Fiadzoe v. Kuadzi [1979] GLR 469.

COURT OF APPEAL, ACCRA 

SOWAH, KINGSLEY-NYINAH AND ANNAN JJ.A.

ANNAN J.A. The plaintiff-respondent claimed the following sums of money in his writ of summons:

(a) the sum of N¢672 being advance plaintiff paid to the defendant on 30 June 1971 for the purchase of defendant’s Toyota bus No. GM 162 under a hire-purchase agreement dated 30 June 1971 which Toyota defendant has now seized unlawfully;

(b) the sum of N¢250 being the first instalment plaintiff paid to the defendant on 8 August 1971 under the said hire-purchase agreement;

(c) the sum of N¢624.20 being amount plaintiff spent in procuring the necessary papers on the said vehicle and making the vehicle roadworthy;

(d) the sum of N¢1,000 being damages for breach of contract.

According to the statement of claim the plaintiff-respondent entered into a hire-purchase agreement with the defendant-appellant for the purchase of the bus for the total hire-purchase price of N¢3,700. The agreement was dated 30 June 1971 and provided for the payment of the initial sum of N¢672 and a first instalment of N¢250. The plaintiff-respondent took delivery of the bus in terms of the agreement but had to spend a total of N¢624.20 for the purposes of the insurance certificate, certificate of roadworthiness and spare parts in order to put the vehicle on the road. The defendant-appellant seized the vehicle on or about 8 August 1971.

The statement of defence admits the agreement of 30 June 1971, the hire-purchase basis of the transaction and total payment of N¢672 at that date but denies that the first instalment of N¢250 was ever paid. The amount paid was N¢170 in July 1971 with no further payments until 23 August 1971 when the vehicle was seized. No admission is made of any of the claims of the Plaintiff-respondent.

The issues agreed for trial are:

(a) whether or not the plaintiff purchased the defendant’s Toyota bus No. GM 162 by a hire-purchase agreement dated 30 June 1971;

(b) whether or not the said bus has been seized by the defendant;

(c) whether or not such seizure is lawful.

The undisputed evidence shows that the appellant and the respondent negotiated the sale of the former’s bus to the latter for a total purchase price of N¢3,700 out of which amount the respondent had paid a total of N¢672 by 30 June 1971, the date of their written agreement, exhibit B. The first and second instalments were fixed in the sum of N¢250 payable on or before the 31 July 1971 and on or about 31 August 1971 respectively. Subsequent payments were fixed at N¢200 from 30 September 1971 for twelve calendar months up to 31 August 1972 with a final balance of N¢128 payable on 30 September 1971.

While there is no dispute about the payment of the initial amount of N¢672, the parties disagree about the payment of the first instalment of N¢250. According to the respondent’s evidence the first instalment was fully paid to the appellant personally on 8 August 1971 at home in the presence of witnesses, one of whom gave evidence for the respondent. No receipt was issued for that payment. The appellant’s evidence was that only N¢170 was paid by the respondent and nothing else. That was in July 1971.

With regard to the seizure, the appellant said: “By reason of the failure on the part of the plaintiff to honour the agreement I waited for a period of three weeks before I seized it, namely 23 August 1971.” The breach consisted of the failure to pay the first instalment of N¢250 due in terms of exhibit B.

Accordingly the most important issue of fact for determination was that of non-payment of the first instalment. That issue the trial judge determined in favour of the appellant whose evidence he accepted that the amount paid was N¢170 and not N¢250 rejecting that of the respondent which he said did not impress him as the truth. The appellant naturally did not challenge this finding, and neither did counsel for the respondent, and I would not disturb it. On this finding the respondent was in breach of clause 4 of the agreement exhibit B, which fixed the first instalment at N¢250 to be paid on or before 31 July 1971.

