IN THE HIGH COURT OF LAGOS STATE
ON MONDAY, THE 16TH DAY OF MARCH 1970
INCAR (NIGERIA) LIMITED ................................................ PLAINTIFFS
ELIAS BUS TRANSPORT LTD .................................................. DEFENDANTS
BEFORE: Dosunmu, J
The plaintiffs brought an action against the defendants claiming the sum of £8,597.17s.4d. being the unpaid Hire Purchase price of four buses, or in the alternative £8,569.17s.4d. being special damage in consequence of the breach of the terms of the Hire Purchase Agreements by the defendants.
The plaintiffs, a Company dealing in motor buses entered into Hire Purchase Agreements with the defendants who are Transporters. Under the agreement the purchase price of each of the four buses was £6,966. The period of hiring was eighteen months and the rental was £387 per month.
The defendants paid only three instalments in respect of each bus and fell into arrears for two months. The plaintiff thereupon re-possessed the buses and thus terminated the Agreement and brought an action against the defendants.
(1) On the evidence it was clear that the defendants broke the Hire Purchase agreements by falling into arrears for two months.
(2) Where the hirer wrongfully repudiates the Hire Purchase Agreement by not paying the instalments due, and he evinces an intention not to pay the future ones and the owner resumes possession, and therefore terminates the Agreement, the owner can claim the arrears of instalment due prior to the termination as well as damages arising from the repudiation of the contract.
(3) In this case the defendants paid three instalments and defaulted in respect of 2 instalments when the plaintiffs resumed possession. There had been nothing on the part of the defendants from which it could be concluded that they repudiated the contract of hiring. Consequently the claim of the plaintiffs must be limited to the outstanding instalments at the time of the determination of the Agreements. But this was not what the plaintiffs claimed as per the writ and statement of claim.
(4) A claim for arrears of instalment due and unpaid is simply a claim for debts due under the Hire Purchase Agreement and not damages following its breach, and should be sued for as such.
(5) Owners undoubtedly have the right to damages for breach of contract even thought the damages are not mentioned in the agreement unless there is something which expressly or by implication excludes their right to damages on breach.
In this case, upon true construction of the Agreements, Clause 8 by implication excludes the plaintiff's right to damages.
Cases referred to:
Attorney-General v. Pritchard and ors.44 T.L.R. p.44
Overstone Limited v. Shipway (1962) 1 A.E.R. p.52
Yeomen Credit Limited v. Waragowski (1961) 3. A.E.R. 145.
Financings Limited v. Baldock (1963) 1 A.E.R. 443
Boutros Abdallah & Michael Said Achou SC. 257/68 delivered on 19/12/69
Fabunmi, for the Plaintiffs
F.R.A. Williams, for the Defendants
Dosunmu, J.:-In their Statement of Claim, the plaintiffs claim as follows:-
(a) £8,596.17s.4d. being the unpaid Hire Purchase price of four OM Trigotto buses.
(b) Or in the alternative £8,569.17s.4d. being special damage in consequence of the breach of the terms of Hire Purchase Agreements by the defendants.
(c) General damages.
From the pleadings, it is not very clear in respect of what the plaintiffs are claiming, and how in particular, the amount of £8,569.17s.4d. claimed as special damage is made up. The evidence, however, runs thus:-
The plaintiffs, a Company dealing in motor buses entered into Hire Purchase Agreements with the defendants who carry on business as Transporters. The subject matters of the Agreements are 4 OM Trigotto buses bearing registration Nos. LN 8094, LN 8095, LN 8096 and LN 8097. The Agreements dated 30/8/67 are practically the same in each case and they were admitted as Exhibits "A", "B", "C" and "D", respectively. The hire purchase price of each bus is £6,966 which includes interest charges. The period of hiring is 18 months and the rental is £387 per month, commencing from 30/9/67. There is an option to purchase in Clause 10 of the Agreements. Since the conclusion of the Agreements and the delivery of the buses to the defendants, the defendants paid only 3 instalments in respect of each bus and fell into arrears for 2 months, namely, January and February, 1968.
