Wiyule Brothers v Stansfield Motors Ltd (Civil Cause 710 of 1987) [1991] MWHC 14 (4 July 1991)

IN THE HIGH COURT OF MALAWI PRINCIPAL REGISTRY CIVIL CAUSE NO. 710 OF 1987 l BETWEEN: WIYULE BROTHERS oooooo••·············PLAINTIFF - AND - STANSFIELD MOTORS LTD ....•..••...• DEFENDANT CORAM: MKANDAWIREP J. Chizumila of Counsel for the Plaintiff Nakanga of Counsel for the Defendant Chigaruu Official Court Interpreter Gausi (Mrs) 6 Court Reporter JUDGMENT By a specially endorsed writ of summons the plaintiff in excess of the price the plaintiff paid on the purchase seeks to recover the sum of K28 3 lll.76 which is alleged to be of a Fuso Truck then BA 2828. The plaintiff also seeks to recover Kl6 6 246.00 being special damages and general damages for the alleged wrongful taking and continued detention of the said truck by the defendant. The plaintiff also seeks a declarati6n that he is the owner of the said truck. Finally, he prays for a permanent injunction to restrain the defendant by itselfu its servants or agents or howsoever otherwise from seizing, taking possession of or detaining the said truck. On 10th December, 1984 9 Mr. B. M . K. Mhangos who is the senior partner in the plaintiff firmv went to the defendant 1 s branch in Mzuzu with a view to purchasing a truck. He dealt with the Branch Managerv Mr. Ismail Khan. Mr. Mhango settled on a Fuso Truck whope cash price was K62u950"00v so that if he had the full cash 6 he would have paid K62,950 plus 5% Govern ment Tax. Unfortunatelyv he did not have the full amount and so according to Mr. Mhango it was agreec that he purchase the truck under a hire purchase agreement. that he shou·ld pay a deposit of K20,000 plus K3vl47 " 50 represent ing 5% of the price which was Government Tax . Mr. Mhango then paid K23,147.50 and this was evidenced by receipt No. 37476v Exhibit Pl. It was further agreed that the balance would be paid in 24 months by equal quarterly instalments and that ·interest would come to Kl6,626. At the end of the 24 months the plaintiff would have paid a total of K82u723.50 for the truck. These details were pu~ on invoice no . 21813 dated 11th December, 198 4 , Exl:ibit P2. •rh,?re would be 8 equal quarterly instalments of K7, 44 7. 00 each- co oc1.mencing from March u 1985. The truck was regist2red as BA 2828 and the plaintiff It was then agreed .~/ Qa OO OO took delivery of the same . The registration book was in the name of the plaintiffu but endorsed thereon was a clause prohibi ting the plaintiff from selling without the written consent of the defendant o It was Mr , ~~ango's evidence that he unders tood this to be a hire purchase agreement , the Court that it was also the understanding of the seller that it was a hire purchase agreemento However , no such agreeme nt was drawn at that memento That would be drawn later on. The important thing was that the plaintiff had the truck he wantedo Indeed, he told • Mr. Mhango told the Court All seemed to be going on very we ll and the plaintiff Th is, I think, was highly paid seven instalments on due dates , commendable. The seven instalments were paid by cheque and these were duly receiptGd for. The cheques plus receipts were tendered in evidence as Exhibit P3 to Exhibit Pl6. Several receipts described the payments as being in payment of H. P. Le ase Hire . One referred to the payment as being a deposit and one issued by the Branch Manager himself refered to the transaction as a Lease Hire. As misfortune had itv trouble started with the very last instal~ent. The cheque for K7,447.00 was sent under covering letter dated December 1 1986, but it was returned with "Ref er to Drawer 11 that he did not know of this state of affairs until Mayv 1987. When he learnt of this, he immediately made arrangements and obtained a bank certified cheque in that amount. This was to replace the dishonoured cheque. He delivered this bank certified cheque in person at Mzuzu Branch. According to the plaintiffv this marked the final payment. But before Mro Mhango delivered this bank certified cheque 1 Mr. Khan had rang him that he had instructions to go and repossess the truck as the last cheque was dishonoured o It was on the basis of this phone cal 1 that arrangements '-'Jere made for the replacement cheque. The truck was indeed repossessed on the afternoon of 21st May, 1987u although the bank cheque had been delivered that morning. ed until 31st August, 19870 The reason being that the proceeds of the bank cheque were appropriated to a general repairs account which the plaintiff had with the defendant ' s garage. On 22nd May, 1987, the plaintiff s e nt a telegram , Exhibit P21 to ths defendant in Mzuzuo that the truck was due to load sugar at