DONKOR vs. OWONA FARKYE BROTHERS TRANSPORT [1973] 1 GLR 152

NATURE OF PROCEEDINGS

RULING on preliminary legal issues raised in an action by the plaintiff to recover payment made to the defendants under a hire-purchase agreement. The facts are fully set out in the ruling.

COUNSEL

L. G. Carson for the plaintiff.

D. K. Afreh for the defendants.

JUDGMENT OF EDWARD WIREDU J.

The brief facts of this case which are straightforward and in the main not in dispute are as follows: The plaintiff and the defendants are parties to an agreement the terms of which are contained in a document which for the purpose of this trial was by consent

[p.154] of [1973] 1 GLR 1 accepted as exhibit A. Exhibit A is titled “Hire-Purchase Agreement Motor Vehicle” and was executed on 17 October 1970. Exhibit A is in respect of a sale by the defendants (described therein as a motor dealer) of a Toyota bus with registration No. GO 975 to the plaintiff who is a driver by vocation. The hire-purchase price of the said bus on the undisputed facts was ¢7,200 out of which an initial deposit of ¢2,000 was paid by the plaintiff. The balance of ¢5,200 was spread over seventeen months at ¢300 per month. Exhibit A shows that the first instalment was to be paid on 17 November 1970 and the last and final instalment on 30 April 1972. The facts further show that when exhibit A was executed the bus was released to the plaintiff under terms contained therein.

It appears that during the currency of the agreement, the exact time is not clear on the pleadings but from the statement of claim it might be some time after 30 June 1971, the plaintiff fell into some arrears with his instalments and this resulted in the bus being seized by the defendants in exercise of their rights under the terms of exhibit A. It appears that certain events took place between the parties when the vehicle was seized but which for the purpose of this ruling are irrelevant and therefore will not be discussed. The admitted facts show that before the plaintiff’s action was commenced a total sum of ¢4,215 had been paid under the agreement leaving a balance of ¢2,985. The defendants in admitting the seizure of the vehicle as alleged by the plaintiff pleaded in paragraph (4) of their statement of defence as follows:

“In further answer to the said paragraph (4) of the claim the defendants say that the plaintiff was owing part of the instalments due in January 1971 and also part of June 1971, and what is worse the plaintiff without the knowledge and consent of the defendants took the said vehicle to the Ivory Coast in utter violation of the terms of the hire-purchase agreement dated 17 October 1970 executed between the parties therein.”

The events which seem to have sparked off the present action were that according to the plaintiff when the vehicle was seized he went to see the defendants and pleaded with them for the release of the vehicle to him. According to the plaintiff his request was acceded to on condition that he paid all the outstanding arrears. In paragraphs (6) and (7) of his statement of claim he pleaded as follows:

“(6) The plaintiff first paid ¢360.00 then ¢300.00 but defendants refused to release the vehicle.

(7) Wherefore by virtue of section 57 of the Sale of Goods Act, 1962 (Act 137), the plaintiff claims ¢4,875.00 being the total payments made by the plaintiff to the defendants.”

The defendants joined issue with the plaintiff on the said paragraphs and contended that exhibit A was executed in conformity with the

[p.155] of [1973] 1 GLR 1 provisions of section 76 of the Sale of Goods Act, 1962 (Act 137), and denied the plaintiff’s claim.

In an amended statement of defence the defendants pleaded the following by way of counterclaim:

“The defendants repeat the whole of their statement of defence, in particular paragraph (8) of the defence, and will contend that the transaction between the plaintiff and defendant was a hire-purchase contract and not a contract of sale of goods stricto sensu. In the alternative the defendants counterclaim from the plaintiff for ¢3,100.00 for breach of contract together with interest at 14%: ¢100.00 of which represents special damages to wit: the cost of recovering the said vehicle from the Ghana-Ivory Coast borders.”

Paragraph (8) of the statement of defence was also in the following forms:

“The defendants deny paragraph (7) of the statement of claim. In further answer to paragraph (7) of the claim, the defendants will contend that pursuant to the hire-purchase agreement dated 17 October 1970 executed between the parties herein, and in conformity with section 76 of the Sale of Goods Act, 1962, the plaintiff is estopped from instituting the instant proceedings and is not entitled to the reliefs sought or to any part thereof or at all.”

