Iveco Finance Ltd v Man Truck & Bus UK Ltd

LORD JUSTICE MUMMERY: I will ask Lord Justice Tuckey to give the first judgment.

LORD JUSTICE TUCKEY: This is an appeal from a summary judgment for over £1 million given by Gray J in favour of the claimants, Iveco Finance Limited, against the defendant, Man Truck and Bus UK Limited. Iveco is a finance company associated with Italian vehicle manufacturers who are part of the Fiat group. Man is the UK supplier of trucks manufactured by their associated companies in Germany.

Iveco's claim was for repayment of the price which it paid for six refrigerated trucks under a contract of sale with Man following its rejection of the goods. Man say that the judge was wrong summarily to reject its defences to the claim which were that it had no contract with Iveco or, if it did, it was not in breach of that contract.

One of Man's customers was the City Truck Group, a large fleet operator of commercial vehicles in the United Kingdom. City purchased many vehicles from Man, sometimes with the aid of finance provided by finance companies. City had an established line of credit with Iveco. The evidence was that in early December 2001 representatives of City and Iveco agreed on the telephone that Iveco would finance the purchase of six Man trucks. In accordance with its (and most finance companies') practice Iveco were to buy the trucks from Man and then enter into lease purchase agreements with City. Following these conversations, Iveco received six invoices dated 4 December 2001 from Man. Each was on Man's headed notepaper and, so far as is material, in the same terms as follows --

There had been no previous dealings between Iveco and Man and there was no further communication between them before or after receipt of the invoices, apart from the fact that, on 7 December 2001, Iveco paid Man the full amount of its invoices, a total of £474,091.38p.

On the same day Iveco entered into a lease purchase agreement for the six trucks with City in which the equipment was described as "Man [truck] with Gray & Adams fridge box body".

Unknown to Iveco at the time of these transactions, the Gray & Adams fridge boxes had not been fitted to the six chassis. At some time, (the evidence does not disclose when) the chassis had arrived in the United Kingdom. On City's instructions they had been delivered between 8 and 10 January 2002 by Man to Gray & Adams for the bodywork to be fitted. But, on 10 January 2002 city went into administration. After Iveco discovered that the chassis were with Gray & Adams, its solicitors wrote on 29 January demanding the return of the money and when this was not forthcoming proceedings were issued.

Man's evidence is that, on receipt of the money from Iveco, it retained the price for the six chassis and passed on the amount paid for the bodies to City to enable it to pay Gray & Adams when the bodywork was complete. City's administrator disclaimed any interest in the trucks under the lease purchase agreements. As we understand it, the six chassis are still with Gray & Adams who have asserted a lien over them.

The judge found that this was a sale of goods by Man to Iveco by description, that at the time of the sale the trucks did not correspond with the description and so Iveco were entitled to reject them which they did by their solicitor's letter of 29 January 2002. In reaching these conclusions he considered and rejected the two defences to which I have referred.

Although Mr Blunt QC, for Man, accepts that the judge applied the right test for summary judgment, he argues that the judge failed to appreciate that the defences raised disputed issues of fact which could not be resolved summarily. Man's first defence is that it had no contract with Iveco. Mr Blunt took us through the evidence in some detail from which he says it is clear that before Iveco became involved city had entered into a binding contract to purchase the six chassis from Man on the terms of their annual contract which went back to 1999. I am not sure about this because the evidence of Man's sales administrator, Miss Turner, was that:

Mr Blunt also referred us to Iveco's evidence, which was to the effect that it was told by City that it was awaiting delivery of the trucks.

Man's evidence went on to say that, when it invoiced Iveco, it did so without any intention of selling the trucks to Iveco. It had no knowledge of the terms on which Iveco were financing the transaction. From its perspective, Iveco were doing no more than financing the transaction in the way in which a high street bank or other finance provider might do.

