Lombank Ltd v Excell
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE UPJOHN,LORD JUSTICE DAVIES |
| Judgment Date | 29 July 1963 |
| Judgment citation (vLex) | [1963] EWCA Civ J0729-4 |
| Court | Court of Appeal |
| Docket Number | Plaint No. RAS 619A |
| Date | 29 July 1963 |
[1963] EWCA Civ J0729-4
In The Supreme Court of Judicature
Court of Appeal
On Appeal from Lamreth County Court
(His Honour Judge Ruttle).
Lord Justice Orierod
Lord Justice Upjohn
and
Lord Justice Davies
Mr. F. ELNYN JONES, D. C., and Mr. STUART SHIELDS (instructed by Mr. Stuart C. Myers) appeared on behalf of the Appellant.
Mr. STFHEN TERRELL and Mr. ANDREW BATESON (instructed by Messrs. Victor Mishcon & Co.) appeared on behalf of the Respondents.
(As revised)
This is an appeal from His Honour Judge Ruttle sitting in the Lambeth County Court who gave judgment for the Plaintiffs, Lombank, Ltd., for £599. 9s. 10d. and costs on the 4th April, 1963. This is yet another case concerned with an hire purchase agreement, the agreement being a standard form of Lombank's Hire Purchase Agreements.
The Agreement was dated the 9th October, 1959, and by it the Defendant Excell contracted to hire on hire purchase terms a new Bedford Utility Marshall Burette. The cash price of the vehicle was £644. 18s. 9d., and an initial payment yes made of £64. 18s. 9d., leaving a cash balance due of £580. Hire charges of £122 and the final fee on exercising an option to purchase of £1 added to that make a total of £123, so that the balance of hire due was £703 payable by 35 monthly rentals of £19. 10s. 0d. and one monthly rental of £20. 10s. 0d., the first rental being payable on the 9th November, 1959, and thereafter on the 9th of each month. The total hire purchase price was therefore cash price plus charges and purchase fee £767. 18s. 9d. On the same day Lombank took the precaution (exceedingly wise in the circumstances) of obtaining a guarantor, the second Defendant, Mr. Palmer.
The Defendant Excell paid the initial payment of £64. 13s. 9d. and the first three instalments due respectively on the 9th November, December, 1959 and January, 1960. He has since paid no other sum and accordingly Lombank by a letter. dated the 10th March, 1960 terminated the hiring and took possession of the vehicle on the 1st April, 1960. It was sold on the 5th. April for £4-35, a cash depreciation over 6 months of rather less than 33 per cent. Excell has not been served with the writ and the only effective Defendant before the Court is the guarantor Palmer. It is however conceded that Palmer is in precisely the same position as Excell would have been in this action.
By Clause 2 of the Agreement the hirer (Excell) agreed to a number of covenants which are familiar, such as, for example, to pay punctually and without previous demand the monthly hire rentals; to retain the goods and all parts in good order, repair and condition; to carry out all repairs and replacements to the goods; to be responsible for destruction or damage to the goods and to insure the goods, and so on. Clause 5(a) contained the usual provision that the hirer might at any time terminate the hiring on notices returning the goods in good order, repair and condition, and sub-clause (b) of that clause made provision for the exercise of the usual option to purchase for the sum of £1. Clause 4 provided that Lombank might terminate the agreement in certain events, principally on the hirer making default in the due or punctual payment of the hire rentals or any breach of the agreement. By Clause 5 it was provided that without derogating from the owner's rights under Clause 4 of the Agreement and hiring should forthwith and for all purposes be determined absolutely and come to an end and neither party should have thereafter any rights thereunder on the happening of a number of events, for example, on the death of the hirer, if the hirer should abandon the goods, if steps should be taken to levy a distress on the goods or if the hirer should permit or suffer to be committed any act of bankruptcy, and so on.
Clause 6 is the only clause which it is necessary to set out in detail; it is in these terms: "6. In the event of the Hirer returning the Goods under Clause 5(a) or in the event of the Owners retaking possession of the Goods under Clause 4 or in the event of this Agreement being determined under Clause 5 hereof the Hirer shall pay to the Owners upon demand (and in the event of this Agreement being determined under Clause 5 hereof such liability shall be deemed for all purposes to have arisen on and immediately before and not after such determination) in addition to any other sums for which he may be liable to the Owners under this Agreement.
