Shortt v Searle (Civil Suit No. 107 of 1952) [1953] EACA 25 (1 January 1953)

## ORIGINAL CIVIL

### Before CONNELL, J.

### R. W. SHORTT, Plaintiff ν.

# SERGEANT SEARLE, Defendant Civil Suit No. 107 of 1952

## Contract—Hire-purchase of motor-car—Sale by hirer to dealers with subsequent sale to customer—Original seller signing transfer of ownership in name of hirer—Whether holding out—Whether estopped from setting up title.

The plaintiff entered into a hire purchase agreement relating to a motor-car with a certain Corporal Cornforth. The plaintiff handed over possession of the car and signed an authority addressed to the Inland Revenue requesting and authorizing the transfer of ownership of the car into the name of the hirer for the purpose of issuing a road licence. A year later and before completing the payment of instalments, the hirer sold the car to Rehman Bros. a firm dealing in second-hand cars, exhibiting the licence in his name as proof of ownership. The dealers thereupon sold the car to the defendant who purchased it in good faith having been shown the copy of the Inland Revenue form signed by Cornforth purporting to transfer the ownership to the dealers. The defendant did not become aware of the hire-purchase contract until after completion of the purchase. The plaintiff then sued the defendant for return of the car or its value. The defendant pleaded estoppel, in that the plaintiff had represented to the Central Registrar of Licences under the Traffic Ordinance that he had transferred the ownership of the car to Cornforth and had so caused a licence to be issued in the name of Corporal Cornforth, and that the latter had so been enabled to represent to the dealers that he was owner by producing the licence in his name and had so held out that the hirer was the owner.

Held (21-8-52).—By signing the transfer of ownership the plaintiff held out to anyone who placed reliance on its authority that the hirer was the owner of the car; and the plaintiff must be held to be estopped from setting up his title against the defendant.

Suit dismissed.

Cases cited: Duder v. Baillie, (1952) K. L. R. 27; Commonwealth Trust Ltd. v. Akotey, (1926) A. C. 72, 76; Fuller v. Glyn, Mills Currie & Co., (1914) 2 K. B. 168; Lickbarrow v. Mason, 2 T. R. 63, 70; 100 E. R. 35.

Shackleton for plaintiff.

#### C. A. Patel for defendant.

JUDGMENT.—On 4th October, 1950, plaintiff, Mr. R. H. Shortt, entered into a hire-purchase agreement with Corporal R. Cornforth concerning a Ford Prefect car, H 8110, by which Corporal Cornforth was entitled to become the purchaser of the car on a payment of Sh. 5,000. Cornforth paid some instalments but began to default after the third or fourth month. The balance due from Cornforth to-day is Sh. $1,700$ .

In October, 1951, Cornforth purported to sell the car to Rehman Bros., in the same month Rehman Bros, purported to sell the car to Sergeant-Major Searle, the defendant.

The material facts leading up to these sales are as follows: —

Shortly before the hire-purchase contract was entered into the plaintiff had met Cornforth in the offices of Rehman Bros. in Nairobi. Rehman Bros. were recognized second-hand car dealers. Mr. Abdul Raoof, a partner in Rehman

Bros., showed Mr. Shortt a copy of his hire-purchase forms and sent Cornforth to the *East African Standard* to buy two copies. Mr. Raoof does not know whether, in fact, a hire-purchase contract was entered into between the plaintiff and Cornforth, but there is evidence, which 1 accept, that he advised Mr. Shortt that it would be better for him to register the car in the joint names of the plaintiff and Cornforth.

Shortly afterwards, Mr. Shortt, signed the usual authority (exhibit A) for the Inland Revenue and requested and authorized the transfer of the ownership of the car into the name of Cornforth; he also wrote to the Insurance Company informing them that the car was going to Cornforth and that he (the plaintiff) would not be paying the premiums. The reason for the plaintiff taking these steps was that he trusted Cornforth and he thought that was what was normally done.

Mr. Raoof was away in Pakistan when the car was bought by Rehman Bros. \_but he gives evidence of general custom of second-hand car dealings; normally, it is their custom not to transfer ownership into the purchaser's name (in hirepurchase contracts) unless and until the purchaser has paid in full; the practice being to make the registration entries and insurance policies jn joint names. There is evidence also that the road licence would be issued by the Revenue Department in whosoevers' name or names appeared on the registration form as the purchaser.

