COURT OF APPEAL, ACCRA
Date: 31 JULY 1974
ANIN HAYFRON-BENJAMIN AND FRANCOIS JJA
CASES REFERRED TO
(1) Lee v. Butler [1893] 2 Q.B. 318; 62 L.J.Q.B. 591; 69 L.T. 370; 42 W.R. 88; 9 T.L.R. 631; 4 R. 503, C.A.
(2) Baxnk of England v. Vagliano Brothers [1891] A.C. 107; 60 L.J.Q.B. 145; 64 L.T. 353; 39 W.R. 657; 7 T.L.R. 333, H.L.
(3) Agah v. Farkye Brothers, Court of Appeal, 4 July 1967, unreported.
(4) Agyeibea v. Fahin & Co., High Court, Kumasi, 8 March 1968, unreported; digested in (1968) C.C. 93.
(5) Carr v. James Broderick & Co., Ltd. [1942] 2 K.B. 275; [1942] 2 All E.R. 441; 111 L.J.K.B. 667; 167 L.T. 335; 58 T.L.R. 373.
(6) Delor v. Foli (1952) 14 W.A.C.A. 54.
(7) Ankrah v. Aryee (1957) 2 W.A.L.R. 251.
NATURE OF PROCEEDINGS
APPEAL by the defendant against the judgment of a circuit court wherein the plaintiff was awarded 01,450.00 as money had and received
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under a hire-purchase agreement. The facts are set out fully in the judgment of Hayfron-Benjamin J.A.
COUNSEL
E. D. Kom for the appellant.
No appearance for or by the respondent.
JUDGMENT OF HAYFRON-BENJAMIN J.A.
This is an appeal from the judgment of the Circuit Judge, Ho, dated 27 August 1971 in favour of the plaintiff on her amended claim under section 69 of the Sale of Goods Act, 1962 (Act 137), for 01,450.00 being money had and received under a hire-purchase agreement in respect of a commercial vehicle.
The plaintiff is an illiterate trader who tried her hand at transportation as side line. She agreed to buy the vehicle the subject-matter of the agreement for 02,000.00 from the defendant, a pastor and a farmer, whom she had met through a prophetess. She paid by way of deposit on the purchase price the sum of 0400.00, and shortly afterwards made a further payment of another 0400.00. It was agreed by the parties that the plaintiff should pay the outstanding balance of 01,200.00 by six equal monthly instalment of 0200.00 each. The agreement was oral, and receipts were given only for the payment of the initial deposit. The parties did not have the advice of a lawyer or anyone acquainted with the hire-purchase business.
The vehicle itself was not new and the plaintiff relied on the advice of her own brother a fitter, and her husband a driver, as to its roadworthiness. The tests carried out on the vehicle are described by the defendant. He said:
“The plaintiff asked her brother who is a fitter and her husband to try the vehicle. The husband drove it to Sovie and the fitter drove it back to Kpandu. The plaintiff was also on the lorry at the time. When we came back both of them recommended the lorry to be good. The plaintiff then asked me which of the two drivers was better and I told her that if the husband was going to drive the vehicle then I would not sell it to her as he drove the vehicle roughly. The husband said he intentionally drove the vehicle that way as if one wanted to test a second-hand lorry it should be driven roughly. I recommended the fitter. .
All the tyres on the vehicle were threadbare and had to be replaced immediately. The plaintiff started plying the vehicle for hire, and her gross income averaged 0200.00 per month out of which she met her operating expenses and paid the 0200.00 per month instalments. After the expiration of barely half the period limited for the payment of the outstanding balance the vehicle started developing serious defects. According to the plaintiff:
“After the vehicle had come to me for about three months the whole engine got spoilt and I repaired it. This engine which got spoilt was the one which the defendant inserted on the vehicle before I bought it. I effected other repairs on the vehicle but as I am only a woman I do
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not know the names of the parts. I received a bill on the parts and I paid for them.”
The plaintiff, predictably, found difficulty in meeting her payment obligations under the agreement. She used earnings from her trading activities in paying for the repairs, and even at times, resorted to a loan to meet the instalments. She succeeded in paying a further sum of 0650.00 making a total of 01,450.00, leaving an outstanding balance of 0550.00. Her difficulties in trying to keep the vehicle roadworthy were compounded by the lack of adequate garage facilities at Kpandu; the vehicle had to be brought to Accra for major repairs. According to the plaintiff:
“After I made this last payment (bringing the total sum paid to 01,450.00) to the defendant, the injector pump got spoilt and I sent the vehicle to Accra. The defendant approached me for the balance of £G285 (or 0550) due to him. I told the defendant that the vehicle was not in good order and that it had been sent to Accra for repairs. I told the defendant that when I put the vehicle back on the road I would pay him the balance. The defendant refused and he told me that he was going to seize the vehicle in Accra. The defendant eventually went to seize it from the fitter’s shop in Accra, and kept it in his house since 20 February 1969.”
