Otis Vehicle Rentals Ltd v Ciceley Commercials Ltd

A seller may recover the price under section 49(2) of the Sale of Goods Act 1979 only where the contract makes payment due on a certain day irrespective of delivery. An agreed completion date does not satisfy that requirement where commercial performance contemplates a coordinated exchange of payment, documents and goods.

Even where section 49(2) otherwise applies, a seller who has not delivered the goods must remain willing and able to deliver them. A seller who disposes of the goods and thereby loses the ability to tender delivery is confined to damages for breach of contract.

A vehicle dealer agreed to repurchase 14 tractor units from a vehicle-hire company after three years. The arrangement was intended to provide funds for final balloon payments due under related hire-purchase agreements. The dealer refused to perform, but admitted liability shortly before trial and contested the appropriate measure of recovery.

HH Judge Kirkham held that the claimant could recover the agreed buy-back price under section 49(2) of the Sale of Goods Act 1979. By the time of trial, however, the claimant had sold all the vehicles elsewhere. The judge awarded £362,104.83 with interest and indemnity costs.

The defendant appealed. The claimant was debarred from appearing after failing to comply with an order to pay money into court. The principal issue was whether the claimant could recover the price or was confined to damages.

1. Appeal allowed. Potter LJ delivered the reasoned judgment, with Peter Gibson LJ agreeing. The agreed buy-back arrangement was legally a contract of sale, despite its commercial role in funding the hire-purchase balloon payments. Payment was to be made against the return of the vehicles and the associated transfer or relinquishment of ownership.

2. The agreement did not make the price payable on a day certain irrespective of delivery within section 49(2) of the Sale of Goods Act 1979. The commercial arrangement contemplated that payment, documentation and redelivery would be coordinated to take simultaneous effect. The statutory condition for an action for the price was therefore absent.

3. In any event, long-established authority required a seller relying on section 49(2), where the goods had not been delivered, to remain willing and able to deliver them. The claimant had disposed of every vehicle before trial and had placed delivery beyond its power. Its only available monetary remedy was damages. The Court accordingly substituted the agreed damages figure of £150,003.91 for the award of the buy-back price.

4. The Court left undecided whether it has a discretion to refuse an otherwise available action for the price because damages would provide an adequate remedy. That difficult issue did not arise once the statutory claim failed.

5. Interest under section 35A of the Supreme Court Act 1981 was discretionary. In light of the claimant's execution for the excessive judgment sum, retention of money to which it was not entitled and failure to obey the payment-into-court order, an interest award would cause injustice. Following amendment of the notice of appeal, no interest was awarded. The claimant's trial costs remained on the indemnity basis until the defendant admitted liability, but were to be assessed on the standard basis thereafter. The claimant was ordered to pay the defendant's appeal costs on the standard basis.

1. Court of Appeal (Civil Division): In [2002] EWCA Civ 1064, allowed the defendant's appeal, substituted damages of £150,003.91 for the award of the buy-back price, declined to award interest and varied the basis on which the claimant's trial costs were to be assessed.

2. High Court, Queen's Bench Division, Birmingham District Registry, Mercantile List: HH Judge Kirkham gave judgment on 16 October 2001 for £362,104.83 with costs on the indemnity basis. She held that the claimant could recover the agreed price under section 49(2) of the Sale of Goods Act 1979. No neutral citation is stated.