On 10 January 1972 the following issues were agreed to and set down for trial:

(a) Whether or not the plaintiff paid ¢4,875.00 to the defendants towards the purchase of vehicle No.

GO 975.

(b) Whether or not the defendants having seized the said vehicle, section 57 of the Sale of Goods Act, 1962 (Act 137), applies.

(c) Whether or not the plaintiff is estopped from bringing this action.

(d) Whether or not the plaintiff is entitled to his claim.

Additional Issues: (1) Whether the transaction between the plaintiff and the defendants was a hire-purchase agreement or a contract of sale stricto sensu. In view of the amended defence the following issue was later added to the issues already set down for trial and the case was set down for hearing on 11 July 1972. Additional Issue: (a) Whether or not the defendants are entitled to their counterclaim.

On that day both counsel appearing in this case agreed to argue the following preliminary issues:

(b) Whether or not the defendants having seized the said vehicle, section 57 of the Sale of Goods Act, 1962 (Act 137), applies.

(1) Whether the transaction between the plaintiff and the defendants was a hire-purchase agreement or a contract of sale stricto sensu.

Arguing on the above issues Mr. Carson for the plaintiff in an exceptionally persuasive and able argument submitted that the only law which governs the sale of goods in Ghana was Act 137 of 1962. Continuing learned counsel submitted that under section 76 of Act 137

[p.156] of [1973] 1 GLR 1 the parties have a right to contract out of Part VIII of the Act which deals with hire-purchase contracts. This right, submitted learned counsel, the parties had exercised and opted in favour under clause (4) of exhibit A. Counsel therefore argued that under such a situation where the parties had opted to contract out of Part VIII in exercise of their rights under section 76, in order to ascertain the obligations of the parties to such an agreement, resort should be had to other provisions of the Act in order to bring the terms of the agreement within the provisions of the Act. Learned counsel further submitted that in the instant case section 57 of Act 137 is the appropriate provision of the Act which should regulate the rights and the liabilities of the parties to exhibit A. According to learned counsel this section is inconsistent with the terms of exhibit A on its face as regards the right of seizure but counsel contended that the provisions of section 57 had no overriding effect over the terms of exhibit A. In effect counsel for the plaintiff’s arguments meant that even though the defendants’ right to seize the vehicle was enshrined in exhibit A the parties having contracted out of Part VIII the power of seizure as contained in exhibit A could only be exercised subject to the provisions of section 57 of the Act.

It was finally submitted on behalf of the plaintiff that the Sale of Goods Act, 1962, sought to abolish the legal distinction as had hitherto been known to exist between hire-purchase contracts and other forms of contracts for the sale of goods. Counsel referred to section 11 (1) and (2) of Act 137 and submitted that such differences as exist between the other forms of contracts for the sale of goods and hire-purchase contracts are mere matters of form and not of substance.

Replying on behalf of the defendants Mr. Afreh with equally admirable and persuasive force submitted that subject to certain fundamental principles of Act 137, where parties to a hire-purchase contract have opted to contract out of Part VIII their rights and liabilities should be gathered from the terms of their contract according to counsel in the instant case from the terms of exhibit A. Learned counsel referred to section 76 of the Act. On the issue as to whether Act 137 sought to abolish the legal distinction between hire-purchase and other forms of contracts for the sale of goods, learned counsel referred to section 78 where hire-purchase had been defined and argued that even the memorandum to the Act was clear about that distinction. Learned counsel submitted that exhibit A on its true construction was a hire-purchase agreement and that the parties having contracted out of Part VIII of the Act the only provisions of the Act which should govern their obligations should be such provisions of the Act as are fundamental to all forms of contracts for the sale of goods but not section 57 which deals with the sale of goods stricto sensu. Counsel reiterated his invitation that under section 76 the safest way to gather what the parties intended to govern their obligations was to look at exhibit A.