The next issue for consideration is that of the lawfulness of the seizure, and that is the crux of this appeal. The question that is raised for determination is this: Was the appellant, the owner of the vehicle, entitled to seize the vehicle upon default by the respondent, the purchaser, in his contractual obligation to pay the agreed monthly instalment as and when it fell due? Generally, the answer to a question like this would pose no problems in law since in the usual transaction of purchase by instalments the written agreement would contain a clause for seizure of the vehicle upon default in payment of an instalment or for determination of the agreement by the seller with a consequential right to recover possession of the vehicle. In the usual type of transaction therefore the right to recover possession is contractual. Exhibit B on the face of it, does not

seem to confer any such contractual right on the appellant and does not contain the usual form of words typical of a well drawn-up agreement in this field of business. The clause that is relevant in this respect is clause 6. It states:

“6. That failure after two (2) weeks from time of payment of any instalment according to the dates of payment above specified the vendor hereof shall have the right to resort to legal action against the purchaser hereof and his guarantors being also signatories hereunder in any court of appropriate jurisdiction for recovery of the whole balance debt as may then be outstanding plus incidental expenses in connection with such action, in which step the attachment and sale by public auction of the vehicle in question herein shall not be excluded.”

There is therefore, on the face of the agreement, no express right to determine it or to recover possession of the vehicle. The right that seems to be conferred is a right to recover the whole of the outstanding balance upon failure to pay an instalment two weeks after such default. In my view neither clause 6 of exhibit B nor any other part of the agreement, confers any contractual right to recover possession of the vehicle in the event of arrears of payment.

Was the seizure therefore lawful? If there was no contractual right of seizure then legal justification for any such act must be founded on statute or the common law. On this aspect of the matter counsel for the appellant, on whom was the onus to show the legal basis of the seizure of the vehicle, submitted that exhibit B is a hire-purchase agreement, that the respondent could not opt out of the provisions of the relevant statute except by express agreement with the appellant and since there was no such agreement, the relevant statute applied to their transaction and the statute justified the seizure. That statute clearly is the sale of Goods Act, 1962 (Act 137), which in 1971 was the operative enactment. Having made the submission, counsel did not offer much help to this court by detailed argument in terms of the statute, and seemed content to leave the matter to the court. One may perhaps understand counsel’s diffidence in not wanting to grapple with an Act, which seems to have attracted strong adverse comment in respect of it’s policy and provisions relating to hire-purchase contracts: see Ampadu v. Dadzie [1978] G.L.R. 54, C.A. and Royal Exchange Assurance v. Tailor [1975] 2 G.L.R. 265 at p. 284, C.A. and the memorandum to the prevailing statute, the Hire-Purchase Decree, 1974 (N.R.C.D. 292). I cannot, however, avoid the Act and I must turn to it.

On the issue of the right to recover possession for non-payment of instalments, Parts VIII of Act 137, which related to hire-purchase transactions, conferred no statutory right to recover possession. Section 69 merely restricted the right to recover possession, where such a right otherwise existed. It did not confer the right “of seizure,” and indeed no such right of seizure was conferred in 1971 or in 1974 by the relevant 

hire-purchase statutes. In terms of the definition in section 81 (1) and section I of Act 137, exhibit B in my view falls within the definition of a hire-purchase agreement, namely, a contract of sale of goods in which the price is to be paid in five or more instalments.

No issue as to unenforceability of exhibit B was raised at the trial or in this court and I do not think any arises for consideration. Exhibit B therefore is governed by Part VIII of Act 137 and that part confers no right of seizure. There are, however, other provisions of the Act, outside Part VIII, which by virtue of the scheme and policy of the Act could apply to hire-purchase transactions. Section 44 is one such section, and that speaks of a right to recover possession in the unpaid seller. It reads in part as follows:

“44. Subject to the provisions of this Act, and subject to any contrary intention an unpaid seller may recover possession of the goods from the buyer after they have been delivered to him if— (a) the property has not passed to the buyer . . . and the buyer fails to pay the price in accordance with the terms of the contract, but not otherwise.”

