United Dominions Trust (Commercial) Ltd v Ennis

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
Judgment Date20 Feb 1967
Judgment citation (vLex)[1967] EWCA Civ J0220-1

[1967] EWCA Civ J0220-1

In The Supreme Court of Judicature

Court of Appeal

Civil Division

From His Honour Judge Glazebrook, Gravesend County Court


The Master of The Rolls (Lord Denning)

Lord Justice Harman and

Lord Justice Salmon

United Dominions Trust (Commercial) Ltd.
Cecil Roy Edward Ennis

MR R.P.GROUND (instructed by Messrs Church Bruce Hawkes & Brasingten, Gravesand) appeared as Counsel for the Appellants.

MR P. GOODENDAY (instructed by Messrs Edwin Coe & Calder Woods) appeared as Counsel for the Respondents.


Mr Ennis is a waterman in the Port of London On the 6th December 1359 he obtained a 1957 Jaguar car on hire purchase terms The cash price was £1,095. He paid the initial instalment £19 The monthly instalments payable over four years were £24. 9s 1d. The first monthly instalment was as on the 8th January 1960. But just at that time there was a dockers' strike which affected his wage vary adversely. He got into difficulties. He could not pay the first instalment of £4. 9s.1d. He telephoned the Finance Company and said he was sorry he could not pay. Their representative told him to wait a little while to see if things improved But the strike went on. So on the 26th January he telephoned the Finance Company again. He told them that the strike was still on and he would like to "get rid of the worry of the car" Their representative made this note at the time "Hirer phoned to say he is unable to maintain instalments He has seen Schofields" (they are the dealers) "bat they are not prepared to settle on our figures. He has left oar end keys with dealers and will forward surrender letter on lines suggested by ma. Seems a decent bloke worried to death" The Finance Company's representative dictated to Mr. Ennis the terms of a letter which Mr. Ennis then wrote on the 26th January 1960 to the Finance Company "Dear Sir I am writing to inform you I wish to terminate my agreement with yea as I find I cannot fulfil the terms stated. Please find enclosed the keys of the car and also the log book The car is new at Schofield's Service Station". In reply the Finance Company wrote on the 2nd February "Dear Sir Jaguar TRY 944 Arrears: £24. 9s.1d January We are in receipt of your letter of the 26th January, informing us that you wish to terminate the above agreement and surrender our vehicle to us and enclosing registration book and keys. Steps are accordingly being taken to repossess our property We have to advise you that under theterms of the hire purchase agreement that you have signed, you have a farther liability of £709 10s.6d., and it may be necessary for us to apply to you for payment of this at a later date" There was some delay in taking possession because the Finance Company made a mistake about the keys: but eventually on the 10 February they did take possession of the car The hirer had only had it for seven or eight weeks. He had only done between 250 and 300 miles, He and his wife had looked after the oar vary well and with every care during that time The Judge Me found.


The net result is this: The plaintiffs bad received £219 by way of initial instalments. They had taken the car back within two mouths. Yet they demanded in addition a sum of £709.10s.ed. They said it was payable under the minimum payment clause, being two thirds of the hire purchase price. They repeated their demand every month for the next three months; but than they let the matter drop for nearly three years. On the 26th November, 1962, they wrote again; and on the 27th March, 1963, they issued a writ in the High Court against Mr. Ennis alleging; "The defendant being in arrears in payment of the first instalment of hire rental payable under She said agreement of £24. 9s.1d. by notice in writing dated the 28th January, 1960, as he was entitled, terminated the hiring created by the said agreement and surrendered the said motor car to the plaintiffs. In the premises the plaintiffs became entitled to the sum of £709. 10s.8d. payable under clause 11 of the said agreement". But they added that "the plaintiffs nevertheless release and abandon as much of their said entitlement as exceeds the sum of £271. 16s.0d."


The pleading stood in that form until the 4th November, 1963, when the plaintiffs amended it so as to allege a repudiation. They alleged in the alternative that the defendant "by the said notice dated 28th January, 1960, evinced an intention no longer to be bound by the said agreement", and theyclaimed £271 16s.0d. damages for breach of contract. The defendant did not enter an appearance and the plaintiffs on the 10th December, 1963, signed judgment. But it earn afterwards set aside and the matter transferred to the Counts court.


The County Court Judge held that the hirer, Mr. Ennis, had exorcised the option to terminate the agreement that the case was governed by the decision of this Court in Associated Distributors Ltd. v. Hall. 1938, 2 King's Bench, page 83. So he gave judgment for the Finance Company on the ground that the minimum payment clause was available to than. Alternatively, he held that if Mr. Ennis did not exercise this option to terminate, ha repudiated the contract and that the plaintiffs accepted the repudiation when they amended their pleading in November 1963. He said they could recover damages for repudiation. The defendant appeals to this court.


