DIVISION: IN THE HIGH COURT, KUMASI
DATE: 9TH APRIL, 1963
BEFORE: APALOO J.
CASES REFERRED TO
(1) Stromdale and Ball v. Burden [1952] Ch. 223; [1952] 1 All E.R. 59; [1951] 2 T.L.R. 1192
(2) Helby v. Matthews [1895] A.C. 471; 64 L.J.Q.B. 465; 72 L.T. 841, H.L.
NATURE OF PROCEEDINGS
ACTION against the defendant-company for damages for breach of contracts and for inducing breaches
of contracts. The defendant-company counter-claimed for arrears of instalments outstanding after its
seizure and re-sale of the subject-matter of the hire-purchase contracts.
COUNSEL
T. A. Totoe for the plaintiff.
Ayim Owusu for the defendant-company.
JUDGMENT OF APALOO J.
In this action, the plaintiff claims against the defendant-company (which I shall hereafter call the
company) damages for breach of contracts and inducing breaches of various contracts entered into
between the plaintiff and various lorry drivers. The company denies that it is liable in any way to the
plaintiff and for its part, counter-claims against the plaintiff for the sum of £G4,648 13s. 9d. being
hire-purchase instalments due and unpaid to the company by the plaintiff.
The plaintiff who is virtually illiterate and does not strike me as particularly business-like began his
association with the company in or about 1942. He was then a trade canvasser for the company and was
paid commission for motor vehicles sold through his agency. Whatever his shortcomings, he maintained
his association with the defendant-company from that time until about 1958. The evidence shows that the
company
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thought then that he could be relied on to do business of a more responsible type. Accordingly, the
plaintiff discontinued trade canvassing for the company and instead became its hire-purchase customer on
a large scale. The system of business which developed between the plaintiff and the company was this:
When a prospective hire-purchaser of vehicle from the company did not feel that for any reason he could
enter into direct contract with the company, he saw the plaintiff. The latter then obtains the vehicle on
hire-purchase and enters into agreement in his own name with the company. He then sub-hires the vehicle
to the purchaser adding to the purchase price a small amount as profit. The plaintiff himself obtains a
rebate which was either credited against the hire-purchase price or the gross price of the vehicle before
the drawing of the relevant hire-purchase contract. Twenty-three of these agreements were tendered in
evidence and were marked as exhibits 2-24. These contain the usual hire-purchase clauses and in my opinion, the controversy between the parties in this case is resolvable on the proper construction of these documents. When the plaintiff sub-hires this vehicle, he, like the company, enters into written agreement with his sub-hirers. The plaintiff tendered nine of such agreements as exhibits El to E9. These are not particularly well drafted documents but their true meaning does not fall for consideration in this case.
By June 1959, the plaintiff fell into arrears on many of the vehicles and it seems the company was far
from satisfied with his payment position. On the 12th June, 1959, the company wrote to the plaintiff
pointing out that if the instalments then due on 28 vehicles were not paid by the 20th of that month, it
would feel compelled to seize the said vehicles. From the evidence I heard in this case, I form the view
that the plaintiff was quite clearly unequal to the work which he undertook to do. As I said, he was
virtually illiterate. He said he went to school up to standard four in 1941. The payments of the various
instalments fell due on divers days. He says he has no record of these and only made payment when his
own sub-hirers made payments. He did not employ a clerk and had no office or a post office box. A
telephone to him would be a luxury. In the circumstances, it does not surprise me that he found himself
wholly unable to pay the hire-purchase rentals on due dates.
By October 1959, the instalments overdue against the plaintiff in the company’s books came up to the
staggering figure of £G4,482 11s. 10d. This was in respect of 24 vehicles. As the payment position had
not improved at the end of October 1959, Mr. Waelty said the company decided to repossess the vehicles.
This decision was implemented and between the 2nd October, 1959, and the 30th November, 1959, all the
twenty vehicles listed in the plaintiff’s schedule to the writ were repossessed. A list was made by the
company showing the dates of seizure and the amounts then owing at the dates of seizure. This list
however for a reason which I do not think was explained, came into possession of the plaintiff. He
tendered it as exhibit F.
