Division: HIGH COURT, CAPE COAST
Date: 29 NOVEMBER 1965
Before: ARCHER J
JUDGMENT OF ARCHER J
The facts in this appeal briefly are as follows: the appellant, by a credit sale agreement dated 15 May 1964 (admitted in evidence in the court below as exhibit A) purchased one Bedford truck No. CP 8405 from the respondent for the price of £G300. Under the terms of the agreement, the appellant paid an initial deposit of £G100 and was to pay thereafter £G40 a month as from 15 June 1964 until the balance of £G200 had been paid. Although the first instalment was due on 15 June 1964, the appellant paid it on 26 June 1964 after the respondent had seized the vehicle on 16 June. The lorry was released to him.
Thereafter no further monthly payments appeared to have been made by the appellant. On 27 September 1964, the respondent seized the lorry when the
appellant was in default in respect of the monthly instalments due in July, August and September 1964 by virtue of a power of seizure conferred by the credit sale agreement on him in case of default. On 12 October 1964, the respondent notified the appellant of his intention to sell the vehicle which was
subsequently sold.
The appellant took action in the circuit court at Cape Coast and claimed from the defendant £G232 10s. 6d. as special damages and £G250 for breach of contract and wrongful seizure. The claim was defended by the respondent on the sole ground that the vehicle was seized and sold under the terms of the credit sale agreement and that the appellant’s claim was misconceived and ought to be struck out.
After hearing evidence, the learned circuit judge gave judgment for the respondent with 20 guineas costs. The appellant has appealed to this High Court from the judgment on the grounds:
(a) That the evidence does not support the judgment of the circuit court;
(b) That the judge misdirected himself as to the effect in law of an agreement for sale on credit; and
(c) That the learned judge was wrong in holding that ownership in the vehicle, the subject-matter in dispute, remained with the defendant-respondent at the time of the sale and delivery of the said vehicle.
When the appeal was about to be heard, counsel for the appellant sought leave of the court to argue supplementary grounds of appeal and abandoned the original grounds of appeal.
The appellant’s counsel argued that first, the alleged notice given to the plaintiff was inadequate to justify the defendant’s seizure and sale of the vehicle. Secondly, the circuit judge was wrong in holding that the seizure and sale of the Bedford truck by the defendant was not wrongful. On these two grounds it was submitted that the right of seizure was not properly exercised. Moreover, when the notice of intention to sell was sent to the appellant on 20 October 1964, a writ of summons had already been issued against the respondent on 8 October. Furthermore the notice of intention to sell was not reasonable.
I must confess now that I cannot find any substance in these two grounds. The first portion of paragraph (4) of the credit sale agreement reads:
“That failure on the part of the second party to fulfil the conditions in paragraph supra, the first party has every right to seize the lorry from the second party without notice.”
It is clear from this clause that the respondent was entitled to seize the vehicle without notice. The last portion of paragraph (5) also reads, “and to give the second party a written notice of his intention to dispose of the lorry to another purchaser who might desire to buy when the second party defaulted …” This sub-clause does not stipulate the length of the notice but it appears from exhibit D that the notice was sent on 12 October 1964 after the vehicle had been seized on 27 September. The question one has to ask is what was the appellant doing during the three weeks. The writ of summons was issued on 8 October but was not served on the respondent until 20 October when he had already sent his notice of intention to sell on 12 October. I do not understand why this argument was put forward seeing that the mere issue of a writ of summons does not operate as an injunction to restrain one nor does it operate as notice forbidding one to exercise his contractual rights. Although the appellant’s counsel did not argue the original ground that the learned judge misdirected himself as to the effect in law of an agreement for sale on credit, I think it is my duty to express my dissent from the reasons given by the learned judge for his judgment. At page 16 of the record which contains part of the judgment, the learned judge quoted extensively from Chitty on Contracts (22nd ed.), Vol. II and after defining a contract of hire-purchase, he distinguished if from a credit sale and quoted further from Chitty on Contracts (supra) at para. 642 as follows, “If the property in the goods is transferred to the buyer at the time of the agreement, it is a `sale of goods’ and is governed by the provisions of the Sale of Goods Act 1893.” Then he quotes further at para. 643: “It may, however, be provided in an agreement for the sale of goods on credit that the property in the goods is not to pass to the buyer until all the instalments are paid. Until that time the buyer is to be a bailee of the goods and they are to remain in the ownership of the seller.” The learned circuit judge later interposed his quotation with the following observation, “The dates do not matter. All I am after is the principle as Acts passed on those dates are not applicable to Ghana.” Assuming therefore that the principle relied on by the learned judge represented the common law before the 1893 Act was passed, does the principle apply in this case? I think not. When one reads the first and second paragraphs of the agreement, exhibit A, the following words appear:
“Whereby it is agreed as follows:
(1) That the first party has disposed of to the second party his 11⁄2-ton Bedford lorry …
(2) That the said lorry was in good running order when disposing of it to the second party by the first party.”