The trial circuit judge found as a fact that the plaintiff had at the time of seizure of the vehicle paid the sum of 01,450.00 on the vehicle, representing more than half of the agreed purchase price. He therefore found that the seizure of the vehicle by the defendant was wrongful, and he invoked the provisions of section 69 of the Sale of Goods Act, 1962 (Act 137), and entered judgment in favour of the plaintiff in the sum of 01,450.00, representing the sum paid under the agreement. He dismissed the plaintiff s further claim for damages, stating that “As the plaintiff is claiming, and will be granted the relief in paragraph (1) of the amended endorsement in her writ I do not think that she should be entitled to her claim in paragraph (2) which pertains to damages for loss of use of the vehicle.”
The first question arising for determination in this appeal is whether or not the trial circuit judge was right in applying the provisions of section 69 of the Sale of Goods Act, 1962, and granting relief thereunder. The plaintiff in her writ of summons claimed the following two reliefs:
(1) 01,450.00 being money had and received under hire-purchase agreement.
(2) 0416.00 damages per month from the date of seizure, that is 20 February 1969 to the date of judgment.
I am of the view that the first claim depends for its success on the proof that the agreement admittedly entered into by the parties is a valid and enforceable hire-purchase agreement under the provisions of the Sale of Goods Act, 1962 (Act 137).
It has been argued by counsel for the appellant that by virtue of the provisions of that Act, a hire-purchase agreement in order to be enforceable must now be in writing. This is obviously a point of some practical
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importance and deserves some detailed considerations. Instalment trading is widespread, and many of our traders are illiterates or semi-literates. A proposition that an agreement solemnly entered into between such persons can be avoided by one party on the sole ground that the agreement was not written or reduced to writing must be examined with some perspicacity.
Section 81 (1) of the Sale of Goods Act, 1962, defines a hire-purchase agreement as “a contract of sale of goods in which the price is to be paid in five or more instalments.” This definition differs fundamentally from that given under section 3 (1) in the Hire-Purchase Act, 1958 (No. 55 of 1958). There a hire-purchase agreement is said to mean,
“an agreement for the bailment of goods under which the bailee may buy the goods or under which the property in the goods will or may pass to the bailee, and where by virtue of two or more agreements, none of which by itself constitutes the hire-purchase agreement, there is a bailment of goods and either the bailee may buy the goods or the property therein will or may pass to the bailee, the agreements shall be treated for the purposes of this Act as a single agreement made at the time when the last of the agreement was made.”
This definition of hire-purchase is in the same words as that in the English legislation, and the better view is that it excludes credit-sale agreements, since the buyer under a credit-sale agreement is an owner and not a bailee of the goods and they are in his possession.
At common law the essence of a hire-purchase transaction is (a) a bailment of the goods under a contract of hire by the owner to the hirer and (b) an option in the hirer to return or purchase the goods at some future time. The object of such an agreement is to ensure that the property in the goods remains in the owner during the whole period of bailment and to vest in the hirer a right to put an end to the bailment either by purchasing the goods or returning them.
Whilst the Hire-Purchase Act, 1958 (No. 55 of 1958), reflected some of these essential factors, the new definition does not. The Sale of Goods Act, 1962 (Act 137), states simply and realistically that a hire-purchase agreement is a contract of sale and it differs from other contracts of sale of goods only in respect to the terms provided for the payment of the purchase price; it must be in five or more instalments. The questions whether the property in the goods passes to the hirer or remains with the owner until the exercise of the option are largely irrelevant to the determination of whether a hire-purchase contract has been created or not. It follows therefore that where the purchase price is payable in less than five instalments, no hire-purchase contract is created even though the agreement is one for the hire of goods with an option in the hirer to purchase them at a further date, or whether all the other provisions of the Act have been complied with.
