Campbell Discount Company Ltd v Bridge

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeViscount Simonds,Lord Morton of Henryton,Lord Radcliffe,Lord Denning,Lord Devlin
Judgment Date25 Jan 1962
Judgment citation (vLex)[1962] UKHL J0125-1

[1962] UKHL J0125-1

House of Lords

Viscount Simonds

Lord Morton of Henryton

Lord Radcliffe

Lord Denning

Lord Devlin

Bridge (A.P.)
and
Campbell Discount Company Limited

Upon Report from the Appellate Committee, to whom was referred the Cause Bridge (A.P.) against Campbell Discount Company Limited, that the Committee had heard Counsel, as well on Wednesday the 22d, as on Thursday the 23d, Monday the 27th and Tuesday the 28th, days of November last, upon the Petition and Appeal of Frank Kitchener Bridge, of 52 Mayesbrook Road, Dagenham, in the County of Essex, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 1st of March 1961, so far as therein stated to be appealed against, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order, so far as aforesaid, might be reversed, varied or altered, or that the Petitioner might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the Case of Campbell Discount Company Limited, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled. That the said Order of Her Majesty's Court of Appeal, of the 1st day of March 1961, in part complained of in the said Appeal, be, and the same is hereby, Reversed: And it is further Ordered, That the Case be, and the same is hereby, remitted back to the Ilford County Court with a Direction to assess what damages, if any, are payable by the Appellant to the Respondents upon the basis that—

  • (1) the Appellant has not exercised the option conferred upon him by clause 6 of the Agreement dated the 20th day of July, 1959;

  • (2) the Appellant was in breach of contract; and

  • (3) the sum claimed under clause 9 ( b) of the said Agreement in respect of the agreed compensation for depreciation is not payable as being a penalty:

And it is also further Ordered, That the Costs incurred by the Appellant in the Court of Appeal as from the date of the issue of a Civil Aid Certificate, namely, the 8th day of August, 1960, and also the Costs incurred by him in respect of the said Appeal to this House, be taxed in accordance with the provisions of the Third Schedule to the Legal Aid and Advice Act, 1949, as amended by the Legal Aid Act, 1960, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments.

Viscount Simonds

My Lords,

1

The facts in this case are fully stated in the Opinion of my noble and learned friend, Lord Morton of Henryton, and I will not state them myself. Upon the basis of those facts I am of opinion that the only question of law that arises for your Lordships' consideration is whether a hirer, exercising the option given to him by clause 6 of the agreement, is entitled to escape from the bargain that he has made by pleading that the price he has agreed to pay for its exercise is in the nature of a penalty. I say that this is the only question that in my opinion arises, because in agreement with the unanimous view of the Court of Appeal I cannot think that the pleadings can fairly be said to give rise to any other question. In their Particulars of Claim the Respondents refer to clause 6 which alone gives the Appellant the right to terminate the hiring, allege that he purported so to terminate it and claim relief accordingly. By his Defence the Appellant admits that he terminated the agreement. The letter, by which he terminated (or purported to terminate) it, is imprecise and there is a confusion about the date of termination. But I find it impossible to treat the issue between the parties as one in which the Respondents alleged a breach by the Appellant of the agreement and an acceptance by them of the breach as a repudiation of it. Nor can the admission by the Appellant that he terminated the agreement be easily translated into an allegation that he committed a breach of it and that the Respondents themselves put an end to it and were suing him for damages for the breach. Your Lordships, however, take a different view of the case with the result that the important question upon which I assume that leave to appeal to this House was given does not arise. That question was, however, fully argued and after some hesitation I have come to the conclusion that I ought to express my opinion upon it, if only in order that hirers may be warned of the possibility that they may be worse off if they exercise such a right as is given to them by such a clause as clause 6 of this agreement than if they commit a breach of the agreement and are sued under such a clause as clause 9 of this agreement.