After consulting one or two authoritative dictionaries of the English language I can say with confidence that to “dispose of” means to make an end of, to have done with, to part with, to get rid of by sale. In other words to divest oneself of something. The language used in the agreement means that the
respondent had sold the vehicle to the appellant. There is no other clause in exhibit A which stipulates that ownership or property in the vehicle shall remain in the respondent until all the instalments had been paid thus making the appellant a bailee.
In Coddington v. Paleologo1 Kelly C.B. stated as follows:
“The rule of construction applicable in general to all written contracts is, that they are to be construed according to the real intention of the parties, to be collected from the language they have used; that effect is to be given, if possible, to every word used, and that every word is to be interpreted according to its natural and ordinary meaning, unless such construction would be contrary to the manifest intention of the parties, or would necessarily lead to some contradiction or absurdity.”
Jowitt’s Dictionary of English Law defines the term “disposition” as a word which comprehends and exhausts every mode by which property can pass, whether by the act of the parties or by operation of law. It has the same meaning in Scottish law. The view I hold upon a careful construction of the agreement – exhibit A – is that the seizure and subsequent sale of the vehicle were not wrongful because the agreement conferred powers on the respondent to do so although the property had passed to the appellant. With great deference to the learned circuit judge I disagree with his reasoning that the respondent retained property in the vehicle.
The agreement was made on 15 May 1964 and it is obvious that our Sale of Goods Act, 1962,2 which came into force on 11 July 1962 should have been regarded as the relevant current statutory law to be considered in determining the rights and obligations of the parties in the absence of express terms agreed by the parties. Unfortunately neither counsel referred to this Act and presumably the learned judge did not consider this Act of any assistance.
Indeed section 44 of the Sale of Goods Act, 1962, appears to be a complete answer to the appellant’s contention. That section reads:
“Subject to the provisions of this Act, and subject to any contrary intention an unpaid seller may recover possession of the goods from the buyer after they have been delivered to him if –
(a) the property has not passed to the buyer; or
(b) the property has passed to the buyer but the contract nevertheless expressly confers a right on the seller to recover possession; and the buyer fails to pay the price in accordance with the terms of the contract, but not otherwise.”
In the present case, the property in the vehicle passed after having been “disposed of” but the agreement expressly conferred a right on the respondent to seize it, which in the agreement could mean to “recover possession,” when the appellant defaulted.
I now come to the third ground that the circuit judge ought in law to have ordered the refund of the amount which the plaintiff had paid to the defendant when he decided that the seizure was not wrongful. The appellant’s counsel relied on section 57 of the Sale of Goods Act, 1962. As I have already said neither counsel nor the learned judge allowed his mind to wander in the maze of the Ghana Act. This ostracism of the Act in my view may be due to the nature of the claim on the writ whereby the appellant was claiming special and general damages for breach of contract and wrongful seizure.
The respondent’s counsel has argued that this ground has taken him by surprise in the appellate court as it was never raised in the court below and was never pleaded and he relied on Order 19, r. 16 of the Supreme [High] Court (Civil Procedure) Rules, 1954.3 In my view, it was not necessary for the appellant to plead section 57 of the Ghana Sale of Goods Act, 1962, specifically. The appellant could have raised that point of law in his pleadings. At p. 369 of the Annual Practice 1964 (White Book), the last paragraph
of the notes reads:
“The pleader must plead facts, and not law . . . [Cases cited] The practice of the Courts is to consider and deal with legal result of pleaded facts, although the particular result alleged is not stated in the pleading.”