By section 34 (1) (a) of the Act a seller of goods, is an unpaid seller, for the purposes of section 44 “when the whole of the price has not been paid or tendered.” It is clear that by virtue of section 1 (2) of the Act the expression seller was statutorily made applicable to a bailor of goods in the type of contract of bailment that is generally known as a hire-purchase transaction. Putting these three sections together it is my view that in 1971 the right to recover possession in terms of section 44 was applicable to a hire-purchase transaction, since the owner of the chattel in such a transaction is always an unpaid seller the whole of the hire-purchase price being, by the nature of the agreement, payable by instalments so that in the usual course of things the whole of the purchase price is not paid or payable until the contractual period has elapsed. Again the transaction calls for delivery of the chattel to the buyer and the retention of ownership in the seller. Upon failure of the buyer to pay the price “in accordance with the terms of the contract” a statutory right to recover possession would become exercisable by the seller “but not otherwise.” The statutory right seemed to have been limited, in the case of hire-purchase contracts, to non-payment of instalments as and when they fell due in terms of the agreement. (For the effect of section 44 in a credit sale agreement within Act 137 see Abaka v. Ansah [1965] G.L.R. 688 at pp. 692-693). Applying section 44 to the facts of this appeal I think that the parties by their contract had agreed differently so as to manifest a contrary intention in terms of section 76 of Act 137, and of section 44 itself which makes its effect expressly subject to a contrary intention in the contract and also subject to the terms of the Act. Section 76 permits the parties to vary the rights and liabilities laid down in the Act as between themselves by their express agreement. I think clause 6 of exhibit B has this effect. I do not think that section 44 is one 

of those provisions of the Act which are binding in any event, contractual provision and common law rights notwithstanding. In my view the statute is of no assistance to the appellant on the issue of the legality of his recovery of possession to the vehicle.

Although counsel did not raise the common law aspect of this issue I think it arises for consideration in terms of section 80 of the Act. That section specifically endorses the position, which would otherwise be a matter of construction, that the policy of the Act is to preserve the rules of the common law and of customary law that applied to sales before the intervention of statute “save in so far as they are inconsistent with the provisions of the Act . . .” Rights and liabilities may therefore attach dehors the act.

It seems to me therefore necessary to consider the common law position as to legality of seizure, where section 44 does not apply. As to the right to recover possession at common law the starting point is the nature of the hire-purchase transaction which is generally said to be an agreement operating as a contract for the hire of chattels to a hirer under which he obtains possession and is granted an option to purchase the goods, the property in the goods hired remaining in the owner until the terms and conditions of the agreement, including the exercise of the option to purchase, have been complied with. Since the property remains that of the bailor who parts with possession to the bailee on terms, circumstances may arise when the bailor becomes entitled to retake possession from the bailee, who then loses his right to possession granted by the contract of bailment. In Wild, The Law of Hire-Purchase (2nd ed.) at p. 64 it is stated:

“Clearly there can be no recovery by the owner unless he has a present right to possession and this cannot arise so long as the hiring continues in accordance with the agreement. But it may be that the agreement itself provides that the hirer shall lose his right to possession on the occurrence of certain events or, if the agreement makes no special provisions, such a right may arise at common law.”

The common law of bailment provides a general principle that any act which is basically inconsistent with the terms of the bailment determines the bailment and the immediate right to possession of the chattel reverts to the bailor. The principle is stated in Pollock and Wright, Possession in the Common Law (1888) at p. 132 as:

“Any act or disposition which is wholly repugnant to or as it were an absolute disclaimer of the holding as bailee revests the bailor’s right to possession and therefore also his immediate right to maintain trover or detinue.”

