United Dominions Corporation (Nig.) Ltd. V. A. O. Oladipo (1971)

LawGlobal-Hub Lead Judgment Report

LEWIS, J.S.C.

In suit LD/382/67 in the Lagos High Court the plaintiff’s writ read:

“The plaintiff claims from the defendant the sum of seven hundred and fifty pounds (750) being general damages for detinue of a car Austin Cambridge LH. 6645 sold to the plaintiff under a hire purchase agreement or the return of the said car. The said car was seized by the defendant by reason of default of installmental payment by the plaintiff but before its sale the plaintiff’s surety the Federal Government had paid to the defendant the full balance outstanding on the purchase price. Inspite of the fact that the balance of the said purchase price had been completely paid by the said plaintiff’s surety the defendant purported to sell the said car at undervalue.

WHEREOF the plaintiff claims as stated above.”

On the 26th April, 1968, judgment was given in his favour for 400 general damages and 55 guineas costs.

The first point taken on this appeal by Chief Williams for the appellants is that under the hire-purchase agreement (exhibit C) the United Dominions Corporation (Nig.) Ltd., the present appellants, as owners were entitled to terminate the hiring by the plaintiff if there was non-payment of the required instalments. He referred us in particular to clauses 6, 8, 9 and 12 of the hire-purchase agreement, though clause 11 is also material and these read:

“6. The goods are and shall remain the property of the owner unless and until the hirer exercises the option to purchase contained in the agreement after having become entitled so to do. All replacements and renewals of component parts and accessories and all additions and alterations forming an integral part of the goods made during the currency of this agreement shall be deemed to form part of the goods.The hirer will at all times allow the owner reasonable facilities for inspecting the goods and access for this purpose to any premises in or upon which the goods may be. The hirer shall punctually pay all rent, rates, taxes and outgoings in connection with any premises in or upon which the goods may be for the time being and if required to do so shall produce to the owner receipts for such payments.

8. Should the hirer fail to pay the initial installment of rent in full at the time when this agreement is made or to pay any subsequent installment or other sum payable hereunder in full within ten days after the same shall have become due or if he shall die or have a receiving order made against him or be made bankrupt or call any meeting of or make any arrangement or composition with his creditors or if the hirer being a limited company shall call any meeting of its creditors or be wound up compulsorily or go into voluntary liquidation or have a receiver of any of its assets appointed or if the goods or any part thereof shall be seized under any execution or legal process issued against the hirer or under any distress for rent or if the hirer shall fail to observe or fulfill any term of this agreement or shall do or suffer anything whatsoever which in the owner’s opinion bona fide formed upon reasonable grounds will or may have the effect of jeopardizing the owner’s right of property in the goods then and in each and every such case the owner may forthwith and without any notice terminate the hiring; or, alternatively, by written notice (either served personally on the hirer or sent to him by post at his usual or last known address) forthwith and for all purposes terminate the hiring and this agreement and thereafter the hirer shall no longer be in possession of the goods with the owner’s consent.
9. Should the hiring be terminated by the owner under clause 8 hereof the owner may without any notice retake possession of the goods and for this purpose shall be entitled freely to enter into and upon any premises occupied by or under the control of the hirer, and notwithstanding the termination of the hiring, the hirer shall be liable for all instalments of rent which shall then be in arrears and unpaid (together with interest thereon until payment at the rate of 8% per annum) and for any other sums then due or thereupon becoming due to the owner under this agreement.
10. Should the hiring be terminated by the hirer under clause 10 or by the owner under clause 8 hereof the hirer shall forthwith pay to the owner either

(a) such further sum as with the total amount of any instalments previously paid hereunder will equal two-thirds of the total hiring cost shown in the schedule as agreed compensation for the depreciation of the goods or

(b) the amount of all instalments and other money then already due hereunder whichever is the greater.

12. If and when all instalments and other moneys payable by the hirer to the owner under this agreement shall have been duly paid and provided that the hirer shall not have committed any breach of the provisions of this agreement then the hirer shall have the option (but shall not be bound) to purchase the goods for the sum of one pound.”