[p.355] of [1963] 1 GLR 352
The plaintiff does not deny that the amounts shown against the various vehicles were owed to the
company and that they were rentals which were overdue. He also admits, as indeed he cannot dispute, that
the company was entitled to exercise the right of seizure. He contends however that the vehicles were not
in fact seized and that the company merely squeezed him out of business by entering into fresh
hire-purchase agreements with his customers. The plaintiff himself said he was not present when this took
place and obviously spoke from hearsay. Mr. Waelty said these vehicles were seized on his instructions
and the various drivers then called on the company to find out the reason for the seizures. In order to
cause them minimum amount of loss, the company agreed to enter into fresh agreements with them. This
offer was accepted by all the drivers except in five cases, when the vehicle was either sold outright or as
scrap. In an attempt to prove his assertion that there was no bona fide seizure of the vehicles, the plaintiff
put into the witness-box one of his customers by name Osei Assibey. He gave evidence to the effect that
on one occasion while he was at Kumasi, the company’s manager sent for him. He said when he went, the
manager queried him about his poor payment and he explained that it was due to the plaintiff’s absence
from Kumasi. According to Assibey, the manager said the company was discontinuing business with the
plaintiff and told him that future hire-purchase rentals were to be paid direct to the company. The
company then entered into a fresh agreement with him. If this evidence is true, it does to some extent bear
out the plaintiff’s complaint.
The company’s version was that Assibey’s vehicle was seized. Mr. Waelty thinks it must have been on
the 16th November because on that date, Assibey paid £G45 to the company in his own name. A fresh
hire-purchase agreement was not entered into with Assibey until the 16th December, 1959. That
agreement was produced and tendered in evidence as exhibit 38. The company also produced a letter
which Assibey admits writing to the company. That letter suggests that the lorry was seized or attempted to be seized at Wa in Northern Ghana about the 13th November. Assibey was apologetically explaining in
that letter that he had made payment to the plaintiff and that in any event the engine had broken down. It
cannot therefore be true that the company entered into fresh agreement with him without seizure. In any
event, it does not ring true in my ears that the company who were desirous of repossessing all their
vehicles and make the best they could out of them, would wait for the fortuitous circumstance of a driver
coming to make payment and then spring a fresh agreement on him. The evidence is that the plaintiff’s
customers paid their instalments personally to the plaintiff and it seems to me the only natural way in
which the drivers could be got to call on the company was to seize their vehicles and thus oblige them to
follow them up and find the reason. I reject Assibey’s evidence as untrue. I find that Mr. Waelty’s
evidence is the plain truth of the matter.
I find therefore that the various vehicles listed in the schedule to the plaintiff’s writ were seized on the
dates which appear against them in exhibit Y. I find, accepting Mr. Waelty’s evidence, that except five,
all
[p.356] of [1963] 1 GLR 352
these vehicles were re-hired to the plaintiff’s customers and that a minimum period of four days elapsed
before fresh contracts of sale or hire were entered into in respect of them. The fact that Assibey’s vehicle
was seized on the 16th November and that the company did not enter into the fresh hire-purchase
agreement with him until the 16th December shows that even at this late stage, the company were
prepared to stay their hand. I reject the suggestion that the company were in any indecent haste to
conclude fresh hire-purchase contracts. I hold that the various hire-purchase agreements entered into
between the plaintiff and the company were validly determined by the latter and subject to exercising the
option conferred upon him by clause 10 of the hire-purchase agreements, the plaintiff’s rights to those
vehicles were completely at an end.
The plaintiff had under clause 10 of the hire-purchase agreement an option within three days after the
determination of the contract either by seizure or effluxion of time, to purchase the said vehicles by
payment of all arrears and the sum of five shillings. The plaintiff contends that he was out of Kumasi
from early October to the 6th December, 1961, and had no notice of the determination and was therefore
unable to exercise the options to purchase. He contends that the company were well aware of his absence
from Kumasi and argues that in determining the contracts in his absence and putting it out of his power to
exercise the options, the company were in breach of clause 10 of the hire-purchase agreement. Although I
am satisfied that the plaintiff had occasion to leave Kumasi towards the close of 1961, I cannot feel
certain when precisely this was. The plaintiff said he left Kumasi on the 12th October and stayed away till
the 6th December. When he was confronted with receipts which he apparently issued at Kumasi to Abena
Foda under his own hand bearing the dates of the 19th and the 27th October respectively, he said he must
have been in town then. I think in all probability the plaintiff left Kumasi in early November and got
mixed up with the dates. At least two of the lorries were seized while he was presumably in Kumasi but
the bulk were seized when he was out of town.
As I said, it was contended on behalf of the plaintiff than an option such as the one conferred on the
plaintiff by clause 10 of the hire-purchase agreement was an enforceable contract, a breach of which gives
right to an action for specific performance or for damages. It was submitted that the company with full
knowledge of the plaintiff’s absence from Kumasi determined the contracts and thereby disabled the
plaintiff from exercising these options. Counsel referred me to Stroud’s Judicial Dictionary, Vol. 3, (3rd
ed.) on the meaning and effect of options and to the cases of Stromdale and Ball Ltd. v. Burden1 and
Helby v. Matthews.2 For the company, it was submitted that the options were not withheld from the
plaintiff and that there was no obligation on the company to put the plaintiff on notice of what happened.