Then at p. 370, the following note is stated:
“There is a vital distinction between pleading law, which is not permitted, and raising a point of law in a pleading, which is permitted . . . Pleading law obscures or conceals the facts of the case; raising a point of law defines or isolates an issue or question of law on the facts as pleaded.”
In the present case, the appellant sued for breach of contract and claimed damages, special and general. He did not claim anything in the alternative assuming that there had been no breach – the alternative being the refund of the deposit and the instalments paid to the respondent before the respondent seized the vehicle. If this alternative claim had been pleaded then the legal result will no doubt flow from section 57 of Act 137. In my view the circuit judge was under no legal obligation to have ordered the refund of the amounts paid. The section does not say so. The section says that the buyer is entitled to recover from the seller the amounts which he has paid where the respondent has lawfully recovered possession. In other words, the buyer must claim it. But in the present case, the appellant chose not to claim any refund as such but elected to include these sums in special damages for breach of contract. I think it is the fault of the appellant’s counsel who failed to amend his pleadings so as to claim these sums in the alternative. There is no indication whatsoever in the record that counsel for the appellant even referred to this alternative claim in his final address to the court below.
Section 57 is a novel provision. It has no equivalent even in the English Sale of Goods Act, 1893.4 I think the Ghana legislature made this provision to clear the doubt which now abounds in the matter in English law and also to prevent unconscionable enrichment.
In Stockloser v. Johnson5 Denning L.J. (as he then was) made the following analysis when he said:
“It seems to me that the cases show the law to be this:
(1) When there is no forfeiture clause: If money is handed over in part payment of the purchase price, and then the buyer makes default as to the balance, then, so long as the seller keeps the contract open and available for performance, the buyer cannot recover the money; but once the seller rescinds the contract or treats it as at an end owing to the buyer’s default, then the buyer is entitled to recover his money by action at law, subject to a cross-claim by the seller for damages: see Palmer v. Temple ((1839) 9 Ad. & EI. 508); Mayson v. Clouet ([1924] A.C. 980); Dies v. British and International Co. ([1939] 1 K.B. 724); Williams on Vendor and Purchaser, 4th ed., p. 1006. (2) But when there is a forfeiture clause or the money is expressly paid as a deposit (which is equivalent to a forfeiture clause), then the buyer who is in default cannot recover the money at law at all. He may, however, have a remedy in equity, for, despite the express stipulation in the contract, equity can relieve the buyer from forfeiture of the money and order the seller to repay it on such terms as the court thinks fit.”
Then the learned lord justice continues6
“Two things are necessary: first, the forfeiture clause must be of a penal nature, in this sense, that the sum forfeited must be out of all proportion to the damage, and, secondly, it must be unconscionable for the seller
to retain the money.”
We have also the earlier case of Howe v. Smith7 where Fry L.J. traced the history of deposit and said:
“Money paid as a deposit must, I conceive, be paid on some terms implied or expressed. In this case no terms are expressed and we must therefore inquire what terms are to be implied. The terms most naturally to be implied appear to me in the case of money paid on the signing of a contract to be that in the event of the contract being performed it shall be brought into account, but if the contract is not performed by the payer it shall remain the property of the payee. It is not merely a part payment, but is then also an earnest to bind the
bargain so entered into, and creates by the fear of its forfeiture a motive in the payer to perform the rest of the contract.”