The principle gained judicial approval in North General Wagon & Finance Co., Ltd. v. Graham [1950] 1 All E.R. 780, C.A. Commenting on this general principle Chitty on Contracts (23rd ed.), Vol. 2, at p.425, para. 844 states: 

“But this only applies where the contract does not make specific provision as to the rights of the parties in the event of individual breaches (North General Wagon & Finance Co., Ltd. v. Graham [1950] 2 K.B. 7, 11) so that the terms of the agreement must be looked at to ascertain what the rights of the owner are in respect of the event which has taken place.”

So also Halsbury’s Laws of England (3rd ed.), Vol. 19 at p. 545, para. 882 provides:

“Although the general rule that any dealing with a chattel by a bailee entirely inconsistent with the bailment amounts to a repudiation by the bailee of the bailment and entitles the owner to resume possession, it does not apply with full effect to a hire purchase agreement in the absence of an express term to that effect, provisions are almost invariably included in modern hire purchase agreements against selling, pledging or disposing either of the chattels or of the benefit of the agreement, and stipulating that, on default by the hirer in the payment of any instalment of hire, or in the event of the breach by him of any other term in the agreement, the owner shall be entitled to retake possession.”

Halsbury in a foot-note to paragraph 882 (supra) states at p. 545 that the effect of such provisions is to make the general rule as to bailments applicable in the event of such a breach.

To the like effect is this comment in Wild, The Law of Hire-Purchase at p. 65 on the general rule: “In hire-purchase contracts, although it is submitted that the principle is the same as in simple bailment, the position is not quite so straightforward for what is inconsistent with a hire-purchase agreement which contains an option to purchase and other complicated terms designed to secure the use to the hirer of the goods as though he were the owner and yet retain ownership in the bailor.”

In my view the general common law rule is inapplicable to the facts of this appeal. Firstly I do not think that failure to pay one instalment is a breach of such character as to be entirely inconsistent with the bailment or so wholly repugnant to the bailment as to amount to a repudiation or absolute disclaimer by the bailee of the bailment so as to revest the right to immediate possession in the bailor. If such a result were intended in the case of hire-purchase it should be put on a contractual basis. Secondly the specific contract made by the parties does in clause 6 thereof to my mind rule out any such result by conferring a different remedy or right on the owner inconsistent with the application of the general rule. Thirdly the ill-fated policy of Act 137 in equating a hire-purchase agreement to a contract of sale contrary to the previous and current position of putting it firmly in the bailment family, makes it unlikely that a common law 

general rule peculiar to the case of bailment could have held its own during the effectiveness of the Act in the absence of a specific contractual provision. I would therefore agree with the finding of the trial judge that the seizure by the appellant was wrongful.

I turn then to the matter of reliefs. Since the respondent had not paid the prescribed amount of fifty per cent of the purchase price the case was outside the ambit of section 69 of the Act which set down limits on the owner’s right to recover possession and prescribed severe penalties for breach of its provisions. Outside of the statutory remedy the common law provides remedies by way of special and general damages for the consequences of wrongful seizure: see Yayo v. Nyinase [1975] 1 G.L.R. 422, C.A. and Allao v. R. T. Briscoe (Ghana) Ltd. [1975] 1 G.L.R. 31, C.A. The respondent was therefore entitled to some damages and the trial judge was right to award him damages.

Learned counsel for the parties did not, however, address any arguments to the court on the rules as to measure of damages neither did they seek to test the actual damages awarded against these rules. I should have thought that this aspect of the matter could have been profitably pursued, at any rate by counsel for the appellant. Since, however, both counsel apparently thought otherwise and no reliance was placed on rule 16 of the Court of Appeal Rules, 1962 (L.I. 218), I am in some doubt about invoking our powers under rule 32 and particularly in view of the limitation obtained in the proviso to subsection (6) or rule 8 which enjoins this court not to rest its decision on any ground not set forth by the appellant unless the respondent has had sufficient opportunity of contesting the case on that ground.

Accordingly I would go no further than to say that I would dismiss the appeal.

Sowah J.A. I agree.

Kingsley-Nyinah J.A. I also agree.