Chilumba and if the truck was not relased~ alt2rnative transport would be hired at the defendant 6 s account o The truck w~s not released and Mr. Mhango was in constant touch with the Branch Manager on the subject. The plaintiff wrote again on 22nd June, 1987, but the truck was not releas ed. The plaintiff obiccted to appropriating the bank cheque to the ~enaral acco~nt and warned the defendant that it would h ;·tve to pay th2 hire charges for alternative transport. The Fttso truck was purchased to service the plaintiff vs sister compan : .es which were 9 among other things.p engaged in the distribution o~ sugar and tuying agricultural produce. As a result of the ·:ruck 1 s contjnued detention the plaintiff did hire trucks fro::i H. A,'110s i T>~ansport, Damba ~i:rans ~· port and others and hir e charq_:: s came to ·:<:13, 883 o 10 . This is so because allowances were made for fu2l and depr e ciation ° The plaintiff also lost rebat( for not u~ing the tiuck in dist r i buting sugar. In addition , the plaintiff claims general damages for wrongful detention of the truck from ?1st May, 1987 to ~1st Augustv 1987. To hav< Inspite of this paymcntv the truck was not releas In that telegram the defendant was advised the truck rel.~asedv the plaintiff had to make arrangements for the payment of the general account. • The last limb of the plaintiff's evidence is on the nature of the transaction. Mr . Mhango testified that although this was a hire purchase agreement under which the minimum deposit must be thirty-three and a third percent of the cash pricev the plaintiff only paid K201000.00v which is less than thirty-three and a third percent. The effect of this was that the price was reduced by twenty-five percent and the transaction would be treated as a credit sale o This mean that the plaintiff should have paid K5lu517 o49, which is seventy-five percent of K62,950o00o As it the plaintiff paid K79 1 629,25 and was charged !<lE- 1 62fio00 werev interest. According to the Hire Purchase Act, he would have paid an interest of K5;726o65. As a result 1 the plaintiff ended up overpaying by K28 1 111.76 u which he is now claiming o Finally 1 the plaintiff prays for a declaration that the vehicle belongs to him and he wants the endorsement removed from the registration book. to The plaintiff also seeks a permanent restrain the defendants from seizing the vehicleo injunction truck. Mro Mhango was cross-examined at length, but he maintained that he went to the defendant 1 s branch at Mzuzu with the express intention of buying a He never went there to lease a Al 1 his discussions with Mr, Khan were centred on the truck. question of purchasing a truck. Mr. Mhango could not produce all the cash at once and so a hire purchase agreement was arranged. He emphasized talks of purchase price is clear testimony that this was a sale agreement and not a lease . He denied having authorised any of his staff to sign the alleged lease hire agreement v Exhibit Dl, and it was his evidence that he saw this document for the first time when it was exhibited to an affidavit in opposition to his application for interlocutory injunction. invoicep Exhibit P2i which that the In 1984 he was working The next witness for the plaintiff was Mr. Ranwel 1 Piyo for Sumuka Kangoli Gondwe(PW2). Enterprises Limited as a personnel manager. He was stationed at the off ices of Bazuka & Company in Blantyre o His evidence was that during lunch-hour 1 on a day hecould not remember, one of the defendant w s employees brought some documents to the of fices of Bazuka & Company. This was a lease hire agreement u Exhibit Dl. The witness was asked to sign this document as it was for the release of a truck the plaintiff was buying in Mzuzu. It was Mr. Gondwe ' s evidence that he knew the plaintiff was buying a truck in Mzuzu and he signed the documents on the assumption that Mr. Mhango had authorised the defendant to take the documents to him. As that was lunch-hour 1 he could not ring Mr. Mhango to confirm. He testified further thtit as he worked for Sumuka Enterprises for Wiyule Limited he had no authority Brothers. He had not read the document before signing and in cross-examination he said that he had never told Mr. Mhango that he had signed such a document . to sign documents I should rr ent ion that Mr. Mhango is the Managing Director of Sumu~a Enter?rjses Limited and is the sole partner of Perhaps Bazuka & Company. He is also the senior partner of the plaintiff; It is on this l:,asis that Mr . Nakanga submitted that Mr, firm. Gondwe had authority to sign on behalf of the plaintiffo On the other hand, the plaintiff submitted that this document is not the binding because Mr. Gondwe had no authority