In a letter date 4th March, 1968, exhibit N, plaintiffs wrote to the defendants asking for the payment of these arrears, threatening also that in default of payment they would re-possess the vehicles in accordance with Clause 8 of the Hire Purchase Agreements. When the defendants neglected to pay, the plaintiffs duly re-possessed bus LN 8095 and LN 8097 on the 19th of March, 1968, and LN 8094 and LN 8096 on the 21st of March, 1969, and thus terminated the Agreements. After doing this, the plaintiffs again wrote the defendants on the 22nd March, 1968, exhibit O giving them time to pay up, or they might be called upon to make good any loss resulting from the resale of the buses. Again the defendants did nothing about this, and the plaintiffs proceeded to re-condition the said vehicles at a cost of £2,486 and later re-sold them to the Federal Ministry of Defence on the 19th April, 1968, at the price of £4,300 each, thus realising a total of £17,200 on all the four. The plaintiffs have now instituted the present action against the defendants. As I said earlier, it was only at the final address of the plaintiffs' Counsel that it became clear that the special damage that is being claimed is the unpaid arrears of instalment for 3 months plus interest at 20 per cent, all totalling £5,959. But throughout the proceedings, it was far from being clear how the plaintiffs arrived at the amount which was being claimed as unpaid Hire Purchase price of the 4 buses.
In Attorney General v. Pritchard and ors. reported in 44 T.L.R. page 44 on a claim by the owner of furniture for unpaid instalments, it was held that as the agreement with the hirer was for the sale of the furniture, the property not to pass to him until all the instalments had been paid, and the owner had resumed possession of it and dealt with it in such a way as to put it out of his power to return it to the hirer, he was disentitled from claiming part of the purchase price and the proper remedy was to sue for damages for breach of contract.
It seems to me, therefore, that the claim for the unpaid hire purchase price is mis-conceived. As for the claim for breach of contract, the term of the hiring breached would appear to be Clause 6(f) which provides as follows:-
(f) Punctually pay all rents also all amounts due for repairs and/or supply of parts and/or accessories & c and other outgoings due and payable in respect of the said Motor vehicle may for the time being be placed."
On the evidence it is pretty clear that the defendants broke the Hire purchase Agreements by falling into arrears for 2 months. The legal position seems to be this, where the hirer wrongfully repudiates the Hire Purchase Agreement by not paying the instalments due, and he evince an intention not to pay the future ones and the owner resumes possession, and therefore terminates the Agreement, the owner can claim the arrears of rent due prior to termination as well as damages arising from the repudiation of the contract. In Overstone Ltd, v. Shipway (1962) 1 A.E.R. page 52, the facts are as follows:-
"Under a hire purchase agreement dated 10th September, 1959, the total hire purchase price of the vehicle hired thereunder was £452.13s. being £73 deposit plus thirty-six monthly rentals of £10.10s.11d. The cash price of the vehicle was £365. The hirer paid the £75 deposit, but the vehicle having proved unsatisfactory, he paid no instalments.
In January, 1960, the owners retook possession of the vehicle under the agreement as they were entitled to do. They then commenced proceedings in the county court and recovered judgment in respect of the four outstanding instalments. In March, 1960, they sold the vehicle for £265. They later put forward the present claim in the county court for £48.15s.4d being damages for breach of contract, made up as follows: hire purchase price £452.13s. less deposit paid by hirer £73 instalments paid by hirer £42.3s.8d. rebate of charge £23.14s. and proceeds of resale £265. The hirer contended that the owners were debarred from bringing the present proceedings by virtue of the county courts Act, 1959, section 69 or, alternatively, on the ground of estoppel per rem judicatam in that the damage claimed in the present proceedings and the arrears of instalments recovered in the previous proceedings constituted one cause of action which it was unlawful for the owners to divide. Held: (i) (Willmer, L.J., dissenting) the owners' cause of action for arrears of instalments for the months before they terminated the contract for the defendant's breach was debt, not breach of contract, therefore, they were not prevented by section 69 of the County Courts Act., 1959, or estopped from suing subsequently for the defendant's breach of contract, and were entitled to recover damages."
I refer to part of the judgment of Davis, L.J., at page 61 and it goes thus:-
"Some assistance on this question is, I think to be derived from an authority which was cited to us, though really on quite a different part of this cae. Moss' Empires, Limited V. Olympia (Liverpool) Limited The facts of that case are miles removed from those in the present one. There the lessees of premises had covenanted to spend so much per year on repairs to the demised premises, or to pay an equivalent sum to the Lessors. The lessees defaulted in that obligation and were sued for the sum of money. The question then arose whether that was debt due under the lease, or whether the proper claim was damages for breach of the covenant to repair, when, of course, quite different considerations would arise. I need refer to only one sentence in the speech of Lord Atkin, which, I think, applies completely to the facts of this case. The learned Lord said: 'I think... that the sums claimed in this action are not damages, but debt'. In my opinion, that applies here. The sums that were claimed in the first action and had fallen due before the contract was terminated were instalments that were due under the contract."