I must confess that my task of choosing between one of the two rival arguments submitted by counsel has not been an easy one for

[p.157] of [1973] 1 GLR 1 me and I am sure my ruling is going to spark off some legal debates. It was clear after submissions of counsel that I had been thrown into an uncertain state of mind. My mind kept on swaying here and there with each argument submitted on behalf of the parties. It was really both a welcome and unwelcome situation which made it difficult for me to reconcile my mind as to which of the two had really convinced me. In this regard I must express my appreciation to both counsel who by their excellent performances unearthed all that there was to offer in support of the issues posed for determination.

The relevant provisions of Act 137 which have been called into issue in this case are the following: Section 81 (1) which defines a hire-purchase agreement provides as follows: “(1) In this Act, unless the context otherwise requires—. . . ‘hire-purchase contract’ means a contract of sale of goods in which the price is to be paid in five or more instalments,” Section 57 upon which the plaintiff’s action is founded reads as follows: [His lordship here read the provision as set out in the headnote and continued:] Section 75 of the Act reads as follows:

“75. (1) Subject to subsection (2), this Part applies to every contract.

(2) The application of this Part, or of any provision thereof, may, in the case of a contract in which the cash price of the goods exceeds £G1,000, be excluded by agreement between the parties.”

[His lordship here read the provisions of section 76 as set out in the headnote and continued:] There is no difficulty about section 75. It is common ground between the parties that this section confers a right on the parties to contract out of Part VIII of Act 137 and that in the instant case the parties rightly opted to exercise that right.

The issue here is whether the parties having opted to contract out of Part VIII are to be bound by no other provisions of the Act other than the terms of exhibit A? If the answer to this is in the negative then which of such provisions of the Act or other principles of law should regulate their obligations? To instance one example relevant to the present proceedings, the terms of exhibit A exclude the application of Part VIII of Act 137 by clause (4) but confers a right of seizure on the defendants in the event of a default in the payment of any instalments among other matters by clause (9). The said clauses are in the following terms:

“(4) Provided always and it is hereby specified agreed and declared that save and except section 75 (2) of the Sale of Goods Act 1962, the other provisions of Part VIII (hire-purchase contracts) thereof are hereby expressly excluded from the terms of this agreement and it is hereby further agreed and declared that the owner shall always have the right to seize the vehicle more particularly described in the schedule hereto as long as any monthly instalment or any

[p.158] of [1973] 1 GLR 1 part thereof shall remain unpaid at the date on which the said vehicle shall be seized by the owners . . .

(9) Should the hirer not observe and perform the foregoing terms provisions and stipulations or any one of them or if he dies or executes an assignment for the benefit of his creditors or if any execution or distress be levied or threatened to be levied upon the said motor vehicle or if the hirer be a company should a petition to wind up be presented or a resolution for voluntary liquidation be passed the owners may forthwith determine the hiring without notice and may forthwith seize and take possession of the said motor vehicle wherever the same may be and may sue the hirer or his representative for all amounts payable in respect of the said motor vehicle for arrears of rent as set forth in clause (2) hereof for cost of repairs and/or accessories and/or parts &c. and for all necessary and proper expenses incurred by the owners in the exercise of the powers conferred on them by this agreement or in respect of the failure of the hirer to observe and perform his obligations to the owners hereunder and the owners shall have the right to exercise the powers of a distraining landlord and wheresoever the said motor vehicle be stored and retake possession of the said motor vehicle and this agreement shall forthwith be at an end except in so far as the aforesaid amounts in respect of rents and other sums due as aforesaid are concerned. The owners may if they think fit hold the said motor vehicle for a period of grace not exceeding one (1) week (unless the owners in their absolute discretion otherwise decide) after the motor vehicle has been so taken possession of and before the expiration of such period all arrears and other payments due in respect of the said motor vehicle shall have been paid this agreement may be permitted by the owners to recommence and continue and if the owners so permit then (subject to any agreement to the contrary) the position of the parties shall revert to what it was immediately prior to the breach in consequence of which the owners took possession and without prejudice to the liability of the hirer in respect of such breach except as to determination.”