to sign it and Mr. Mhango who negotiated the transaction on behalf of the plaintiff If it becomes necessary I shall at the appropriate never saw it. time decide whether this document is binding on the plaintiff or There is v however v one thing that surprises me about the not. signing of this document. The transaction was negotiated in Mzuzu by Mr. Mhangov on behalf of the plaintiff and Mr. Khan, on One would, therefore u have expected behalf of the defendant. transaction should have been that any document governing signed in Mzuzu and possibly by the same parties 1 that is Mr. But as it happened Mr. Khan did not have Mhango and Mr. Khan. the cyclostyled forms in Mzuzu and so he authorised the document to be signed in Blantyre. What is clear therefore is that Mr. Mhango had not been shown the document that was to be signed in I Blantyre. Since the transaction was negotiated by Mr. Mhango 0 think it was a matter of paramount importance that he should have seen the document that l'7as to govern the transaction before it was signed. I wonderhow Mr. M.hango could have authorised the signing of a document he did not see. There is no evidence from Mr. Khan that it was agreed with Mr. Mhango that any of Mr. Mhango 9 s staff in Blantyre would sign the document on behalf of The defendant did not lead evidence relating to the plaintiff. The the manner in which the document was signed in Blantyre. signing of this document is therefore a matter of obscurity. Mr. Ismail Khan, DWl 0 was the principal witness for the It was he who dealt with the plaintiff. Of course he defendant. did that on behalf of the defendant in his capacity as Branch Manager. He was in the motor business for 12 years. His evidence was that Mr. Mhango wanted to lease a Fuso truck. Mr. Mhango then paid a deposit of K20,000.00. The deposit having been paid, Mr. Khan instructed his Blantyre off ice to have a Lease Hire Agreement signed. After sometime a Mr. Maciel rang him from Blantyre to say the document was signed and stamped. It was only then that the truck was released to the plaintiff. This document headed "Memorandum of Agreement of Lease of Motor Vehicle" dated 11th December v 1984, was tendered in evidence as Exhibit Dl. Under this agreement the plaintiff was to lease the vehicle for a period of 24 months at 8 quarterly rentals of K7,447.00 eachv the first of which was payable on 10th March, 1985" In this agreement the plaintiff is described as the ~1essee"r while the defendant is referred to as the "lessor~. Clause 4(a) provides that during the continuance of the agreement ownership shall lie with the defendantu while the plaintiff shall only be entitled to possession 1 use and enjoyment" Clause ll(a) provides that at t'h-e expiration of the agreement the plaintiff, who is lessee, is to return the vehicle at its own expense to the defendant v who is the lessor. Clause 12 empowers th& agreement in the event of default in th~ payment of rentals or other breach on the part of the plai~tiff . I shall in the course of this judgement refer to certain ot_her &spects of the agr.eement It. •11as Mr. Khan ff s evidence that wherever it becomes necessary. this document is the sole agreement. governing the transation and that there was no other collateral agreements. The witness denied categorically that this was 1; hire purchase agreement and the defendant to cancel (. to bring the point home he referred to the plaintiff's lette r , Exhibit D11, dated 29th May, 1987, which was headed •purchase of Fuso Truck Under a Lease Hire Agreement·. Mr. Khan further infor med the Court that the p laintiff It was Mr. Khan's evidence that the bank certified duly paid all rentals, except the last, when the cheque relating to that payment was not honoured by the bank . The plaintiff then, under his letter dated 21st May, 1987, Exhibit D3, sent a bank certified cheque. Prior to this letter the witness had by phone notified Mr. Mhango of the dishonoured cheque. Since there was default on the last instalment, Mr. Khan repossessed the truck on 20th May, 1987. There was not enough fuel in the tank to get to Mzuzu and so he bought diesel for Kl00.00 and he produced Exhibit D2 as evidence of this. cheque was not credited to the lease hire account, b ut to the general repairs account. Under Clause 14(c) of the lease hire agreement, the defendant was entitled to appropriat e the cheque in this manner. to allocate monies at its hands the way it deemed fit. meanwhile, the plaintiff was pressing that the truck b e released, but the witness maintained that there could be no release unless the general repairs account was fully paid. The plaintiff then issued post-dated cheques and sent them under cover