by its manager Mr Howarth well before delivery of the products by the plaintiff to the defendants happened.
The matter was touched on in a telephone conversation Mr Howarth had with Mr Lance Fairbrother, one of the defendants, who wished to know what was happening in relation to supply of the ordered equipment. He revealed the information that - as was the case - the defendants had made full payment. This occurred by means of some lease financing or similar transaction which, on the evidence, also included other indebtedness for services or goods previously supplied by B & P Pump Repairs.
Mr Howarth advised that the plaintiff would not release the products until its customary deposit had been paid. Some time later payment of the deposit was made and the goods were dispatched by a carrier called Arafura Freight Lines. The delivery dockets in Exhibit 9 include one generated by the carrier and one generated by the plaintiff, each of which was signed by a person who has not been identified, but may be taken to be an agent of the defendants. The latter delivery docket contains the endorsement that, “These goods remain the property of Compac Industries Pty Ltd until paid in full.”
Another document generated by the plaintiff, which I took Mr Hackett to rely on, as indicating that the defendants may have been alerted to the Romalpa clause, was Exhibit 6. I may have misunderstood Mr Hackett's submissions - perhaps nothing turns on it. The endorsement on Exhibit 6, which is an invoice from the plaintiff to B & P Pump Repairs, which happens to have attached to it a full sheet of conditions of sale including clause 7, is as follows: “Note these goods remain the property of Compac Industries Pty Ltd until fully paid for.”
I would not think that either of those documents was appropriate to advise persons in the position of the defendants of the existence of a Romalpa clause since their meaning would probably be taken to be that bona fide payment by the ultimate purchaser was sufficient to prevent property remaining that of the plaintiff. It is not spelt out as it is in clause 7 that it is the plaintiff which must be paid in full.
I, at risk of frustrating the efforts of counsel who attempted to conduct the case in a strictly focussed way, expressed interest in topics such as the impact of estoppel and like equitable notions on the operation of Romalpa clauses. This is not a case in which any useful comments can be made on that score because of the difficulty of establishing that the defendants acted in reliance on anything in particular. They have made payment very early in the picture, and certainly well in advance of any question of delivery of the equipment. But for this, questions might arise as to the justice, if that be a relevant consideration, of the plaintiff having the full benefit of the Romalpa clause, particularly in circumstances where it may be that the plaintiff was alerted to the dilatory performance of B & P Pump Repairs in forwarding any moneys at all to it.
It is common ground between the parties that this ought not to be regarded as a transaction between the plaintiff and the defendants, but rather as a sale to B & P Pump Repairs followed by an on-sale to the defendants. In those circumstances Mr Hackett did not pursue the plaintiff's claim in the pleadings for the price of the goods, the claims pursued being for possession of them and damages for conversion, in the alternative. The plaintiff's evidence showed that when its solicitor Mr Fisher contacted the defendants and advised them of the plaintiff's claim to title to the goods, those were yet to be installed and were available for collection, if the defendants had been disposed to permit collection, in their packing cases. The plaintiff has established that it made appropriate demands before action for possession.
Mr Bland for the defendants' part abandoned any argument that the goods, which have now been installed at the defendants' premises and presumably by being bolted onto concrete or similar pads had become fixtures. So the only question in the case is the effect of the Romalpa clause.
Fannon Pty Ltd is in liquidation, having been wound up around March 1995 at the suit of the plaintiff, on the ground of insolvency. It is common ground, as it would have to be, that there is hardship to the defendants if they have to pay twice for the goods. Mr Hackett submits that is the consequence of clause 7, that matters are no different from what the legal situation would be if Mr Stark, Fannon's principal, had simply stolen the plaintiff's goods and purported to sell them to the defendants; that the defendants in the events which have happened have no more entitlement to claim title.
I do not know that there is any relevance in this today, but in the circumstances regarding Mr Howarth's knowledge it can, perhaps, be said that the plaintiff is the author of its misfortune through having released its goods in circumstances known to it which, I would speculate, were somewhat unusual, raising real doubt whether B & P Pump Repairs would pass on the price following receipt by it of payment from the defendants.
Mr Bland does not assert that B & P Pump Repairs ever obtained title, but he does assert that his clients did, on the basis that there is implied in the arrangements, notwithstanding clause 7, a power in B & P Pump Repairs to sell the goods prior to payment being made to the plaintiff. Such a possibility was acknowledged in the leading case of Aluminium Industries Vaassen BV v. Romalpa Pty Ltd (1976) 2 All England Reports 552 as noted and, indeed, applied by Simon Brown J in Four Point Garage Ltd v. Carter (1985) 3 All England Reports 12, which has considerable similarities to the present case. Locally, Cooper J in Style Finnish (Qld) Pty Limited v. Abloy Security Pty Limited (1994) 2 Queensland Reports 203 at 207 has said:
“Contracts of the type presently under consideration usually either expressly or by implication include a power to sell in the recipient of the goods prior to payment for the goods notwithstanding that the recipient has no property in the goods at the time of sale. Where a sale is made in those circumstances it is a sale made on account of the original supplier. Property then passes direct from the original supplier to the third party purchaser and the title acquired is not a derivative title through the intermediate supplier (Aluminium Industries Vaassen BV v. Romalpa Aluminium Ltd [1976] 1 WLR 676 at 690, 693, 694). Property in the goods will never pass to the original acquirer of the goods unless the goods are paid for, or in the case of an all moneys clause there are no moneys outstanding on any account.”
Here, it was always the basis of dealings between the plaintiff and B & P Pump Repairs that the goods were not for the latter's use; the plaintiff was willing to arrange delivery to the defendants direct. For completeness, Mr Bland has referred me to an unreported judgment of Branson J in the Federal Court of Australia in the matter of United Hardware (SA) Pty Ltd (Receiver and Manager Appointed), Bruce James Carter v. Makita (Australia) Pty Ltd and others 978 of 1995 27 November 1995, particularly at page 11. Her Honour said:
“It is not contended that there was a wrongful disposition of Makita's property when United Hardware on-sold such property to its customers Makita Products. It is plain that a term must be implied into the contractual arrangements between United Hardware and Makita authorising United Hardware to on-sell Makita's products which have not been paid for (Codelfa Construction Proprietary Limited v. State Rail Authority of New South Wales (1982) 149 CLR 337 per Mason J at 347). The crucial issue is that of whether such implied term should be one authorising United Hardware to sell such products on its own account or on account of Makita.”
In the end this case comes down to opposed contentions of the parties as to whether or not it is right to make the implication contended for. In the end I reach the clear view that it is and the consequence is that the claim of the plaintiff fails. It seems to me the result should be that the plaintiff's action is dismissed with costs to be taxed. The costs will be taxed on the District Court scale applicable to judgments for less than $50,000.