The question which arises then is, does the right of seizure as is contained in clause (9) make it right or justifiable for a seller to seize goods valued at ¢4,000.00 where the buyer has paid ¢3,999 at the same time entitle him to refuse to refund the instalment or any part thereof paid?

I have considered this question alongside with the provisions of section 76 on which counsel for the defendants relied so much in the course of his submissions and I have come to the unavoidable conclusion in my ruling that all contracts for the sale of goods in Ghana must be contracted within the framework of the provisions of Act 137. No parties to a contract for the sale of goods have the right to contract

[p.159] of [1973] 1 GLR 1 out of its provisions entirely so as to permit their obligations to be regulated by the terms as they have themselves agreed to. The latter right is a common law notion and where necessary must give way to principles of equity, good conscience and statutory provisions. Learned counsel for the defendants conceded that section 76 itself under which he sought refuge, by its very wording recognises the overriding effect of the fundamental provisions of Act 137. He described the opening words of section 76 as limiting the parties to these fundamental provisions. He did not refer the court to any of such fundamental provisions of the Act that he had in mind but emphatically excluded section 57 of the Act as being one of such fundamental provisions. In my ruling where parties to a hire-purchase agreement have opted to contract out of Part VIII of Act 137 the rights and liabilities of the parties thereto should be governed by the terms of their agreement as far as are consistent with other provisions of Act 137 out of which they cannot in my view completely contract. I am of the view that this is the true spirit of section 76 of Act 137. To interpret that section in any other way will in my view be doing violence to the true language of that section. To accede to the construction submitted by learned counsel for the defendants would mean to give parties to a contract an unlimited scope to frame their own terms and to permit them to contract out of Act 137 so that the courts will be called upon to determine each and every contract that comes before it according to the contents of the documents evidencing such contracts. This would mean also that the courts will have to do this without any laid down principle for each case will depend on its own terms without any well defined system to be followed in all cases. Such a situation I am sure would create confusion and will add to the unsatisfactory situation which already exists in our present Sale of Goods Act. It would also have the effect of defeating the very purpose which Act 137 sought to achieve (though I must confess that this purpose has not been satisfactorily achieved by the Act in its present form) to have our laws dealing with the sale of goods codified into a single law. I think therefore that in the instant case Mr. Carson’s view of the application of section 57 of Act 137 is to be preferred to the able submission of Mr. Afreh for the very simple reason that parties cannot contract completely out of Act 137 and that in view of their express will to exclude Part VIII their obligations as to the right of seizure should in my ruling be governed by section 57 of Act 137 which clearly cuts across the common law notion of contracts whereby parties to a contract are bound solely by the terms of their agreement.

Even if my contention above is wrong which I very much doubt, I am of the view that on grounds of public policy and equity a seller should under circumstances as were instanced above be made to refund a justifiable part of the instalment already paid. For it would amount to unjust enrichment on the part of the seller at the instance of the buyer who stands in a very weak bargaining position.

[p.160] of [1973] 1 GLR 1

Secondly I have always understood equity to treat payment or tender of arrears of rent as an answer to forfeiture of a lease and I see no reason why where the facts justify that course the same principle should not be extended to cover cases where goods under a contractual agreement are seized on grounds of non-payment where the arrears are tendered and accepted by the seller.

On the other remaining issue as to whether exhibit A is a hire-purchase agreement, I would have had no difficulty in holding that it is such by the unsatisfactory definition of hire-purchase as given by the Act. But since inherent in this kind of contract is the right to the enforceability of its terms under Part VIII of the Act I will without hesitation say that by the exercise of their option under section 75 (2) of Act 137 the terms of exhibit A cannot be enforced as a hire-purchase agreement under the Act. I am however of the view that Mr. Carson’s contention that there exist no longer under the Act the legal distinction between hire-purchase contracts and other forms of contracts of sale of goods is not wholly correct for the memorandum to the Act itself and the other provisions as are contained in Part VIII are clear that the legal distinctions are safeguarded.

In view of the observation I had made earlier in this ruling about the invaluable contributions made by learned counsel in this case I will make no order as to costs.

DECISION

Agreement subject to provisions of Sale of Goods Act, 1962 (Act 137).

S. O.