Commercial and General Acceptance Ltd v Papuan Airlines Pty Ltd [1967] PGSC 9; [1967-68] PNGLR 490 (2 December 1968)

Papua New Guinea Law Reports - 1967-68

[1967-68] PNGLR 490 - Commercial and General Acceptance Ltd. v Papuan Airlines Pty. Ltd.

[1967-68] PNGLR 490

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

COMMERCIAL AND GENERAL ACCEPTANCE LIMITED

V

PAPUAN AIRLINES PTY LIMITED AND OTHERS

Port Moresby

Frost J

28-29 November 1968

2 December 1968

INJUNCTIONS - Principles for grant of interlocutory relief - Hire purchase - Effect of failure to comply with statutory form on right to repossession.

To obtain interlocutory relief pending the trial of an action a plaintiff must establish a prima facie case in the sense that if the evidence remains as it is there is a probability that at the trial he will be held entitled to the relief sought. The strength of the probability required will depend upon the nature of the rights asserted and the practical consequences likely to flow from the order sought. Relief may be refused where the inconvenience or injury which the plaintiff would be likely to suffer if the application were not granted is outweighed by the injury which the defendant would suffer if it were granted.

Beecham Group Ltd. v. Bristol Laboratories Pty. Ltd. [1968] HCA 1; (1968), 42 A.L.J.R. 80, applied.

The plaintiff sought possession of an aircraft held and operated commercially by the first defendant. The plaintiff was the owner of the aircraft and had let it to the third defendant under a hire purchase agreement. The third defendant failed to pay instalments under the agreement and pursuant to a repossession clause which incorporated the provisions of s. 13 of the Hire Purchase Act, 1960-1965 (N.S.W.), the plaintiff purported to give notices of repossession. The notices complied with the form required under the section except that they were headed “Hire Purchase Agreements Act 1960” instead of “Hire Purchase Act 1960-1965” and the defendants argued that they were therefore void and the plaintiff was not therefore entitled to retake possession.

Held

That the plaintiff had not established the degree of probability of success required to justify the granting of an interlocutory injunction pending the trial of the action and had failed to show that the inconvenience or injury which it was likely to suffer if the application for interlocutory relief were refused outweighed the injury which the defendants would suffer if the relief were granted.

Motion

Commercial and General Acceptance Ltd. commenced action against Papuan Airlines Pty. Ltd. and Stol Commutors Pty. Ltd. claiming an injunction to restrain the defendants from using an aircraft, an order that the defendants deliver the aircraft and an inquiry as to damages. The defendants joined Stol Air Services Pty. Ltd. as a third defendant. The plaintiff moved that the first and second defendants be restrained, pending the trial of the action, from using the aircraft and that those defendants deliver the aircraft to the plaintiff. The facts appear sufficiently from the judgment.

Counsel

Wood, for the plaintiff.

Kirke, for the first and second defendants.

Francis, for the third defendant.

Cur. adv. vult.

2 December 1968

FROST J:  The plaintiff in this matter has sought various orders upon notice of motion for interlocutory relief, pending the trial of the action. The subject matter of the action is a Piper Aztec Aircraft VH-COC, which is the property of the plaintiff and of which the third-named defendant became entitled to possession under a hire purchase agreement dated 23rd March, 1967. The agreement provides for payment of a total sum after payment of deposit of $65,340 over a period of three years. The plaintiff claims that because of the failure of the third-named defendant to pay instalments due on 9th August, 1968, and the subsequent repossession of the aircraft, the plaintiff is entitled to possession of the aircraft which it seeks in the writ. In fact the first defendant was in possession of the aircraft under a deed of sale made in May 1968 between the third-named defendant and the first defendant. As the first defendant is a substantial and, to use the words of the plaintiff, reliable airline operating company, and presumably because the plaintiff has been aware of the arrangement, the plaintiff does not rely upon the transfer of possession as being a breach of the hire purchase agreement.

It is not contested that the third-named defendant is in arrears under the hire purchase agreement but his counsel is seeking to put off what appears to be the inevitable day of reckoning by setting up the failure of the plaintiff to comply with the provisions of the Hire Purchase Act, 1960, of the State of New South Wales, which governs the contract. Mr. Francis has submitted that the purported repossession of the aircraft on 30th September, 1968, was unlawful and that the plaintiff is not entitled to take possession of the aircraft because of its failure to comply with the provisions of the Hire Purchase Act and, more particularly, s. 13. Section 6 is the relevant provision in the Hire Purchase Agreement, which provides:

“If during the hiring .... I (that is the hirer) make default in any payment or commit any other breach hereunder; .... then, and in any such event you shall become entitled to immediate possession of the goods and may without notice (save as required by the Act) retake possession thereof and upon such repossession the hiring shall terminate (subject to any rights conferred on me by the Act to resume the hiring) . . . .”

Now, the effect of this section, in my opinion, is to incorporate s. 13(1) of the Hire Purchase Act into the contract. Section 13(1) provides:

“Subject to this section, an owner shall not exercise any power of taking possession of goods comprised in a hire-purchase agreement arising out of any breach of the agreement relating to the payment of instalments until he has served on the hirer a notice, in writing, in the form of the Third Schedule and the period fixed by the notice (being not less than twenty-one days after the service of the notice) has expired.”