The fine distinctions drawn under English law between a credit-sale-agreement, a Lee v. Butler [1893] 2 Q.B. 318 agreement and hire-purchase
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agreement, and by our courts between hire-purchase agreements and what are sometimes clumsily described as “work and pay” agreements, and all the learning on these distinctions have been largely swept away by the Sale of Goods Act, 1962 (Act 137). Now all that is necessary is to determine whether there is an agreement by the owner to sell and the buyer to buy for money, and whether the money or price is payable in five or more instalments. Section 1 of the Sale of Goods Act, 1962 (Act 137), provides that:
“1. (1) A contract of sale of goods is a contract whereby the seller agrees to transfer the property in goods to the buyer for a consideration called the price, consisting wholly or partly of money.
(2) Where, by virtue of one or more contracts, a person has agreed for value to bail goods to a bailee on such terms that the property in the goods will or may at the option of the bailee pass to the bailee then, for the purposes of this Act, that person is deemed to have agreed to transfer the property in the goods to the bailee, and the bailor shall be deemed to be the seller and the bailee shall be deemed to be the buyer.
(3) There may be a contract of sale between one part owner and another.
(4) A contract of sale may be absolute or conditional.”
Under the Act an agreement to sell has the same meaning as a sale.
The Sale of Goods Act, 1962, is said to be an Act to codify with amendments the law relating to the sale and hire-purchase of goods. It was therefore not intended to be merely a code of the existing law. It is not open to question that it was intended to alter, and did in fact alter the law in certain respects. And as was said by Lord Herschell under similar circumstances in Bank of England v. Vagliano Brothers [1891] A. C 107 at p. 145, H.L., “And I do not think that it is to be presumed that any particular provision was intended to be a statement of the existing law, rather than a substituted enactment.”
I am of the view therefore that the plaintiff was perfectly correct in describing the agreement as a hire-purchase agreement in the endorsement on her writ of summons and in her subsequent pleadings and further that the trial judge was right in treating the agreement as a hire-purchase contract. Section 66 of the Sale of Goods Act, 1962 (Act 137), however provides that:
“66. ( 1) Before any hire-purchase contract is entered into in respect of any goods, the seller shall state in writing to the prospective buyer (otherwise than in the note or memorandum referred to in subsection (3)), a price at which the goods may be purchased by him for cash (in this Part referred to as the ‘cash price’), and shall also state the cash price to the purchaser orally.
(2) Subsection (1) shall be deemed to have been sufficiently complied with if the seller states the cash price to the buyer orally, and—
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(a) if the buyer has inspected the goods or like goods and at the time of his inspection tickets or labels were attached to or displayed with the goods clearly stating the cash price, either of the goods as a whole or of all the different articles or sets of articles comprised therein; or
(b) if the buyer has selected the goods by reference to a catalogue, price list, or advertisement, which clearly stated the cash price either of the goods as a whole or of all the different articles or sets of articles comprised therein.”
The cumulative effect of these provisions is that in practice, it is only in respect of sale of second-hand goods and such new items as furniture sold by small time or petty carpenters, craftsmen, or roadside fitters, the very people who are most likely to be semi-literate that a formal written statement of the cash price as stipulated under subsection (1) above becomes necessary. Most new goods normally subject to hire-purchase agreements such as cars, pianos, refrigerators, air-conditioners, deep-freezers and furniture in large departmental stores, have either the cash price displayed on them, or are purchased by reference to a price list.
The Act itself provides sanctions for non-compliance with these mandatory provisions. Subsection (3) of section 66 provides that unless these requirements have been fulfilled:
“A seller shall not be entitled to enforce a hire-purchase contract or any contract of guarantee relating thereto or any right to recover the goods from the buyer, and no security given by the buyer in respect of money payable under the hire-purchase contract or given by the guarantor in respect of money payable under such a contract of guarantee as aforesaid shall be enforceable against the buyer or guarantor by any holder thereof, .
It is clear therefore that it is the seller who suffers for non-compliance with the provisions of section 66
(1) of Act 137 and this is as it should be, as the duty of stating the cash price in writing is imposed by the Act on the seller and not on the buyer.
The Act contains other provisions as to the form, non-compliance with which attract the sanctions imposed by section 66 (3). These are:
“(a) a note or memorandum of the agreement is made and signed by the buyer and by or on behalf of all other parties to the agreement, and
(b) the note or memorandum contains a statement of the hire-purchase price and the cash price of the goods to which the agreement relates and of the amount of each of the instalments by which the price is to be paid and of the date or the mode of determining the date upon which each instalment is payable, and contains a list of the goods to which the agreement relates sufficient to identify them, and
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(c) the note or memorandum contains a notice which is at least as prominent as the rest of the contents of the note or memorandum, in the terms prescribed in the First Schedule to this Act, and
(d) a copy of the note or memorandum is delivered or sent to the buyer within fourteen days of the making of the agreement.”