of a letter written without prejudice. The truc k was then released, but immediately that was done the plaintiff stopped payment of the cheques. According to the witness, this was cheating. He then threatened that he was going to repossess the truck again. Before that was done, the plaintiff obtained a court order restraining the defendant from so doing. Mr. Khan denied that the defendant was liable to pay the hire charges incurred by the plaintiff during the period the truck was under detention. He also denied that the defendant was overpaid; as a matter of fact, the plaintiff has not finished paying for the truck, which means that the vehicle still belongs to the defendant. It was in the defendant's discretion In the When cross-examined, Mr. Khan conceded that although in examination-in-chief he had said that the Lease Hire Agreement, Exhibit Dl, was the only document governing the transaction, the receipt for deposit, Exhibit Pl, and the invoice, Exhibit P2, form part of the transaction. He said that the transaction was evidenced by the Lease Hire Agreement, the deposit receipt and the invoice. He also conceded that in the absence of the deposit receipt and the invoice, the lease hire agreement could not be prepared. He also conceded that the invoice, Exhibit P2, gave the purchase price as K82,723.50. Asked why the lease hire agreement talks of rentals, while the invoice referred to purchase price, his explanation was that the purchase price and rental are one and the same thing. He maintained that Mr. Mhango said he wanted to lease a truck and not to buy one. Referring to the signing of the lease hire agreement, it was Mr. Khan's explanation that Mr. Mhango must have delegated someone in Blantyre to sign on his behalf. Turning to the practice of leasing trucks -- 6 - like the plaintiff did, Mr. Khan explained that once a lessee has paid all the rentals under the agreement, he returns the truck to the lessor and the lessor gives him some cash discount for having used the truck. The truck could then be leased to another lessee. The lessee does not obtain ownership of the truck, although he has paid everything that is to be paid under the agreement. Mr. Xhan conceded that paragraph 2 of the defence stated that if the plaintiff paid the full purchase price plus interest, ownership of the truck would pass to him. His explanation was that that was a mere goodwill gesture to Mr. Mhango, but it was not agreed that ownership would pass to the plaintiff after everything was In the course of this judgment I will at the paid. appropriate time refer to some of the things this witness said 1n cross-examination. • In cross-examination he was asked if the The next witness for the defendant was Mr. Saguga, DW2. He is the defendant's Credit Controller and he has served in that capacity for the past 11 years. His evidence related to the accounts the plaintiff had with the defendant and he was quite brief. defendant has any trucks on which the full lease hires were paid. He replied that the defendant had none. contrast to what Mr. Khan said, Mr . Saguga explained that the defendant sells vehicles on lease hire and if a lessee pays all the rentals, the vehicle becomes his. Turning to this very transaction, the witness told the Court that the plaintiff bought the truck on lease hire and that on full payment the truck would be his. In sharp I now set out to consider the evidence before me. As both learned counsel have rightly submitted, the main issue for determination is what the true nature of the transaction was. The plaintiff maintains that he was purchasing a truck and this was a hire purchase agreement. On the other hand the defendant's case is that the plaintiff was not purchasing a truck but leasing a truck and this was a lease hire agreement as evidenced by Exhibit Dl. Clause 14(£) of this document states: NThis agreement constitutes the entire agreement between the parties hereto and the parties hereby declare that there are no collateral Agreements or undertakings which refer to or affect or which are in any way related to this Agreement whether directly or indirectly ...... N This clause is clearly very wrong and very misleading. As a matter of fact several other clauses are misleading. The impression created by this lease hire agreement, Exhibit Dl, is that the plaintiff got this truck from the defendant on lease without paying anything whatsoever. Clause 1 states that: . ·The Lessor shall let to the Lessee and the Lessee shall take and hire from the Lessor for a period of 24 months from the 11th day of December One thousand nine hundred and eight four ......... - It is in this respect Clause 2 states that there will be quarterly rent of 