In fact, the plaintiff did serve notices which are in the form of a Third Schedule except that each notice is headed “Hire Purchase Agreements Act 1960” and not, as the form specifies, “Hire Purchase Act, 1960-1965”. Mr. Francis argued that the section requires that the form of the Third Schedule should be strictly followed, and that in setting out a non-existent Act the notices were thus defective. He referred to the different language used in ss. 3 and 4 of the Hire Purchase Act, 1960, and he relied on the definition of the phrase “in the form of” stated in Stroud’s Judicial Dictionary, 3rd ed., vol. 2, p. 1405. He submitted that it was an Act for the protection of hirers and that one of the purposes of the notice was that the hirer’s attention should be directed to his statutory rights. He submitted that if the notices were void the plaintiff was not entitled to retake possession, the foundation of the action has disappeared, and further that this Court should not make an order for the delivery up of possession in view of the fact that the plaintiff has not complied with the procedure provided in the Act for retaking possession.

The principles of law applicable to the grant of an interlocutory injunction are set out in the case to which Mr. Wood helpfully referred me, Beecham Group Ltd. v. Bristol Laboratories Pty. Ltd.[dcv]¹

The Full High Court said[dcvi]²:

“It is as well to begin consideration of the appeal by recalling the principles to be observed in dealing with applications for interlocutory injunctions in patent cases. The jurisdiction is discretionary, being a part of the jurisdiction under s. 31 of the Judiciary Act 1903-1965 (Cth) to make all such orders as are necessary for doing complete justice in the cause. The Court addresses itself in all cases, patent as well as other, to two main inquiries. The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief: Preston v. Luck[dcvii]³; Challender v. Royle[dcviii]⁴. How strong the probability needs to be depends, no doubt, upon the nature of the rights he asserts and the practical consequences likely to flow from the order he seeks. Thus, if merely pecuniary interests are involved, ‘some’ probability of success is enough: Attorney-General v. Wigan Corporation[dcix]⁵; and in general it is right to say, as Roper C.J. in Eq. said in Linfield Linen Pty. Ltd. v. Nejain[dcx]⁶: ‘There are disputes of fact as to a number of matters . . . but this being an application for an interlocutory injunction I look at the facts simply to ascertain whether the plaintiff has established a fair prima facie case and a fair probability of being able to succeed on that case at the hearing.’ ”

Then after referring to patent actions the Court went on to say:

“. . . in a particular case it may be that although the plaintiff has shown a probability of success other considerations make it unjust to grant an injunction, especially if another form of interlocutory relief is possible. The second inquiry is directed to this aspect of the matter. It is whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.”

Although the point is a technical one and does not go to the merits of the case, I am impressed with Mr. Francis’ submission and in my opinion the defendants have raised a serious question of law and I am not prepared to say that the plaintiff has shown “some probability” of success of the action.

Mr. Francis raised a second point, that by the issue of the purported Third Schedule notice in September 1968 the plaintiff thereby waived the August notice. But in my opinion Mr. Wood’s answer that any such waiver would depend upon the third defendant showing that it had acted on the second notice or had embarked upon a course of conduct on the faith of it, is sound. As the defendants have failed to show any such course of conduct, the probability is that the plaintiff’s argument on this point would succeed. But as it has not been the practice of the Court in interlocutory applications to make a final decision upon the issue of law which is to determine the action, it is sufficient for me to reach the conclusion that the plaintiff has not shown that its chances of success are of the standard referred to, that is, involving some probability of success.

Further, on the balance of convenience there are two matters which weigh with me strongly. The first is that it appears from Mr. Jamieson’s affidavit, sworn 11th November, 1968, the motion was originally founded on the aircraft being uninsured, which is not the case as appears from Mr. McCollim’s affidavit. Also, as I have said, the first defendant, which is in possession, is a sound and reputable airline operator. Secondly, the third defendant has now paid more than one-half of the total sum payable under the hire purchase agreement, something over $45,000. Thus financial loss will be caused to the first defendant if it is prevented from flying the aircraft and, no doubt, the third defendant also will be affected if the transfer of its possessory rights under the deed of sale is prevented from being given operation. Having regard to these circumstances, in my opinion, here too the plaintiff has failed to show that the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs the injury which the defendants would suffer if the injunction were granted, and the defendants were deprived of the use of the aircraft pending the determination of the question as to whether the plaintiff is entitled to retake possession. So I have reached the conclusion that in the exercise of my discretion I ought not to grant the interlocutory relief sought. However, it seems to me that this is a case in which if the parties desire it I should order a speedy trial.

Motion dismissed with costs. Order for speedy trial.

Solicitor for the plaintiff: J. K. Smith.

Solicitor for the first and second defendants: Craig Kirke & Co.

Solicitor for the third defendant: Wm. Lander & Co.

R>

[dcv](1968) 42 A.L.J.R. 80.

[dcvi](1968) 42 A.L.J.R., at p. 81.

[dcvii](1884) 27 Ch.D. 497, at p. 506.

[dcviii][1887] UKLawRpCh 162; (1887) 36 Ch.D. 425, at p. 436.

[dcix][1854] EngR 309; (1854) 5 De G.M. & G. 52, at pp. 53, 54; 43 E.R. 789.

[dcx] (1951) 51 S.R. (N.S.W.) 280, at p. 281.