The defendants did so terminate in May, 1966, as had been found proved by the learned trial judge. The effect therefore was to bring the hiring to an end and the appellants were entitled under the hire-purchase agreement to take possession of the car thereafter, as they in fact did in September, 1966. So far as the plaintiff was concerned his interest in the car was at an end though he remained liable under the terms of the hire-purchase agreement for the outstanding sums due. Instead, however, of pursuing further the claim against the plaintiff after his default on the instalments the appellants preferred to pursue the claim against the Federal Government of Nigeria who by a separate contract of guarantee, which was not put in evidence, had guaranteed the required payments of the plaintiff under the hire-purchase agreement, as he was at the time he entered into the agreement an officer in the Nigerian Police Force. Indeed he only fell into arrears in the payment of the instalments when he ceased to hold such office.

There was evidence that the Federal Government of Nigeria in fact paid to the defendants the sum of 426.10s being the sum outstanding from the plaintiff to the defendants under the hire purchase agreement. Whether or not subsequent to that the appellants sold the car, on the instructions of the Federal Government, was in Chief Williams submission really quite immaterial to the plaintiff as his interest in the car ceased on the termination of the hire purchase agreement. The plaintiff was never the owner of the car, only the hirer, and under the hire purchase agreement he only had the right to become the owner if, after all the instalments and other moneys payable under the hire purchase agreement had been paid and provided there was no breach of the provisions of the agreement, he exercised his option to pay one pound as the purchase price. This he of course never did as he had not paid all the instalments and had been in breach of the provisions of the agreement. Whether or not, therefore, the car was in fact sold for an undervalue was no concern of his and he could, in Chief Williams submission, have no claim against the appellants in regard to it once the hiring was properly terminated, as the learned trial judge found it was.

Mr. Atilade for the respondent submitted that there was a vital distinction between terminating the hiring and terminating the agreement. If the hiring was terminated then under clause 9 of the hire-purchase agreement the owner could retake the goods, but if the agreement was terminated then all rights under the agreement ceased and the owner must rely on his common law rights. He referred us to Smart Brothers Ltd. v. Holt (1929) 2 K.B. 303 and in particular to the words of Wright J. at page 308 when he said:

“Notwithstanding the strenuous argument of Mr. O’Connor, I agree with my Lord that the notice put an end to the agreement, leaving the plaintiffs with no right to repossess themselves of the goods under any special power granted by the agreement such as would be granted under clause 8(a) if they had availed themselves of that clause. Clause 8(b), on the contrary, though providing that rights of a personal character, such as claims for arrears of rent, should remain, had the effect of removing the goods from the ambit of the agreement; the goods remained the property of the plaintiffs, but the licence to the defendants had been revoked by the notice given under the agreement; the defendants had, after the notice, only such rights as flowed from that position at common law, that is, such rights as an owner of goods has as against a person who no longer has a right to the possession of the goods and who is holding without the owner’s consent. The owner has, in such a case, no right of entry to retake possession; he can merely ask for delivery of the goods, and if refused delivery may fall back upon the aid of the court to give him possession in an action of detinue.

I think in such a case it cannot be said that the goods are comprised in the hire purchase agreement at the material time, that is, the levy of distress, when, as here, the owner of the goods has previously terminated the agreement by a notice duly given, as the goods after the termination of the hire-purchase agreement without the consent of the plaintiff; that the plaintiff gave evidence that the goods were “seized” and this imported that it was against his wishes; that if it was against his wishes then the defendants had to have recourse to the courts to get leave to take the car and they were liable if they did not. Mr. Atilade also referred to paragraph 5 of the statement of defence to show in what capacity the defendants claimed they were acting but Chief Williams rightly pointed out that paragraph 4(c) of the amended statement of defence, which we have quoted, superceded paragraph 5 of the statement of defence so that Mr. Atilade could not rely on the earlier pleading. Nevertheless Mr. Atilade submitted that as the plaintiff had the actual possession of the car after the termination of the hire-purchase agreement and as the owner only had the right to possession if he had the authority of the court to take back the car, the plaintiff could sue as he did in detinue.