Ann: COVID-19 Update, page-26

The recently announced quarterly statement seems to suggest that TGA has reverted to its original Radio Rentals business of renting, which could be a viable option. This is what I thought may have happened, but I was unsure. The quarterly statement has a note that reads, "Includes for the quarter (and year to date): rental asset purchases of $15.7m ($61.3m) and equipment finance originations of $33.7m ($155.8m)".

Apart from wondering why TGA shifted from what it called operating leases (renting) to finance leases (sale of goods via instalments) in recent years, I'll attempt to talk to TGA to find out why it first said it would contest the class action on the basis of legal advice to the effect that its contracts were defensible, and then capitulated, and settled the class action for $20m.

I know this issue may not interest HC readers, I just wrote my thoughts below to articulate them to myself in case I decide to vent my spleen when, and if, I speak to TGA. The standard-form contract that I read did not appear to qualify as a financial lease, but I cannopt be sure that TGA had stuck to that precise wording of the document that I had viewed.

A lease contract does not become a financial lease contract simply by being thus called, and the same applies to an operating lease contract (a rental contract). It is the provisions in the contract that determine what the contract is, and the sample standard-form contracts that I examined seemed to be worded to the effect that TGA's contracts were operating leases, because the contract overtly stated that onership in the product vested in TGA (which a judge could strike out), and there was no option to purchase the product (which a judge could insert by "construction").

However styled, Commercial Law states that a contract styled as an operating lease with an option, or obligation, to purchase the leased products would be deemed to be a sale of goods via instalments. As far as I could see, TGA's leases did not include an option to purchase. Howwever, contracts can be varied by a judge via both "construction" and "strike-out". That the contracts should have each have had a purchase option required "construction". The forensic protocols of "construction" are extremely limited, so I was surprised that TGA caved in and offered to settle, but firms often do that rather than fight to the bitter end. However, I was surprised that the Federal Court judge did not disallow that settlement. Federal Court judges often get things wrong, which is why cases end up in the Supreme Court, and Federla Court judges are some times overruled.