In Dies v. British and International Mining and Finance Corporation, Ltd.8 it was held that the distinction between a deposit which is forfeitable on the purchaser’s default and a part payment which is returnable is not confined to contracts of sale of land but is of general application. Benjamin on Sale (8th ed.) at p. 946 has also this to say:
“A deposit is not recoverable by the buyer, for a deposit is a guarantee that the buyer shall perform his contract and is forfeited on his failure to do so. As regards recovery of part payments, the question must depend on the terms of the particular contract. If the contract distinguishes between the deposit and
instalments of price and the buyer is in default, the deposit is forfeited and that is all. And in ordinary circumstances, unless the contract otherwise provides, the seller, on rescission following the buyer’s default, becomes liable to repay the part of the price paid (Gallagher v. Shilcock) where `deposit’ was in the nature also of a part payment.”
In Gallagher v. Shilcock9 Finnemore J. held that under section 48 (3) of the English Sale of Goods Act, 1893, where the unpaid seller gives notice to the buyer of his intention to re-sell, and the buyer does not pay the price within reasonable time and the seller re-sells then the seller must repay any deposit paid by the original purchaser or account for it because the contract is not rescinded. But where under section 48(4) the seller expressly reserves a right of re-sale in case of default by the buyer and the seller resells, the contract is rescinded and the seller has full title to the goods reverted in him. This judgment has created some doubts as to the legal standing of the unpaid seller who re-sells the goods and Finnemore J. expressed the doubt in the following passage10:
“The general principle of English law is that mere lateness or unpunctuality in making payment for the goods does not rescind the contract. It would be a curious thing if, nevertheless, the exercise by the seller of his remedy for delay should rescind the contract. The question, therefore, is whether, when the unpaid seller sells the goods, he sells them as a person who, by rescission of the contract, has the full title to the goods re-vested in him, or sells them in a capacity analogous to that of a pledgee, or in some limited capacity? So
far as I know, this question has never been decided.
In Halsbury’s Laws of England (1st ed.), Vol. 25, para. 461, p.264, there is this statement: “Whether the unpaid seller under the foregoing provision [s.48, sub-s. 3] re-sells the goods in the capacity of an owner so as to be entitled to any profit which may be realised by the re-sale, or whether he re-sells the goods in a capacity analogous to that of a pledge … is doubtful.’ The following words appear for the first time in the corresponding passage in the second edition (Vol. 29, para. 250, p. 186): But semble, the former is the correct view.”
Finnemore J. disagreed with this latest addition and did not think that the unpaid seller sells as absolute owner as the property had already passed to the buyer. It appears the third edition of Halsbury has approved for Finnemore’s view in Vol. 34, para. 236 at p. 142 in the following passage:
“When the unpaid seller . . . re-sells the goods, he does so in a capacity analogous to that of a pawnee; the original contract is not rescinded, and the seller must account to the buyer for money received from him.”
The Ghana Act of 1962 has by section 57 avoided these doubts. Subsection (1) of the section provides:
“Where under a contract of sale the buyer has paid a part or all of the price to the seller and the seller refuses or neglects to deliver the goods to the buyer, having the right so to do, or, after delivering the goods, recovers the possession thereof having the right so to do, the buyer is entitled (without prejudice to any other rights, but subject to any counterclaim for damages by the seller) to recover from the seller the amounts which he has paid.”
Then subsection (2) reads:
“This section applies whether the amounts paid by the buyer were expressed to be by way of part payment or deposit or otherwise, and notwithstanding any agreement to the contrary.”
This subsection (2) in my view negatives section 76 of the Act which provides that the rights and duties and liabilities of the parties as laid down in the Act may be varied by express agreement by the parties. It follows therefore that so far as recovery of deposit or part payment by the buyer is concerned the provisions of section 57 (1) are paramount notwithstanding any agreement by the parties to the contrary. The Ghana Act is clearly meant not only to avoid doubts which are prevalent in the English Act but also to ensure fairness and justice.
In conclusion, I hold that the vehicle was lawfully seized and that there has been no breach of contract on the part of the respondent. The equitable remedies against forfeiture of deposit have now been converted into statutory remedies by section 57 of the Ghana Sale of Goods Act and the appellant is at liberty to seek redress in a fresh action.
For the above reasons, the appeal is hereby dismissed without prejudice to the right of the appellant to institute fresh proceedings to recover the sums he has paid to the respondent.
DECISION
Each party shall bear his own costs in this appeal.
E. A.- A.
