Overstone Ltd v Shipway

This case has been argued very and clearly on both sides. The plaintiffs appeal from a Judgment of His Honour Judge sir Shirley Worthington-Evans at the Brentford County Court whereby he dismissed their claim for £48. 15s. 4d. for the defendant's breach of the terms of a hire purchase agreement. The appeal relates to the quantum of damages on a breach of obligation by the hirer.

The plaintiffs are a finance company. by an agreement dated the 10th September 1959 the plaintiffs let on hire purchase to the defendant a motor car at a cash price of £365, end hire purchase price of £452,13s. Thus the credit charges were £87.,13s. The initial payment of £73 was duly paid. Thereafter thirty-six Monthly rents of £10. 10s. lld. were payable commencing the first month after delivery of the car. Delivery was taken on the 7th September 1959. The car proved unsatisfactory, and the defendant paid no further Installments.

In November the defendant wrote a letter to the plaintiffs pointing out that the car which he had bought was worth very much lass than its price, and ending: "I cannot afford to carry on paying for this car when It will be worth little afterwards. can anything be done about the overcharge Please advise". The learned Judge held that that was not Intended to be, and was not In fact, a determination of the agreement.

On the 9th January 1960 the plaintiffs. representative went to the defendant's precises. He had a conversation with the defendant and took away the car. Thereby, as the learned Judge found, the plaintiffs retook possession of the car under the agreement, as they were entitled to do. On the 22nd January 1960 they brought an action claiming £42. 3s. 8d., being the unpaid arrears in respect of four installments due in October, November, December and January. That action did not deal with damages it was not then known whether the resale of the car would leave the plaintiffs badly out of pocket, or even possibly with no loss at all.

In a defense filed on the 3rd February the defendant, in his own words, alleged mistake of the plaintiffs and misunderstanding of the defendant. On the 26th February the plaintiffs' solicitors wrote to the defendant to confirm moral admission of the debt In the action, and arrangements made on the telephone for its satisfaction On the some date they wrote to the County Court Register telling him that the defendant was writing that day to agree to Judgment being entered with costs. That Judgment was finally paid by the plaintiff about the 16th March 1960. On the 14th March 1960, the plaintiffs sold the car for £265. In July they put forward their present claim of £48. 15s. 4d damages for breach of contract, that sum Is made up as follows: Hire purchase price, £453.13s, less the following items: Deposit paid by defendant, £73 Installments paid by defendant, £42. 3s. 8d rebate of charges, £25. 14s; proceeds on resale, £265. These amounts, when deducted from £452, leave £48. 15s. 4. The items are all agreed save that on the cross-notice it is said that the figure of £23. 14s. for rebate of charges is inadequate.

The plaintiffs then started these proceedings in the county court. Their particulars of claim do not make it very clear in respect of what they are claiming. But they allege that it was a term of the hire agreement that In the event of the defendant lawfully terminating the same he would be liable to the plaintiffs for a sum equal to two-thirds of the total purchase price. Then they amended by adding: "The plaintiffs. Notwithstanding such term, limit their claim herein to the amount of their loss Incurred by them as a result of the defendant's breach or the termination of the said agreement whereby they have suffered such damage. Particulars of the said loss amounting to £48. 15s. 4d. were rendered" etc. The defence alleged that there was nothing owing, and that lib was the plaintiffs who terminated the hiring and in the alternative the defendant contended that the plaintiffs could not, by virtue of section 69 of the County Courts Act 1959, bring the present action. The damages, it Is alleged, that are claimed In this action, and the arrears of installments claimed and paid in the first action "constitute one cause of action which it is unlawful for the plaintiffs to divide up. By accepting the sum claimed in full settlement of the first action the plaintiffs are prevented from bringing a subsequent action for the same cause".

The plaintiffs, in reply to the alleged division of the action, pleaded: The former action was an action for arrears of rentals then accrued due. The plaintiffs are Suring in this action for damages being the loss suffered by them by reason of the defendant's breech and/or termination of the said hire purchase agreement. The plaintiffs were unable to quantify such loss until the said vehicle was sold on the 14th March 1960 and thus would have been unable to claim their actual loss until after that date.

In the premises the plaintiffs have not divided their causes of action. nor waived their rights to damages nor Is their claim barred as alleged or at all". On that point, the learned Judge rejected the defendant's contention. but it Is raised in this court on a cross-notice.

The terms of the hire purchase agreement were as follows: "(1) The hirer shall (a) Punctually pay to the owners the rents specified in the agreement and (In default of payment within seven days of due date and without prejudice to the other rights of the owners) shall pay interest at 10 per cent per annum on any arrears.(3) On any default In punctual payment of rent… it shall be lawful at any time or times thereafter for the owners forthwith to terminate the hiring and the owners' consent to the hirer's possession of the hired goods shall thereupon be deemed to be withdrawn and the owners shall be at liberty… to repossess the hired goods".Clause 4 gives the hirer the option to return the goods to the owners but in view of the Judge's finding of fact that It was not he who returned the goods, that clause Is Irrelevant, "(5) If the hiring be determined under condition 4 or if the owners repossess under condition 3 hereof the hirer shall pay to the owners by way of compensation for depreciation in addition to any other sums payable hereunder such a sum as with the amount previously paid by way of rents (including the Initial rent) shall equal two-thirds of the total amount which would have been payable If the hiring had been continued for the full period of the agreement".

The plaintiffs did not, however, claim under that clause. No doubt they did not do so because of the danger that it might be held to Impose a penalty. They claim a lesser sum as the common law damages suffered by them. They undoubtedly have a right to damages for breach of an Agreement even though damages are not mentioned In the agreement unless there is something which expressly or by implication excludes their right to damages on breach.

The learned Judge held that the plaintiffs had not suffered any damages because their loss on resale was caused not by the defendant's breach, but by the plaintiffs' exercise of their right to retake possession.

The defendant relies (as did the Judge) on a dictum in a case decided by the Divisional Court in which Mr. Justice Salter set out reasoning which was approved by Lord Justice Jenkins in ( Cooden Engineering Company. Ltd. v. Stanford1953 volume 1 Queen's Bench Division, page 86, at page 99). The Divisional Court case, Elsey & Company Ltd. v. Hyde, Is not, I think, reported elsewhere than in the Cooden Engineering case and In Proudfoot's Notes on Hire Purchase Law. The words of Mr. Justice Salter on which the Judge relied are these: "Then there is a third case I take, and that Is this one, where the hire is determined by the owner because the hirer is in arrear with his payments. It Is proved that this Is a breach of this contract, and it Is proved that that breach, apart from any termination of the hirer, would give the owner a right to damages against the hirer. But what would those damages be? They would be interest on the amount unpaid, and nothing more. The fact that the hirer is In arrear with his payments will not entitle the owner to any damages for depreciation of these things. The reason that they have suffered is that they have second-hand goods put on their hands before they have received very much money in respect of them. That is not the result of the hirer's breach of contract, in being late In his payments; it is the result of their own election to determine the hiring".

The day after Judgment was given in the present case there appeared a report of Yeoman Credit Limited In 1961 volume 1 Weekly Law Reports, page 1124. That case was very similar to the present. The defendant there took delivery of a van under a hire purchase agreement. He paid the deposit, and made no further payments. The plaintiffs retook possession and sold the van. The Master assessed damages on the basis claimed by the plaintiffs in this case. The relevant clause in the hire purchase agreement need not, I think, be read, but it has considerable similarities to the one In this case though It does provide that should the Hiring be terminated by the hirer or the owner, then the hirer shall forthwith pay to the owner...