8 x K7,447.00; then follow various other clauses dealing with delivery of the vehicle, ownership, e tc. etc. Nowhere does the agreement mention a deposit of K23,147.50 and nowhere is the invoice, Exhibit P2 referred to. that this document is misleading and that is particularly so when one considers the p r ovisions of clause 14(f). When pressed in cross-examina t ion Mr. Khan conceded that the deposit receipt, Exhibit Pl, and the invoice, Exhibit P2, formed part of the transaction. He went on to say that the lease hire agreement, Exhibit Dl, could not be prepared in the absence of Exhibit Pl and Exhibit P2. Mr. Khan in cross-examination, these documents formed part of the transaction, why were they excluded in the agreement? tnink that this goes to support the plaintiff's case that the so-called lease hire agreement does not represent the true nature of the transaction. If, as conceded by I • Let us for a moment look at what happened in Mzuzu. Mr. Mhango went to see Mr . Khan, the branch manager. no doubt in my mind that Mr. Mhango went there with the express intention of buying a truck. He made this quite clear to Mr. Khan who quoted the price. Mr. Mhango did not have the full amount and so he paid a deposit of K23,147.50 and a receipt, Exhibit Pl, was issued. this receipt would form part of whatever transaction that would be entered into. Mr. Khan then prepared an inv-0ice, Exhibit P2, which gave the total purchase price. Mr. Khan conceded that this document did record the purchase price. Perhaps I must set out the relevant parts of this document. It is common knowledge th.at I have BA 2828 K t New Fuso Truck No.107023 62,950 . 00 Chassis No.50093 5% Government Tax 3,147.50 (Quarterly instalments) 24 months interest 16,626..:.. QQ K82,723.50 It is abundantly clear that at this stage of i:he trans.action Mr. Mhango was buying a truck and this documen~ set out what If Mr. Mhango had the full c z1sh he wa s going was to be paid. to pay K62,950.00 plus government tax. Since he did not. have • It is clear In these circumstances I very much this money he would have to pay interest as well bringing t h e total to K82,723.50. Mr. Khan conceded that this was the position. What remained was to draw a formal agreement to embrace Exhibit P2. According to Mr. Mhango it was agreed that a Hire Purchase Agreement would be drawn. According to Mr. Khan this was a lease hire. What is clear however is that Mr. Khan did not have any standard form agreement to show Mr. Mhango. Mr. Khan said these were cyclostyled documents but he did not have any to show Mr. Mhango, but he authorised his office in Blantyre to have one signed. therefore that Mr. Mhango did not know what type of agreement was signed in Blantyre. doubt if Mr. Mhango authorised M.r. Gondwe to sign this document whose terms are fundamentally different from the purport of Exhibit Pl and Exhibit P2. fundamentally different because Exhibit P2 gave the purchase price as K82,723.50 and having paid deposit of K23,147.50 the balance was K59,576.00 which, according to Exhibit P2, was to be paid in quarterly instalments in a period of 24 months and yet under Exhibit Dl the plaintiff was to pay rent . Instalment and rent are entirely different things - see Jowitt's Dictionary of English Law, second edition, volumes l and 2. When the plaintiffs paid the deposit of K23,147.50 they were paying towards the purchase price and yet under Exhibit Dl they ended up paying rentals. Price and rentals are not the same thing and one cannot pay both in the same transaction. confusing matters or he was deliberately concealing the obvious when he said that price and rent are one and the sa:mQ thing. I am inclined to think that either Mr. Khan was I am saying I think that I should now turn to the question of ownership. The registration book is in the name of the plaintiffs, Wiyule Brothers. There is, however, an endorsement in the following words: -Not to be sold without the written consent of Stansfield Motors Ltd., P. O. Box 151, Mzuzu-. In his evidence Mr. Khan said that the vehicle belonged to the defendant and that is why there was that endorsement. The endorsement would only be removed when the plaintiff finished paying for the vehicle. At that stage the vehicle would belong to the plaintiff. The position, therefore, was that the plaintiff enjoyed possession and use of the vehicle, while ownership was with the defendant. Ownership would pass to the plaintiff when everything was paid for. his evidence, Mr. Khan said that it was never intended to pass ownership to the plaintiff. The vehicle would all throughout belong to the defendant even though t,e plaintiff finished paying all the rentals. Mr. Khan was the