HALABY vs. WIREDU [1973] 2 GLR 249

CASE REFERRED TO

Domestic Electric Rentals Ltd. v. Dawson [1943] L.J.N.C.C.R. 31.

NATURE OF PROCEEDINGS

APPLICATION for leave to defend an application for summary judgment under Order 14, r. 1 of the Supreme [High] Court (Civil Procedure) Rules, 1954 (L.N 140A), in respect of a liquidated debt being the purchase price of a business, stock-in-trade and business premises. The facts are set out fully in the ruling.

COUNSEL

Sotomey for the plaintiff.

T. A. Totoe for the defendant.

JUDGMENT OF KORANTENG-ADDOW J.

The plaintiff was an alien who was trading in Ghana, dealing in motor spare-parts. He had to leave the country as a result of the government legislation requiring all aliens trading in some fields to leave the country to enable Ghanaians to take up those activities. Before leaving he sold his business to the defendant. He entered into two separate transactions in that regard. The first agreement is dated 14 November 1970 with a supplementary one dated 20 March 1971. And the second transaction was made under an agreement dated 1 December 1970. There was also a supplement to this.

Under the first agreement the plaintiff, described as the vendor, sold to the defendant “the business of a dealer in spare-parts heretofore carried on by the vendor in the premises comprising a four door store with one wholesale situate at plot No. 1 Block A Suame.”

The stock-in-trade of the business is, as I have stated above, motor spare-parts. The value of the goods in the store and wholesale at the time of the sale was ¢37,602.00 and was to be paid by monthly instalments of ¢5,000.00. By the supplementary agreement the purchase price was reduced by ¢417.84 and the monthly instalments were reduced from ¢5.000.00 to ¢3,000.00. At the time of the supplementary agreement the balance outstanding was ¢25,184.00. This amount was to be paid in seven instalments. At the time the action was brought the balance stood at, ¢19,184.16.

Under the second transaction the plaintiff sold his business that was carried on in a two door store and a small wholesale situate at plot No.600 Old Town, section B, Dominase Road, Kumasi. The purchase price in the case was ¢29,924.32 and had to be defrayed by monthly instalments of ¢5,000.00. By another supplementary agreement the quantum of the instalments was also reduced to ¢3,000.00. At the time of the supplementary agreement the amount outstanding was ¢18,924.32. That amount also had to be paid in seven instalments. And the balance still unpaid when this action was instituted was ¢15,924.32. The total indebtedness of the defendant to the plaintiff is now ¢35,108.48 and it is for this amount that the plaintiff brought this action.

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As the claim is for a liquidated debt, after the defendant had appeared to the writ, the plaintiff took out a summons under Order 14, r. 1 of the Supreme [High] Court (Civil Procedure) Rules, 1954 (L.N. 140A). As a consequence of that move the defendant filed an affidavit asking to be allowed to defend the action because, according to him, the transactions are in law to be regarded as hire-purchase agreements within the meaning of the term under the Sale of Goods Act, 1962 (Act 137). The foundation of that contention is that the payment of the purchase price is to be made in more than five instalments.

As hire-purchase agreements, submitted learned counsel for the defendant, the transactions infringed the mandatory provisions of section 66 (1)-(3) of the Sale of Goods Act, 1962. They are, therefore, unenforceable at law. Learned counsel submitted, therefore, that the defendant had a good defence to the action and should be allowed to defend it. Mr. Totoe argued that the vital distinction between credit sales and hire-purchase agreements is obliterated by the Sale of Goods Act, 1962, and that all agreements for sale of goods should be regarded as hire-purchase agreements whenever the payment of the purchase price of the goods is to be made in five or more instalments. By a forceful argument and with ingenuity he submitted that the definition of hire-purchase in section 81 of the Act left no two minds on the matter. He contended that whatever the view or intention of the parties was, once the instalments were five or more the transaction was caught by the Sale of Goods Act, 1962. To buttress his submission on this point, Mr. Totoe cited the case of Domestic Electric Rentals Ltd. v. Dawson [1943] L.J.N.C.C.R. 31.

Mr. Sotomey, learned counsel for the plaintiff, argued contra and submitted among other things that the agreements did not fall within the purview of the Sale of Goods Act, 1962, and that, even if they did, the Act did not blur the vital distinction between a credit sale and a hire-purchase agreement. In his view the definition of “hire-purchase” in section 81 (2) of the Sale of Goods Act, 1962, is not exhaustive. It was only an aid to interpretation. He submitted also that the agreements were for the sale of businesses and that therefore they do not fall within the provisions of the Sale of Goods Act, 1962.

In my view, the submission that every sale transaction in which payment of the purchase price is to be made by five or more instalments is a hire-purchase agreement because it falls within the definition of “hire-purchase” in the Sale of Goods Act, 1962, cannot be right.