The first point (and it is the cardinal point in the ease) is whether Mr. Ennis exercised the option to terminate the hiring. The option is given by clause 10, which says: "The hirer may at any time terminate the hiring by returning the goods at his own expense and risk to the owner at such place as shall be appointed by the owner in a good state of repair and in good working order and condition. It is followed by the minimum payment clause 11, which provides that "should the hiring be terminated by the hirer under clause 10 hereof or by the owner under clause 8 hereof, the hirer shall….forthwith pay to the owner….such farther sum as with the total amount of any installments previously paid here under will equal two thirds of the total hiring cost shown in the schedule as agreed compensation for depreciation of the goods".


The cases show this If the hiring is terminated by the owner under clause 8 (which gives the owner power to terminate for a breach by the hirer), than clause 11 is a penalty. The Courts will not enforce it. That was decided by the House of Lords in Campbell Discount Company Ltd. v. Bridge1962 Appeal Cases, page 600. But if the hiring is terminated by the hirer under the option given to him by clause 10, there is a decision of this Court that the Finance Company can enforce Clause 11 in its fall rigors. They get the ear back and else two thirds of the hire purchase price. That was decided in Associated Distributors Ltd v. hall, 1938, 2 King's Bench, page 83 which is said to have been followed in Goulston Discount Company Ltd. v. Herman. (1962) 106 Solicitors Journal, page 369.


In Campbell Discount Company Ltd. v. Bridge, sitting in the House of lords, I expressed the view that Associated Distributors Ltd. v. Hall was wrongly decided. So did Lard Devlin. I retain that view and I think it is open to this Court to reconsider this decision. But it is unnecessary to do so today. For this very good reason Accepting for the moment that Associated Distributors Ltd. v. Hall is good law and that a hirer, by exercising the optica, does commit himself to paying this large sum, then I say this hirer is not to be taken to exercise such an option unless ha does so consciously, knowing of the consequences, and avowedly in exercise of the option. If this ware not so, the document would be an absolute trap set to catch him. Not one hirer in a thousand reads these small printed clauses. Even if he did, he would not understand them. When he returns the car, he naturally assumes that is an and of the hiring and, in consequence, an end of the installments. He should not be held bound to make in addition this tremendous payment as the price of termination unless he knows what he is doing. To bind him to it, knowledge of it must be brought home to him in fact so as to amount to a new agreement by him to pay the sum.


On the facts this case is very like Campbell Discount Company Ltd. v. Bridge Mr. Ennis, like Mr. Bridge, said "I am sorry but I cannot keep up the installments". That was notthe exercise of an option such as to render him liable for another £709. It wee simply an intimation that he could no laager keep up the instalments and he wanted the agreement brought to an end. The Company replied saying that steps were being taken to repossess the ear. This might have been regarded as a consensual termination, with no Claims on either side save for past arrears. But that was not pleaded or argued. In the absence of a consensual termination, I think the Finance Company must be taken to have terminated the hiring under the powers given to them by clause 8 of the agreement. That clause says that "should the hirer fail to pay….any subsequent instalment….the owner may forthwith and without any notice terminate the hiring". That is how this agreement came to an and. The owners exercised their right to terminate the hiring! and the hirer was content that they should dc so. On such a termination the owners cannot rely on the minimum payment clause for the simple reason that they are terminating for a breach and in that case the minimum payment clause is a penalty and unenforceable under the decision of the House of Lards in Campbell Discount Company Ltd. v. Bridge. They can only recover for such breaches as had taken place prior to the termination. The only breach which they can establish is the non payment of one installment, see Financings Limited v....

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24 cases
  • Stocznia Gdynia SA v Gearbulk Holdings Ltd
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 13 Febrero 2009
    ...and could not subsequently treat it as having been repudiated. The judge derived support for that conclusion from United Dominions Trust (Commercial) Ltd v Ennis [1968] 1 Q.B. 54. His reasoning appears most clearly from paragraph 43(ii) of his judgment in which he said: “Conclusive in my j......
  • Chartered Trust Plc v Pitcher
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  • Stocznia Gdanska S.a. v Latvian Shipping Company and Others
    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • 8 Mayo 2001
    ...purpose of terminating the contract and claiming damages at common law. 178 They relied on Johnson v Milling (1886) 16 QBD 460, United Dominions Trust v Ennis [1968] QB 54 and Decro-Wall v Practitioners in Marketing [1971] 1 WLR 361. None of these was helpful; in the first two cases, the p......
  • Dalkia Utilities Services Plc v Celtech International Ltd
    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • 27 Enero 2006
    ...notice of termination is inconsistent with, and not simply less than, that which arises on acceptance of a repudiation: United Dominions Trust (Commercial) Ltd v Ennis [1968] 1 QB 54, 65, 68. In the present case markedly different consequences would arise according to whether or not there w......
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