Anglo Auto Finance Company Ltd v James
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE DANCKWERTS,LORD JUSTICE DIPLOCK |
| Judgment Date | 28 June 1963 |
| Judgment citation (vLex) | [1963] EWCA Civ J0628-1 |
| Court | Court of Appeal |
| Date | 28 June 1963 |
[1963] EWCA Civ J0628-1
In The Supreme Court of Judicature
Court of Appeal
From Judge Temple Morris Cardiff County Court
Revised
Lord Justice Wilmer
Lord Justice Danckwerts and
Lord Justice Diplock
Mr JOHN G. FOSTER, Q.C., and Mr DEREK W. HOWELLS (instructed by Messrs Leo Abse & Cohen, Cardiff) appeared on behalf of the Appellant (Defendant).
Mr JOSEPH T. MOLONY, Q.C., and Mr W. NORMAN FRANCIS (instructed by Messrs Morgan Lloyd, Evans & James, Cardiff) appeared on behalf of the Respondents (Plaintiffs).
LORD JUSTICE WILLMER: This is an appeal from a Judgment of His Honour Judge Temple Morris, given at Cardiff County Court on the 11th March 1963, whereby he pronounced in favour of the claim of the plaintiff finance company for the sum of £235. 19s.6d., being the amount claimed to be due on the termination by them of a hire purchase agreement made between themselves and the defendant, as hirer, in respect of a Vauchall motor car. Although the learned Judge does not appear to have mentioned this in his Judgment so far as I can find, and although nothingis said about it in the order as drawn up, I think it must be taken that at the earns time the Judge dismissed a counterclaim which had been put forward by the hirer.
The point which has been raised on this appeal is a very short one and turns on the construction of a single clause in the hire purchase agreement. In those circumstances I think it is necessary to refer only to the terms of the hire purchase agreement end the particular circumstances of the case in the briefest outline. The agreement was dated the 22nd April 1960, and dealt (as I have already indicated) with the hire purchase of a Vauchall motor car, the cash price of which was stated to be £495. Credit was given for the part exchange value of another oar in the sum of £105, leaving a cash balance of £390. Hire purchase charges of £156 brought the balance of hire up to £546. That sum was payable under the agreement over a period of forty-eight months by monthly instalments of £11. 7s.6d. The total hire purchase price was stated to be £652.
At the same time as that agreement was entered into there was a collateral agreement between the plaintiffs and the defendant covering monthly payments of the insurance premium for the first year's insurance. Those monthly payments were at the rate of £2.4s. per month, so that the total monthly sum for which the hirer was rendering himself liable was £13. 11s.6d. for the first year, and thereafter £11. 7s.6d. I would mention in passing that there was a considerable dispute in the court below as to whether the £11. 7s.6d. ought to be reduced to £9. 7s.6d., having regard to a subsequent agreement which it was suggested by the hirer has been made. The issue on that, however, was resolved in favour of the plaintiff company, and there is no appeal about it.
The defendant hirer fell into arrears with his monthly payments, and eventually on the 9th November 1961 the plaintiff company by notice terminated the hiring and repossessed the vehicle. Having retaken possession of the car they caused it to be put upfor sale and it was in fact sold on the 21st November 1961 for a sum of £130. The amount of arrears outstanding at the moment when the hiring was terminated by the plaintiff company was £17. 11s.6d.
Clause 3 of the agreement provides: "If the Hirer shall:- (a) Make default in punctual payment of any rentals or other moneys due", or "(c) Fail punctually to fulfil his obligations under this Agreement then…. it shall be lawful for the Owner but without prejudice to any other rights here in contained to forthwith without notice terminate the hiring and or forthwith by written notice…. to the hirer at his last known address to absolutely determine and for all purposes end the Hiring and if the Hiring be terminated under this or Clause 4 the Hirer shall no longer be in possession of the said vehicle with the Owner's consent". I refer to that clause merely for the purpose of introducing clause 6, which is the clause that has given rise to the dispute in the present case.
Clause 5 says: "In the event of the Hiring being determined under either Clause 3 or 4 hereof there shall become due and payable forthwith by the Hirer to the Owner in addition to all other moneys (except monthly installments of hire rent) already accrued due …(b) In any other case a sum equal to the amount (if any) by which the Hire Purchase pries (less the deposit plus monthly instalments already paid) exceeds the net amount realised by the sale of the said vehicle by the Owner after such termination provided such sale is carried out within six months thereof". In the present case the said was carried out within six months. I have referred already to the price realised by the sale. I think it is accepted that if, as the learned Judge held, the plaintiffs are entitled to recover in accordance with the calculation under the clause that I have just read, then the appropriate figure is that which he found, namely, £235. 19s.6d.
The one point which has been raised in the case arises from the defendant hirer's submission that clause 5 (b) amounts to a penalty clause, and as such is not one which the court will enforce.
If that view is to prevail, it follow, I think (and I believe this again to be accepted by both sides) that, having regard to the decision of this court in ( Financings Limited v. Baldock 1963 volume 8 Weekly Law Reports, page 359) the plaintiff company would be entitled to recover only those arrears of instalments actually outstanding at the date of determination, which, as I understand it, amount to an agreed figure of £17. 11s.6d. plus the costs incurred in re-possessing the vehicle, that is to say, £7.3s. It follows, therefore, that if the defendant is right in this appeal, his liability is £24. 14s.6d., and if the plaintiff company is right, it is entitled to recover £235. 19s.6d.
The vice of clause 5 (b), If I may so call it, which is relied on in support of the argument that it amounts to a penalty clause is that it provides in effect for the plaintiff company being entitled in all circumstances to recover 100 per cent of the total hire purchase price. That, it is said, cannot be regarded as a genuine or reasonable attempt to pro-estimate the damage resulting from a breach of the agreement, and must, in accordance with well-known principles, be taken as amounting to a penalty clause imposed in terrorem...
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Cases referred to in 1965
...v. Ijirigho (1960) 5 F.S.C. 97, 100. ................................................. 256 Anglo Auto Finance Co. Ltd. v. James (1963) 1 W.L.R. 1042 .......................... 313 Anjoku v. Nnamani 14 W.A.C.A. 357. ........................................................... 298 Archibong v.......