(a) All arrears of rent, including apportioned rent for any broken period all interest thereon and all sums due and payable in the event of such return or retaking up to the date of the receipt of the Goods by the Owners and in the event of such determination up to the date of such determination of this agreement
(b) The cost of all repairs and replacements required to be done to render the Goods in good order repair and condition and the estimate of a reputable dealer appointed by the Owners and who deals in goods of the same nature as the Goods shall be conclusive and binding upon the Hirer as to the repairs required and the cost thereof and
(c) by way to agreed depreciation of the Goods a sum equal to (a) if the Goods be a motor-vehicle 45 per cent, of the total hire purchase price payable under this Agreement (including initial payment and hire charge), (b) if the Goods be other than a motor vehicle 50 Per cent, of the total hire purchase price payable under this Agreement (including initial payment and hire charges) plus in either case a further 5 per cent, of such total hire purchase price for each month which has elapsed between the date of the Agreement and receipt of the Goods by the Owners up to 75 per cent, of the said total price less in each case the total of the sum already paid and the moneys due to the Owners for hire rentals at the date of the receipt of the Goods by them."
By their Plaint Lombank claimed to recover money against the Defendants under two headings: (a) for a specific sum due under Clause 6 of the contract and (b) a claim for damages at Common Law for breach of contract. The claim under (a) is made up in this way: First under Clause 6(a) the two instalments of rent due on the 9th February and March respectively before Lombank terminated the hiring. That amounted to £39 and it is not in dispute that Lombank are entitled to recover that sum. Secondly under Clause 6 (c) in respect of what in the Pleadings is described as agreed depreciation, that is, 45 per cent, initialdepreciation and 5 months' depreciation at 5 per cent, per month, aggregating 70 per cent, of the total hire purchase price of £767. Rs. 9d. less instalments due, These two sums under Clause 6 amount to the total of £599 9s. 10d. for which Judgment was given, This figure in fact favours the Defendant Palmer slightly, but nothing arises thereon.
As appears from the Judgment of the learned County Court judge when the matter came before him, it was clear that the real issue in the case under claim (a) was whether Clause 6(c) was a penalty or in the nature of a genuine covenanted pre-estimate of liquidated damages. At an early stage of the case in the County Court, Counsel for Lombank submitted that the learned Judge was bound to decide that Clause 6(c) was a genuine pre-estimate of liquidated damages and that the clause was accordingly valid for the reason that the identical clause in the same common form Agreement had been held to be valid by this Court; see Phonographic Equipment Ltd. v. Muslu, 1961, 3 All England Law Reports page 626. He relied strongly on the decision of Mr. Justice Winn in Lombank Ltd. v. Cook, 1962, 1 Weekly Law Reports, page 1133, on a Summons for leave to sign Judgment against the defendant in default of appearance when he hold that the plaintiff was entitled to sign Judgment. His view, contrary to the opinion of the learned Master, was that Muslu's case had decided as a matter of law that a clause in the form of Clause 6(c) was valid in every case. Mr. Justice winn said at page 1141 of the report (in reference to Muslu's case): "I am quite unable to regard that decision of the Court of Appeal as a decision merely upon the particular hire-purchase agreement or the particular dispute then arising between those parties. She wording of the clause that had to be considered in that case was identical with the wording that the court has to consider in the present action". Accordingly, Counsel for Lombank invited the Judge to determine this matter as a preliminary question ofPaw although Counsel for the. Defendant Palmer opposed this course and asked the learned County Court Judge to hear all the facts and decide the matter finally before him. However, it is quite clear from his Judgment that the learned County Court Judge acceded to the submission on behalf of Lombank and after hearing argument decided that he ought to follow Lombank v. Cook, and so he determined this point as a preliminary point of law in favour of Lombank and accordingly entered Judgment for £599. 9s. 10d. I may add here that Mr. Justice Ashworth some five days before the Judgment of Mr. Justice Winn reached a similar conclusion on the effect of Muslu's case in the unreported case of Lombank v. Archbold, 1962 Current Law, paragraph 1409.
Mr. Elwyn Jones for Mr. Palmer argued that the case of Muslu is no longer law but has inferentially, though not expressly, been overruled by the recent case in the House of Lords, Campbell Discount Co., Ltd. v. Bridge, 1962 Appeal Cases, page 600.
Before us a large number of points were argued. not only upon claim (a) but upon claim (b), but in the end we decided to adjudicate only on the question decided by the learned County Court Judge whether...
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