type of witness who kept on changing his evidence to suit the moment. He said in lease agreements, ownership never passes to the lessee. In this instant, even if the plaintiff f i nished paying all the rentals, the vehicle would come back to the defendant and the In another breath of same vehicle would yet be leased to another lessee. When pressed in cross-examination, he said in this particular case the ownership in the vehicle would pass to the plaintiff merely as a goodwill gesture to Mr. Mhango. Exhibit Dl seems to be contradicting itself; while Clause 4(a) seems to suggest that ownership would pass to the plaintiff at the determination of the agreement, under Clause 11 ownership would never pass to the plaintiff even after paying all that was to be paid~ Under this clause the lessee is under an obligation to return the vehicle to the lessor at his own expense. On the same subject of ownership, paragraph 2 of the defence states: NThe defendant states that the plaintiff leased the said truck for 24 months and, in terms of the Memorandum of Agreement thereof the said truck remained the property of the defendant until the plaintiff paid off the agreed price and interest.# I find this paragraph to be very interesting, because the Memorandum of Agreement does not mention price, neither does it mention interest. The agreed price and interest appear in the invoice, Exhibit P2, which the alleged agreement sought to exclude. What then was the true nature of the transaction? case of Goan Social Club vs Bobillier and G. F. Ponson Ltd. (1961-63) ALR Mal.190: In the #The plaintiffs brought an action against the defendants for the recovery of certain chattels, alternatively the value of the chattels, and for damages for the detention and conversion of the chattels. The plaintiffs, a social club, alleged that the defendants had agreed to buy a billiard table from them, payment for which was to be made on a monthly basis. A representative of the defendants took delivery of the table having signed a bill of sale and paid the first instalment. The defendants failed to pay subsequent instalments even after having been repeatedly asked to do so by the plaintiffs. The table was seized by the plaintiffs allegedly under the bill of sale. argued for the defendants that the transaction was in fact one of hire-purchase and not a sale and that, therefore, the plaintiffs had no right to seize the table. N It was These are the brief facts as given in the head note. The Court carefully considered all the ~vidence before it and held that it was entitled to investigate the true nature of the transaction. The Court found that the transaction was in fact an instalment sale agreement and not a bill of sale. The Court followed with approval the dictum of Maughan, L. J. in the case of the Lonegrove ex Applestone (1935) 1 Ch.464: - l J - ·rt is beyond all doubt ~hat in a case such as this one does not look mer2ly at the form of the document which is alleged to be a bill of sale. The true nature, not the form of the transaction, must be regarded, and if the document itself in effect is only a cloak for what is really a mortgage of chattels or a pledge of chattels, the form may be disregarded.- • In an earlier case of Re Watson exp, Official Receiver (1890) 25 QBD 27 Maughan, L. J. said: ·whether a transaction purporting to be a sale and purchase of goods is no more than it appears to be on its fact, or whether it really is a loan or security, and therefore a document which might be hit by the Bills of Sale Acts, is a question to be determined by ascertaining the true intention of the parties. That true intention may appear either from the document itself, because although it uses the language of sale and purchase, it might very well on its mere words appear to be nothing other than a loan on security or it may appear from any collateral agreement or other document which would show that the true intention was a loan on security, or finally the fact might be ascertained by parol evidence which would suggest some fraud on the part of the person who is either the vendor or the borrower, whichever view the Court should take.