Mrs Amusan & Anor V Bentworth Finance (Nig.) Ltd (1965)
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PER COKER JSC
The appellants have appealed against the judgment of the High Court, Lagos, awarding against them and in favour of the respondents a total amount of £ 1 ,389-1 2s-3d., ‘being arrears of hire rentals, re-possession expenses and agreed depreciation amount’ and costs. The respondents were the plaintiffs in the High Court and their writ of summons is endorsed as follows:-
‘The plaintiffs claim against the defendants jointly and severally is for the sum of £1, 389-12s-3 being arrears of hire rentals, repossession expenses and agreed depreciation amount owed by the defendants to the plaintiffs under a hire-purchase agreement between the plaintiffs Company and the 1st defendant in respect of five vehicles registered numbers are as follows:-
LF 1671, LE 9375, LF 3632 and WE 839.
The second defendant is being sued as an indemnifier to the 1st defendant. ‘
It is common ground that the real hirer of the vehicles was the first appellant and that the second appellant was a guarantor or indemnifier of the first appellant to the respondents.
The case of the respondents is that pursuant to a hire purchase agreement dated the 23rd February, 1962, the first appellant took on hire from the respondents five second-hand vehicles, four of which were Austin A.55 saloon cars and the fifth a five-ton lorry. The hire-purchase agreement was produced in evidence as Exhibit 1 . By an indemnity dated the 16th February, 1962, the second appellant agreed to pay all such sums of money as may at any time become due or payable by the first appellant but be unpaid by her. Following breaches of the terms of Exhibit 1 by the hirer, the respondents retook possession of the vehicles in May, 1962.
The appellants denied that they were in breach of the hire purchase agreement and maintained that when the vehicles were delivered to the hirer, the parties agreed that the hirer was not to pay any rentals until the vehicles should have been put to the use for which they were purchased. The appellants also complained that since the vehicles were delivered to the hirer, they had been pushed from one mechanic to another for the purpose of repairing the several faults in them and that indeed three of them were incapable of self-propulsion. Finally, the appellants contended that before taking delivery of the vehicles, Messrs. S.C.O.A., who were the dealers for the vehicles and from whom possession was taken, represented to the appellants that there ‘would not be any great trouble to get’ the vehicles repaired. It was also part of the appellants case that the vehicles had never been roadworthy, that the first appellant made various suggestions to Messrs. S.C.O.A. with regard to the postponement of the payment of rentals, but as those were not accepted, she repudiated the contract and directed Messrs. S.C.O.A. to where the vehicles could be found.
The learned trial judge did not accept the evidence that any representation was made to the appellants about the condition of the vehicles or that it was the first appellant herself who had repudiated the contract. Rather he accepted the case of the respondents that in May, 1962, when they retook possession of the vehicles, the appellants were in breach of the hire purchase contract as rentals were already overdue and in arrears on the vehicles. He therefore gave judgment against the appellants in the sum stated above, the particulars being as follows:-
Hire rent due 1st April, 1962
Hire rent due 1st May, 1962
Repossession and towing expenses
Agreed depreciation amount under Clause 4 (ii) of terms and conditions of the agreement
Before us on appeal, two grounds of appeal were argued and in view of the importance to the hire-purchase business of the issues raised for decision, we think it desirable to deal with the grounds of appeal seriatim and at length.
It was firstly argued on behalf of the appellants that the learned trial judge wrongly applied the decision in Associated Distributors Ltd. v. Hall and Hall  1 All E.R. 511, and erred in holding that the sum claimed as damages was by way of liquidated damages and not a penalty. This ground of appeal manifestly refers to item (d) of the particulars of award, i.e ., agreed depreciation amount under clause 4(ii) of the terms and conditions of the agreement -£ 831-3s-9d. In awarding this item of claim, the learned trial judge observed as follows in his Judgment:-
‘regarding the depreciation clause, I would have thought it was clearly a penalty and would have so decided had it not been for the case of Associated Distributors Ltd. v. Hall  2 K.B. 83, the principle of which I think is applicable to the present case.’
Learned counsel for the appellants on this ground of appeal submitted however that the relevant provisions in the hire purchase agreement, Exhibit 1, constitute a penalty and not a fair calculation or assessment of the actual wear and tear or depreciation of the vehicles concerned. On the other hand, learned counsel for the respondents maintained that the amount awarded is justifiable by way of agreed depreciation of the goods the Area Of Law of the hire-purchase contract.
We pointed out before that the judge did not accept the contention of the appellants that the hirer repudiated the hire purchase contract and that he took the view that on account of the several breaches of the contract, the owners exercised their right of repossession and seized the vehicles. Clauses 2, 3 and 4 of the hire-purchase agreement, Exhibit 1, as far as they are material to this case read as follows:-
‘2. The owners agree (a) To permit the hirer to terminate this Agreement by giving notice of termination in writing to the owners and returning the said goods in good order, repair and condition at his risk and expense to the owners at such place as they may designate together with all additions alteration and improvements as may have been made thereto without thereby becoming entitled to any credit allowance or set off and without prejudice to the rights of the owners in respect of any breach of this agreement by the hirer. (b) …
3. Should the hirer fail to pay the initial payment in full at the time when this agreement is made or to pay any subsequent instalments or other sum payable thereunder in full withi
Other Citation: (1965) LCN/1193(SC)