Although a “hire-purchase contract” is defined to mean a contract of sale of goods in which the price is to be paid in five or more instalments in section 81 (1) of the Act, that definition can only be regarded as a definition of the term “hire-purchase contract” as appearing in section 66 (1) of the Act. It cannot be taken to mean every contract of sale. The same section defines “hire-purchase price” among other things

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as excluding “any sums payable as a penalty or as damages or compensation….” Buyers in credit sale transactions do not pay any sums as a penalty. The term “hire-purchase price” cannot therefore in my view apply to any instalment payment made towards the agreed purchase price under a credit sale agreement. It is therefore obvious that “hire-purchase price” cannot mean “purchase price” under an ordinary credit sale transaction. This in a way supports the contention that the term “hire-purchase contract” cannot apply to every contract of sale in which the purchase price is to b paid in five or more instalments.

The Act, in my view, still retains the distinction between an ordinary sale contract and a hire-purchase contract. Section 1 (1), defines an ordinary contract of sale as “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.” It will be noted that here the Act mentions “price” not “hire-purchase price.” Again it may be noticed that the Act devotes sections 1-65 to ordinary-sale transactions before it comes to deal with hire-purchase contracts under sections 66-84. The fact that the Act is compendious does not, in my view, blur the distinction between the two types of transactions. The authority cited by Mr. Totoe, namely, the case of Domestic Electric Rentals Ltd. v. Dawson (supra) does not, in my view, support the contention of learned counsel that now the intention of the parties does not matter and that once there is a sale of goods and the payment of the purchase price is to be made by five or more instalments the transaction is to be regarded in law as a hire-purchase agreement. Because the agreement involved in that case was an agreement of hire. The parties knew it was. The only thing about that agreement which made it sui generis is that the agreement was so ingeniously worded that the option to purchase which is normal in a hire-purchase agreement was left in the air. And that was done intentionally in order to take the agreement out of the English Hire-Purchase Act.

Before an English court, the argument of Mr. Totoe might have been somewhat relevant because now (i.e., since 1965) sale of goods transactions have generally been brought within the purview of the English Hire-Purchase Act, 1965 (c. 66). The 1965 Act specifically provides that certain types of contracts of sale of goods should fall within the provisions of the Act. As Professor Guest points out in his book, The Law of Hire-Purchase at p. 34 “credit sale agreements (as so defined) are governed by the Act (the Hire-Purchase Act, 1965) in all cases where the total purchase price does not exceed £2,000 unless the buyer is a body corporate.” A credit-sale agreement is defined by the English Act in section 1 (1) as “an agreement for the sale of goods under which the purchase price is payable by five or more instalments, not being a conditional sale agreement.”

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From this observation and the definition of credit sale these agreements which are involved in this case would, even in England, fall outside the ambit of the Hire-Purchase Act, 1965. The sums involved in the two transactions are well over the ceiling set by the Act, i.e. £2,000. That Act was in fact conceived for the protection of the small household consumer, not big business or big businessmen.

The Ghanaian Act, in my view, has not progressed so fast. It still maintains the distinction between the hire-purchase and the credit sale agreement in all respects. It does not impose upon credit sale agreements those requirements of hire-purchase agreements which are the pre-conditions of enforceability. Nor does it open to the buyer the options of repudiation which are available to the buyer under a hire-purchase agreement in England. And I do not see any lack of wisdom in the preservation of this distinction either. From the foregoing it is obvious that the agreements under discussion in this instant case fall outside the scope of both the English Hire-Purchase Act, 1965, and the hire-purchase provisions of the Ghanaian Sale of Goods Act, 1965.

The conditions imposed as to enforceability under the English Hire-Purchase Act, 1965, would not apply were this case heard by an English court and those imposed by section 66 of our sale of Goods Act, 1962, certainly do not apply to this case. Again, in my view, the sale of a business is not the sale of goods and cannot be the sale of goods within the meaning of the Sale of Goods Act. The sale of a business is a sale of more than the goods that are sold by the businessmen. It includes for instance the sale of goodwill and the sale of a whole business organisation. In this instant case, as disclosed by the statement of claim, what was sold consisted also of the sale of an interest in land (the leasehold interest of the seller in the premises in which the business was run). The sale of such things cannot surely be the sale of goods.

The submission of learned counsel for the defendant, namely, that he has an arguable defence would not therefore hold. With that removed, what tangible reason is there for granting him leave to defend the action? The short answer is that there is none. I am therefore constrained to discountenance the submission and to order that judgment be entered for the plaintiff in the sum claimed. There will be judgment for the plaintiff in the sum of ¢35,108.48 with costs assessed at ¢1,722.80. DECISION Judgment for the plaintiff with costs.

S.E.K.