· Similarly, this Court is entitled to go beyond Exhibit Dl It appears clear to me 'go' the plaintiff's express intention was and investigate the true nature of the transaction. This I intend to do by carefully examining the parol evidence, learned counsel's submissions and all the documents that were tendered. Mr. Khan agreed that the purchase price was K82,728.50 as evidenced by Exhibit P2. He told the Court that if Mr. Mhango had sufficient money he would have bought the truck at K62,950.00 plus Government Tax. Having paid a deposit of K23,147.50, the balance of K59,576.00 was to be paid in eight quarterly instalments in 24 months. significant that total rentals to be paid under Exhibit Dl came to the same total of K59,576.00. that from the word to buy a truck and the defendant's intention was to sell a truck. This is further evidenced by the letters the plaintiff wrote when sending the instalment cheques. and there are more than eight of them, the transaction is described as •purchase of Fuso Truck by Wiyule Brothers· and the defendant raised no objection at all. Most of the payments were receipted as ·e. P. Lease Hire·. Even after Exhibit Dl was signed, Mr. Khan continued to offer to sell the truck to the plaintiff outright and a discount of 2½%. The plaintiff reacted to this offer and made an immediate payment of K7,500.25, leaving a balance of K33,876.00, but money was not easy to come by and so instalments continued. was no intention to sell from the very beginning, then surely Mr. Khan would not have made an offer of outright sale in the In these letters, If there It is middle of instalments after Exhibit Dl had been signed. As for the question of ownership, it is again clear from the evidence that the intention was that ownership would pass to the plaintiff when all the monies were paid. Mr. Khan kept on changing his evidence at will to suit the moment, but he finally conceded that after making all payments ownership would pass to the plaintiff. Mr. Saguga was quite clear on the point. On a very carefull consideration of the documents before I do not want to go that far for I do not It was in effect a hire purchase agreement coming me, including the alleged Memorandum of Agreement to Lease a Motor Vehicle, as well as parol evidence and learned counsel's submissions, I come to the conclusion that this was not a lease hire. within the Hire Purchase Act as defined under Secti o n 2. The plaintiff referred to the case of Snook vs London and West Riding Investments Ltd. (1967) 2 QB 786 in which Diplock, L. J. defines NshamN. think that the defendant's intention was to deceive or defraud the plaintiff. dealer of high repute. All I can say is that the most unfortunate part of this transaction is that while it was negotiated and agreed in Mzuzu, Exhibit Dl was signed in Blantyre. The circumstances in which this document was signed are, to say the least, obscure. As it happened, this document did not record the true nature of the transaction and did not represent the real intention of the parties. Exhibit Pl and Exhibit P2 formed the very basis of the transaction agreed by the parties in Mzuzu and yet Exhibit Dl sought to exclude these vital documents. Indeed, the defendant is a motor vehicle Having found that in reality this was a hire purchase agreement, I must now look at the consequences that follow. It is in evidence that this truck, BA 2828, was seized by the defendant. However, the date of such repossession is in dispute. According to the plaintiff, it was on 21st May, 1987, while the defendant says it was on 20th May, 1987. On the evidence before me, I pref er th.e plaintiff, s evidence. Paragraph 11 of the statement of cLaim clearly pleads that the vehicle was repossessed on 21st May, 1987. This is not disputed in the defence. Paragraph 9 of the defence does refer to paragraph 11 of the statement of claim, but merely explains why the truck was repossessed. Exhibit D2 is indeed suspicious and I disregard it. fact that this truck was repossessed on 21st May, 1987. common knowledge that despite pressure from the plaintiff to have the truck released, the same was not released until 31st August, 1987, which means that the defendant detained the truck from 21st May to 31st August, 1987. I, therefore, find it as a It is The immediate question that follows is whether the defendant was entitled to repossess the truck and detain it. It is clear from the evidence of Mr. Khan that the defendant repossessed the truck because the last instalment of K7,447.09 was not honoured by the bank. Repossessi o n went ahead even - .1.. L --· In repossessing the truck the though the plaintiff replaced the dishonoured cheque with a bank certified cheque. By the time the repossession took place, the plaintiff had paid well over fifty per cent of the agreed purchase price. defendant did not comply with the provisions of section 19(1 ) of the Hire Purchase Act. The repossession and continued detention were, therefore, wrongful. The defendant well knew that this was a profit-making vehicle and that it was involved in the distribution of sugar in the North among other duties. The plaintiff made it quite clear that if the truck Wd S not released, then they would hire alternative transport and carry