2

I state my opinion very shortly, for I agree with the judgments given by Lord Justice Pearce and Lord Justice Harman in the Court of Appeal. Clause 6 is not a penal clause. It confers on the hirer a right for which he agrees to pay a price. He need not exercise it if he does not want to. It is a right which is sedulously preserved for the hirer by Act of Parliament and, though the amount here involved takes it out of the ambit of the Act, the principle is the same. I must dissent, as Lord Justice Harman did, from the suggestion that there is a general principle of equity which justifies the court in relieving a party to any bargain if in the event it operates hardly against him. In particular cases, for example, of expectant heirs or of fiduciary relationship, a court of equity (and now any court) will if the circumstances justify it, grant relief. So also if there is duress or fraud "which unravels all". In the present case there is nothing which would justify the court in granting relief to a hirer who exercised his rights under clause 6.

3

As, however, this case has in your Lordships' House become a claim under clause 9 for a breach by the Appellant of his contractual obligations, the question arises whether the amount allegedly due under that clause is a penalty or liquidated damages. Upon this question I have had the privilege of reading in print what your Lordships propose to say and agree that it is the former. Upon that subject I cannot usefully add anything. In the result the proper course appears to be to allow the appeal and to remit the case to the County Court to assess the damage, if any, which the Respondents suffered by reason of the Appellant's breach of contract. The order as to costs will recognise that this is a legal aid case.

Lord Morton of Henryton

My Lords,

4

The events leading up to this appeal are as follows:

5

By an Agreement in writing dated the 20th July, 1959, and made between the Respondents and the Appellant, the Respondents agreed to let and the Appellant agreed to hire (with an option to purchase as therein provided) a used Bedford Dormobile motor car described therein as having been manufactured in the year 1954. for a total hire-purchase price of £482 10s. 0d. payable as follows:—

( a) By an initial rental of £105 payable as to £10 in cash and as to £95 by an allowance on another motor car then surrendered by the Appellant in part exchange;

( b) by 36 consecutive monthly rentals thereafter of £10 9s. 2d. each, the first such rental being due on the 20th August, 1959;

( c) by a final payment of £1 to be paid with the last of such monthly rentals in consideration of the exercise by the Appellant of his option to purchase.

6

By Clause 4 of the Agreement the Appellant agreed—

( a) to keep and maintain the vehicle at his own expense in good order, repair and condition, not to make any alterations to it without the written consent of the owners, to report to the owners any damage to the vehicle so soon as the same has been caused, to keep the owners informed of the address of the hirer, to notify the owners of any change of place where the vehicle is housed or ordinarily kept, to permit the owners or their duly authorised representative to inspect the vehicle at any reasonable hour and to provide facilities to enable them to do so:

( b) to keep the vehicle during the currency of this Agreement in his own possession and control and not take the said vehicle out of the United Kingdom without the previous written consent of the owners:

. . . . . .

( f) to use his best endeavours to have carried out within ten days all repairs necessary to remedy any damage suffered by the vehicle and all repairs which the owners may at their discretion reasonably require the hirer to have effected, all such repairs to be carried out at the hirer's expense.

. . . . . .

7

Clause 5 provides:

"If the hirer shall have punctually paid all sums due to the owners under this Agreement and shall further have strictly observed and performed all the terms conditions and obligations on his part herein contained, he shall have the OPTION TO PURCHASE the vehicle for the sum of £1 (one pound) but until such option is exercised the vehicle shall remain the sole and absolute property of the owners."

8

Clauses 6 to 9 of the Agreement are as follows:

"6. The hirer may at any time terminate the hiring by giving notice of termination in writing to the owners, and thereupon the provisions of Clause 9 hereof shall apply.

7. If the Hirer shall fail to pay any sum due hereunder or to observe any of the stipulations in Clause 4 hereof or any other stipulations on his part contained herein the owners may thereupon and without notice terminate the hiring and/or this Agreement, and may, subject only to the restriction of the owner's rights to recover (where the hire-purchase price does not exceed £300 and contained in the statutory notice hereto), retake possession of the vehicle whereupon the provisions of Clause 8 hereof shall apply.

8. Without in any way derogating from their rights under...

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