It was said it was his own affair to inform himself of
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the position of the options and that the company was under no duty, to use counsel’s words, to go chasing
the plaintiff about to keep him informed of his rights.
In my opinion, the determination of this question does not depend upon the subtleties of the English law
of options. The cases cited by counsel afford hardly any help as to what I conceive must be done to
resolve the controversy in this case, namely the true and proper construction of section 10 of the
hire-purchase agreement. It seems to me as a matter of good sense that if the hire-purchase agreement is
determined by the company, notice of this ought to be given to the plaintiff to enable him to consider his
position vis-a-vis the options. I think as a matter of ordinary business etiquette such notice would be
given. The question which calls for determination is whether there is any legal obligation cast on the
company by clause 10 to do so. I have come to the conclusion that there is no such obligation. Were the
company obliged to do so, it would mean that the plaintiff must be sought and located wherever he
happens to be and notified of a determination before the company can validly exercise its unquestioned
right of resale or rehire. In this wise, it would be possible for a defaulting hirer to frustrate the exercise by
the company of its right of alienation by the very simple device of avoiding being served with a notice. In
my judgment, all that the company was obliged to do under clause 10 was to forbear exercising any right
of alienation for three days after the determination of the contract and to leave it to the hirer after
informing himself of the determination, to elect to exercise the option of purchase or not just as he
pleases. In this case, I am satisfied that none of the vehicles repossessed was resold or rehired before the
expiration of four days from the date of seizure. Accordingly, I hold that the company committed no
breach of contract and the plaintiffs claim for damages fails. I am also satisfied that the company did not
induce any of the plaintiff’s customers to break their contracts with him. I find it established that these
contracts were entered into between the plaintiff’s customers and the company after the valid
determination of the plaintiff’s hire-purchase contracts by the company and after the period within which
the plaintiff’s right to exercise the option granted him by clause 10 had elapsed. The company was
entitled to enter into fresh hire-purchase agreement in respect of these vehicles with anyone it pleased and
I accept Mr. Waelty’s evidence that offers were made initially to the plaintiff’s customers to minimise
their losses. It follows therefore that the damages claimed against the company for inducing breaches of
contracts similarly fails.
That leaves me only with the company’s counter-claim against the plaintiff. The company, as I have said,
itself counter-claims against the plaintiff for the hire-purchase rentals which were due and unpaid at the
date of repossession of the various vehicles listed in paragraphs 8 and 9 of the counter-claim. Details of
the statement of accounts were carefully compiled and annexed to the various hire-purchase agreements.
Mr. Waelty testified that such sums were in fact owing to the company when the vehicles were seized.
The plaintiff did not dispute it. He was in no position to do so. He had no clerk and kept no books of
account and
[p.358] of [1963] 1 GLR 352
although he admitted owing moneys at the time the lorries were repossessed, he could not say at what
figure the gross indebtedness to the company stood. In these circumstances, one would have thought that
judgment for the company for the aggregate sum claimed would have been a matter of course. But thanks
to the ingenuity of counsel, it was not so.
It was contended for the plaintiff that the company was itself under a duty to mitigate its losses and that
this it has done by entering into fresh hire-purchase agreement. Although there is no evidence of it, counsel for the plaintiff submitted that having rehired or sold all these vehicles shown in exhibit F the company have received or almost recovered the sums being now claimed against the plaintiff and that it ought not to benefit twice on these vehicles. It was said that hire-purchase rentals were a genuine pre-estimate of the damage likely to be suffered by the company in the event of the breach of contract and
this damage it has already recouped itself of by the subsequent contracts.
In my judgment, to argue in this way, is to misunderstand the essential nature of a hire-purchase contract.
When a hire-purchase contract is signed, a debt arises which is in part solvendum in presents and in part
in futuro. The hirer comes immediately under a firm obligation to pay some part of the rent in advance
usually called a deposit. The hire-rentals are debitum and are solvendum in futuro. I think it would be
accurate to say that the rents accrue day by day and are normally payable in arrears at the expiration of
one month from the date of the contract and so on from month to month. The hirer is always of course,
entitled to limit the extent of his liability, as in this case, by determining the contract under clause 9 and
returning the vehicle to the owners. But he still has to pay such instalments as accrued due before the date
of determination and such sums are debts and nothing less. In my judgment, there is no valid answer to
the counter-claim, and if indeed there be an answer, it has nothing to do with the merits of this case and is
probably due to the likely truth that the plaintiff has simply not got that sordid thing called money.
Whether the company will be able to wrench anything out of him or whether a judgment in their favour
will turn out to be an empty one are matters which have no relevance to the merits of this case.
The plaintiff fails in this action and I give judgment for the defendant-company in the sum of £G4,648
13s. 9d. with inclusive costs of 120 guineas.
DECISION
Action dismissed.
Judgment for defendants on their counter-claim.