sugar and other commodities. The defendant must certainly be liable for these hire charges. The plaintiff sufficiently proved the hire charges in the sum of Kl3,883.10; however, an allowance was made for fuel and depreciation and so a sum of Kl0,640.00 was claimed. As indicated earlier in this judgment the plaintiff hired from H. Amosi Transport, Damba Transport and various other transporters. Various documents running from Exhibit P28 to Exhibit P47 were tendered in support of the hire charges. I find this to be a proper claim and so I enter judgment for the plaintiff in the sum of Kl0,640.00. addition to this, the plaintiff suffered loss of profits by way of loss of rebate for not using the truck in June and July, 1987. This totals to KS,606.00 and I enter judgment for the plaintiff in that amount. In I now turn to the price and interest and the plaintiff is I must claiming a refund of K28,lll.76 as an overpayment. confess that the calculations are a little complicated, but I am much indebted to the plaintiff who made detailed calculations in his written submissions. The plaintiff's contention is that the provisions of section 24(l)(a) of the Hire Purchase Act were contravened, in that a deposit of K20,000.00, representing 31.77% of the cash price, was paid. According to the plaintiff, the Fuso truck comes under category NGN of the Schedule and the initial deposit to be paid should have been thirty-three and a third per cent of the cash price. As a result of this alleged violation of the Act, the transaction became a credit sale and the cash price reduced by twenty-five per cent in terms of section 24(3). so far as the price is concerned, the plaintiff has got his figures wrong. To begin with, the Fuso truck cannot be classified under -GN as any other goods. The truck should appropriately come under category ·c- and the initial deposi t to be paid must be twenty per cent bf the cash price. What was paid represented 31.77%, so that section 24(l)(a) was no t violated. Even if the truck were to be classified under •GN, again there would be no violation, as the initial deposit payable must be 30%. This is less than what was paid. follows, therefore, that section 24(3} would not apply since there was no violation. It In As for interest or finance charge, the plaintiff was indeed overcharged. However, violation of interest or finance charge does not render a transaction a credit sale. The plaintiff was charged an interest of Kl6,626.00. Mr. Khan made no attempt whatsoever t o explain how this figure was arrived at. Under the Hire Purchase (Finance Charge) Notice the interest payable is 15.69% and this is on a reducing balance. The total interest payable is calculated at K5,726.65 as follows: #Cash price Less Depo sit Balance of purchase price after payment of deposit Rate of per centum allowed by the Act Instalment K62,950 20,000 42,950 7,447 Interest on 42,950 March 1985 = 15.69 x 42,950 x 3 100 X 12 = Kl,684.71 Hence on reducing basis -7447 - - -7447 - - -7447 -7447 -7447 - - Interest on 42950 = 1684.71 Interest on 35503 = 1392.60 Interest on = 1100.60 Interest on 20609 = 808.39 Interest on 13162 = 516.28 Interest on 5715 = 224.17 5726.65 1-11GH cou'i.,. 0? ,.,, '?9z .-- ,~·,,.:.;:.....,.,,.._ ... _~- ., .. ,.,, H . ) •' The total purchase price was, therefore, K62,950.00 + KS,726.65 = K68,676.65. The plaintiff has paid a total of K79,629.25 including Government Tax against a purchase price of K68,676.65. The plaintiff is, therefore, entitled to a refund of the excess payment which is Kl0,952.60. therefore, enter judgment for the plaintiff in that amount. award the plaintiff a further Kl,000.00 as general damages. This means that the truck is fully paid for and ownership, therefore, passes to the plaintiff and the restrictive endorsement must be removed from the registration book forthwith. The end result is that the defendant cannot lawfully seize the truck. I, I -~ In all, I enter judgmen t f o r the plaintiff in t he to tal sum of K28,198 .60. The defendant is to pay the c0stK of these proceedings. PRONOUNCED in open Court this 4th day of July, 1991, at Blantyre. • M. P. Mkandawire JUDGE ~ ------ --- 1--\ COURT O F y,.\C, - - - - - li-1 • 0 2 JU I. 1993 • ~LIBRARY _ / .;;:.;..; . ...,:_;,:_··=~--· NAKANGA: instructions to appeal. My learned friend to make an undertaking to refund costs. I apply for a stay of execution as I have MHANGO: I would suggest that separate application be made. COURT: Application is to be separate. NAKANGA: A decision for the interim. COURT: is made. with the Court within 7 days from today. In that case I stay execution till another application In the meantime the money to be paid is to be lodged ,JUDGE