The court is given power under subsection (4) of section 66 to dispense with the requirements imposed by subsection (1) and paragraphs (b), (c) and (d) of subsection (3) where the buyer has not been prejudiced by their non-compliance provided it would be just and equitable to do so.
The whole history of legislative incursions into the field of hire-purchase law shows that the primary concern of the legislature has been the protection of the buyer, hirer or consumer from the cupidity and rapacity of sellers or, owners, and from their own inexperience and gullibility.
The trend of legislation has been to limit the rights of the owner or seller at common law, and to confer more effective rights on the buyer, hirer or consumer. The rights of the buyer at common law have largely not been limited. The right of the hirer or buyer to enforce a hire-purchase agreement is not affected by the absence of writing although a seller cannot do so except the agreement is in writing or the court dispenses with this requirement under section 66 (4) of the Act. Section 69 of the Sale of Goods Act, 1962 (Act 137), is the high-water mark of the legislative effort at protecting the hirer or consumer from the actions of the seller. Section 69 provides:
“(1) Where goods have been delivered to a buyer under a contract of hire-purchase, and at least fifty per cent, or such other minimum percentage as may be prescribed, of the hire-purchase price has been paid or tendered by or on behalf of the buyer, the seller may not enforce any right to recover possession of the goods from the buyer otherwise than by action.
(2) If a seller recovers possession of goods in contravention of subsection (1) the hire-purchase contract, if not previously determined, shall determine, and—
(a) the buyer shall be released from all liability under the contract and shall be entitled to recover from the seller all sums paid by the buyer under or in respect of the contract; and
(b) any guarantor shall be entitled to recover from the seller all sums paid by him under or in respect of the contract of guarantee.”
In this case there was admittedly a contract of sale within section 1 (2) of the Sale of Goods Act, 1962 (Act 137). The purchase price was made payable by more than five instalments. There is evidence which the trial judge justifiably accepted that more than fifty percent of the purchase price in respect of the vehicle had been paid to the seller. The seller nevertheless seized the vehicle. The buyer’s right to recover from the seller all sums paid in respect of the contract seems to me unimpeachable.
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In the circumstances I am of the view and I hold that the trial circuit judge was right in affording the plaintiff relief under section 69 of the Sale of Goods Act, 1962.
The plaintiff has not appealed from that portion of the judgment dismissing her claim for damages for loss of earnings; she has also not filed any notice for variation of the judgment of the court below. Rule 16 of the Court of Appeal Rules, 1962 (L.I. 218), however provides:
“16. ( 1) It shall not be necessary for the respondent to give notice by way of cross-appeal; but if a respondent intends upon the hearing of the appeal to contend that the decision of the Court below should be varied, he shall within one month after service upon him of the notice of appeal cause written notice of such intention to be given to every party who may be affected by such contention . . .
(2) Omission to give such notice shall not diminish any powers of the Court, but may in the discretion of the Court be a ground for postponement or adjournment of the appeal upon such terms as to costs or otherwise as may be just.”
Rule 32 deals with the powers of the Court. It provides that:
“The Court shall have power to give any judgment and make any order that ought to have been made, and to make such further or other order as the case may require including any order as to costs. These powers may be exercised by the Court, notwithstanding that the appellant may have asked that part only of a decision may be reversed or varied, and may also be exercised in favour of all or any of the respondents or parties, although such respondents or parties may not have appealed from or complained of the decision.”
These rules have been considered and applied in several cases before this appellate court and its predecessors. In this case, as I have already said, the sole reason given by the trial circuit judge for rejecting the plaintiff s second claim for damages for wrongful seizure is that having obtained relief under section 69 of the Act, she was not entitled to such damages. If this reason is wrong, it would seem that the plaintiff would be entitled to damages if any had been suffered. The Court of Appeal would be entitled to invoke its powers under the aforementioned rules and award such damages. The point arising for consideration is whether or not relief under section 69 of Act 137 is exhaustive. In Agah v Farkye Brothers, Court of Appeal, 4 July 1967, unreported, Apaloo J.A. dealing with a similar provision in the Hire-Purchase Act, 1958 (No. 55 of 1958), was of the view that the buyer or hirer is only entitled to the statutory remedy. He said:
“The remedy which the Act provides for the plaintiff, is the recovery of the sums paid by him to the defendants. . . For that sum, the plaintiff is entitled to judgment. As I said, the plaintiff also made a claim for general and special damages. His counsel said he would not press these claims. It would not have made the slightest difference if he had. The plaintiff is entitled to no more than the statute provides.”