The defendant, Searle, testified that at the end of September, 1951, be - approached Rehman Bros. and, as a result of his negotiations, he purchased from them the Ford Prefect, giving Rehman Bros. £120 plus a Vauxhall in exchange. **He** made inquiries in whose name the car was registered and at Rehman Bros. office he saw the duplicate registration form, which he thought was dated 15th September, 1951, but it is admitted it was dated 5th October, 1951, in which Cornforth purported to transfer to Rehman Bros.

It should be explained that Searle purchased from Rehman Bros. in October. (The stamp of the Revenue authorities on the form is dated 13th October, though in actual fact Searle had inserted the date as 2nd July so as to make it appear that he would have had the car for two years when he went on leave in 1953.) Searle also stated that he saw the licence for 1951 in the name of Cornforth. According to Searle, Rehman Bros. gave him every indication that they were the true owners of the car and had authority to sell themselves: he had no reason to suspect that Cornforth had no authority to transfer the car to Rehman Bros. Re first came to know about any hire-p-urchase contract on 28th February, 1952.

So far as Searle is concerned I am satisfied that he acted in entire good faith in purchasing the car.

So far as Rehman Bros. are concerned, Mr. Raoof was away in Pakistan when Rehman Bros. purchased from Cornforth and, no doubt, Mr. Raoof did say in answer to a question by the court that if Cornforth had asked him to buy the car in September, 1951, he would have asked Cornforth if he had paid Mr. Shortt in full. In my view, however, that admission does not affect the case one way or the other and I must decide the case on broad principles.

The main issue in the case (as is outlined in para. 3 of the defence) is whether the plaintiff is estopped from saying that he is the true owner and from denying that Corporal Cornforth was at a. II material times the owner of the car. The recent case of *Dueler v. Baillie,* (1952) 25 **K. L. R.** 27 was quoted to me by Mr. Shackleton in support of his argument that the plaintiff should be entitled to judgment. In that case, however, with which I respectfully agree, there was

an important difference, in that, when Baillie bought the car from Lawrie, he was unaware of the fact that the plaintiff had notified the Registrar of Motor Vehicles that he had transferred his ownership to Mr. Lawrie, Mr. Justice Thacker stated: "estoppel cannot arise on the notification by the plaintiff to the Registrar of Motor Vehicles because the defendant was not aware of that fact when he bought the car. He came to know of it only after he had bought the car".

Mr. Justice Thacker also came to the conclusion, with which again I respectfully agree, that no estoppel arose by virtue of the letter to the Insurance Company.

The vital difference, of course, between the two cases is that, in the present case, the defendant did in fact examine the copy of the transfer form signed by Cornforth and transferring to Rehman Bros. I believe the defendant when he states he did see this copy and when he states he saw the licence in the name of Cornforth. It seems to me therefore that the question of estoppel does not arise in this case and I need only quote the two cases cited by Mr. Patel, Commonwealth Trust Ltd. v. Akotey. (1926) A. C. 72 and Fuller v. Glyn. Mills Currie & Co., (1914) 2 K. B. 168. In the former case Lord Shaw at p. 76 quotes Ashurst, J. in Lickbarrow v. Mason, 2 T. R. 63, 70; 100 E. R. 35: "whenever one of two innocent persons must suffer by the acts of a third, he who has enabled such third person to occasion the loss must sustain it". In the latter case the headnote reads as follows: "... Held, (2) that the plaintiff was estopped from setting up his title as against the defendants, having left the certificates in the hands of the stock-brokers in such a condition as to convey a representation to any person who took them from the stockbrockers that they had authority to deal with them".

To my mind, by signing the transfer of ownership as he did, the plaintiff held out to anyone who placed reliance on that authority that Cornforth was the owner, and I think that as such a holding out would enable Cornforth to sell the car (as he did) to Rehman Bros. and would enable Rehman Bros. to sell to the defendant, under those circumstances I must hold that the plaintiff is estopped from setting up his title against the defendants. The case must, therefore, be dismissed with costs.