The judge concluded that by their invoices man offered to sell the trucks to Iveco and that, by making payment of those invoices, Iveco accepted this offer. Mr Blunt submits that if the judge had examined the surrounding circumstances to which I have referred he could not have concluded to the summary judgment standard that the invoices constituted an offer to sell to Iveco. They are, he says, only invoices and should properly be characterised as mere requests for payment against the background of a pre-existing contract between City and Man. It was, he submitted, unlikely that Man were offering to sell the bodies when they were not their manufacturer.

I do not accept these submissions. The matter has to be judged objectively. There can be no doubt that Iveco treated the invoices as an offer for sale, otherwise it would not have paid the price and then leased the trucks to City. It had no other dealings with Man so it cannot be said that Iveco knew that Man was not intending to offer the trucks for sale. Judged objectively I think it is an inescapable conclusion that Man was making such an offer. The invoice is directed to Iveco. The "total amount payable" is for "supplying" the completed truck "as described below". Whatever Man may have thought they were doing is irrelevant. The fact is that sales to a finance company is a very common method of financing transactions of this kind and that is what I think the documentation which Man created in this case achieved.

Mr Blunt submitted that this analysis, which was the judge's analysis, overlooks the earlier contract between Man and City. What in this tri-partite arrangement happened to that original contract, he asks? If property had passed to City under that contract, how were Iveco to obtain the title which they needed as security for this transaction? There is no evidence, he says, that Iveco did anything to get City to transfer title to it as its leasing terms contemplated it might do in certain situations.

So far as the first point is concerned, I do not think there is any difficulty about the analysis. If there was an earlier contract, it was simply replaced by the contract between Man and Iveco. So far as the other point is concerned, there is absolutely no evidence that property in these trucks did pass to City before 7 December.

At the end of the day, however much background you introduce of the kind for which Mr Blunt argued, you cannot overcome the clear meaning and intent of the invoices, which were clearly intended to offer these trucks for sale to the finance company which Iveco then accepted by payment.

On the assumption that it did have a contract with Iveco, Man contended that it was not in breach. That contract, it is submitted, could only have been for the sale of six chassis to be delivered to City's order. That is what Man did. In support of this submission, Man relies on Iveco's knowledge that it only manufactured truck chassis and the reference in the invoice to Gray & Adams who are well-known specialist body manufacturers and fitters. The invoice was only for both the chassis and the body because that is industry practice. Man also contend that City were Iveco's agent so City's knowledge as to who would do what was to be imputed to Iveco.

The judge rejected these submissions by reference to the invoices saying:

On the first of these points, the judge was plainly right. The contract was contained in the offer made by the invoices and acceptance by payment. The offer was of a truck "supplied and fitted" with a number of things, including a fridge box body. The fact that a body manufacturer was identified is no more than part of the description of the vehicle being sold in the same way as the tyres, the radio cassette player etc, which, presumably, had nothing to do with Gray & Adams. If the contract had been intended to sell a truck to which the body had still to be fitted, it could have said so. It did not.

As to agency, Mr Blunt points to the fact that City arranged the contract between Man and Iveco so it was Iveco's agent for that purpose. He also points to the invoices which provided for delivery to City. He argued that this must show that City were acting as Iveco's agents, at least for the purpose of taking delivery of the vehicles, and that from this a wider agency is to be inferred; one in which, therefore, one can impute to Iveco City's knowledge that Man were only to supply the bodies and that this was the only contract intended between Man and Iveco.

I do not agree. The fact that City established the contact between Man and Iveco does not, it seems to me, carry with it any inference of agency. The fact that the trucks were to be delivered to City does not give rise to any inference of agency either. It is typical of this kind of triangular transaction. The mere fact that A agrees to buy goods from B for delivery to C, does not make C his agent. The contract of sale is perfectly explicable on the basis of the invoices and their payment. The transaction does not need to be explained by any assumption that City acted in any way as Iveco's agent. The judge was therefore right, in my view, to reject the agency point.

LORD JUSTICE MUMMERY: In my judgment, for the reasons given by Gray J, I think they were entitled to the summary judgment that he granted. For the reasons given by Lord Justice Tuckey, the appeal against Gray J's judgment should be dismissed.