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In Agyeibea v. Fahin & Co., High Court, Kumasi, 8 March 1968, unreported, digested in (1968) C.C. 93, Campbell J. (as he then was) also came to much the same conclusion, by relying on the English case of Carr v. James Boderick & Co. [1942] 2 K.B. 275 at p. 278. In that case Goddard L.J. (as he then was) said:
“In my opinion, the plaintiff cannot succeed in the present proceedings either on a claim in detinue or on one in conversion. The property in the goods is and always was in the defendants. The plaintiff had no right to possession as default had been made in the payment of instalments, although he could only be properly deprived of possession by an action. I see no ground on which it is possible to order a return of the goods.”
It would seem therefore that the basis for these decisions is that the property is not vested in the hirer or buyer so as to invest in him a right to claim for damages in detinue or conversion. This of course, is right so long as the hire-purchase agreement was basically a contract of bailment as it is under the relevant English statutes and under our own now repealed Hire-Purchase Act, 1958 (No. 55 of 1958). Our Sale of Goods Act, 1962 (Act 137), now provides that a hire-purchase agreement is a contract for the sale of goods and the Act contemplates contracts where the property passes to the buyer and other where its passing is postponed till the payment of the whole or part of the purchase price.
It would seem by sections 35 and 44 of Act 137 that a right to take possession of the goods rests in a seller only where (a) the goods have been delivered to the buyer and (b) the buyer has made default in payment of the price in accordance with the terms of the contract and (c) (i) where the property has not passed to the buyer, or (ii) where the contract of sale expressly confers such a right on the seller. Section 26 of Act 137 however provides:
“(1) Subject to section 25 of this Act the property in goods passes under a contract of sale when the parties intend it to pass.
(2) Unless a different intention appears the property in the goods passes under a contract of sale when they are delivered to the buyer.”
It would seem therefore that the mere fact that the parties agree on their pleadings, and the trial judge also found as a fact that the agreement is a hire-purchase agreement is not enough under our Act to deprive the buyer of a right to claim damages in detinue or conversion for wrongful seizure. Much depends on the actual terms of contract which must be read as a whole and its substantial effect ascertained.
Once the goods have been delivered to the buyer there is a presumption that the property in them has passed unless a different intention appears from the contract. Where no such intention appears, there must be an express provision conferring on the seller a right to retake possession of the goods. It seems that a mere express insertion of a right to retake possession of the goods cannot by itself be taken as an intention that the
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property in the goods shall not pass. It may be an important factor in determining whether the parties intended the property in the goods should remain in the seller, but it is clearly not conclusive. Cases like Delor v. Foli (1952) 14 W.A.C.A. 54 and Ankrah v. Aryee (1957) 2 W.A.L.R. 251 at p. 252 show that a “provision for seizing a chattel is not inconsistent with a sale.” Where there is a sale and not a mere bailment of goods under a contract of hire with an option to purchase, and there is superimposed on that sale an express right to retake possession of the goods, the buyer in my view can maintain an action for detinue or conversion if that right to retake possession is wrongfully exercised, e.g. by exercising it in contravention of the provisions of the Act where more than 50 per cent of the purchase price has been paid. Where there is a sale with no such express right reserved, the buyer’s right to maintain an action for damages is clearly unaffected even though the agreement is a hire-purchase contract under the Sale of Goods Act, 1962. In these cases it is my view that the remedy provided under section 69 of the Sale of Goods Act, 1962, cannot be said to be exhaustive, nor the only remedy available to a buyer who has paid more than 50 per cent of the purchase price under a contract where such price is payable by five or more instalments. Where there is a bailment of the goods the buyer as is now well settled has no right of action in detinue or conversion, because the property in the goods remains in the seller. In this case the agreement is oral but there is evidence which was rightly accepted by the trial judge that the property in the goods was not to pass to the plaintiff until she had completed paying the whole purchase price. In the circumstances I agree with the trial circuit judge that her claim for damages was not maintainable. In the circumstances I dismiss the appeal.
As there was no appearance for the respondent there will be no order as to costs.
JUDGMENT OF ANIN J.A.
I agree.
JUDGMENT OF FRANCOIS J.A.
I also agree.
DECISION
Appeal dismissed.
No order as to costs.
S. E. K.