The case follows the same principle and measure of damages as laid down in Yeomen Credit Limited v. Waragowski (1961) 3 A.E.R. 145. It is noteworthy that in the latter case the claim for damages was made in one and the same action as the claim in respect of the instalments that were in arrears.
I now come to the case of Financings Limited v. Baldock (1963) 1 A.E.R. 443, where the two earlier cases were distinguished. The headnote of it reads as follows:-
"Hire Purchase-Damages for breach of contract-Hirer's breach by not paying two instalments-Termination of agreement by owner-Goods re-sold by owner-No repudiation of contract by hirer-Measure of damages."
"Held: As there had been no repudiation of the hire purchase agreement by the defendant, the plaintiffs could recover only (cl. (11)(a) of the agreement being void as imposing a penalty) the damages suffered by them for his breaches of the agreement prior to the date of its termination; accordingly they could recover only the amount of two monthly instalments (£6.1s.4d) together with interest at ten per cent."
Lord Denning, M.R., at page 446 of the report said, "the repudiation being itself as breach which took place before the termination, it is within the class of breaches for which the owners can recover damages according to the principle which I have already stated. If, however, there is no repudiation but simply as here, a failure to pay one or two instalments (the failure not going to the root of the contract and only giving a right to terminate by virtue of an express stipulation in the contract), the owners can recover only the instalment in arrears, with interest, and nothing else; for there was no other breach in existence at the termination of the hiring."
The facts of this case show that the defendants paid 3 instalments and defaulted in respect of 2 instalments when the plaintiffs resumed possession as they were entitled to do. There has been nothing on the part of the defendants from which I can conclude that they repudiated the contract of hiring. They were only slightly in arrears. It seems to be, therefore, that the claim of the plaintiffs will be limited to the outstanding instalments at the time of the determination of the Agreements. But as it was pointed out by Chief Williams for the defendants, this is not what the plaintiff's claimed as power the writ and the Statement of Claim. A claim for arrears of instalments due and unpaid is simply a claim for debts due under the Hiring Agreement and not damages following its breach. Chief Williams drew the attention of the court to the judgment of Supreme Court in Boutros Abdallah & Michael Said Achou. SC. 257/68 delivered on the 19th December, 1969. In that case, it was held that past salary, etc., are not damages claimable in an action for wrongful dismissal from employment. The reasoning of the court was that such past salary, etc., which had been earned already under the Contract were debts and should be sued for as such. In my opinion, the same applies here. This, I believe, is enough to dispose of the plaintiffs' claim; but it seems to me that on close examination of the Hire Purchase Agreements, claim for damages seems to be excluded by implication. Clause 8 of the Agreement specifically sets down the relief's open to the plaintiffs on the termination of the hiring and resumption of possession of the vehicles. It provides as follows:-
8. "Should the Hirer not observe and perform the foregoing terms provisions and stipulations or any one of them of if he dies or executes as assignment for the benefit of his creditors of if an execution or distress be levied or threatened to be levied upon the said Motor Vehicle or if the Hirer be a Company should a petition to wind up be presented or a resolution for voluntary liquidation be passed the owners may forth-with determine the hiring without notice and may forthwith seize and take possession of the said Motor Vehicle wherever the same may be and may sue the hirer or his Representative (1) for all amounts payable in respect of the said Motor Vehicle for arrears of rent as set forth in Clause 2 hereof (2) for one half of the amount of any monthly payments which but for such determination would, therefore, have become payable under Clause 2 thereof (3) for cost of repairs and/or parts & c, and (4) for necessary and proper expenses incurred by the Owners in the exercise of the powers conferred on them by this Agreement or in respect of the failure of the Hirer to observe and perform his obligations to the Owners hereunder and the owners shall have the right to exercise the powers of a distaining landlord and that wheresoever the said Motor Vehicle be stored and retake possession of the said Motor Vehicle and this Agreement shall forthwith be at an end except in so far as the aforesaid amount in respect of rents and other sums due as aforesaid are concerned."
In Overstone Limited Shipway, (supra,) Holroyd Pearce, L.J., said at page 55 that the owners undoubtedly have the right to damages for breach of contract even though damages are not mentioned in the agreement unless there is something which expressly or by implication excludes their right to damages on breach.
In my opinion and upon true construction of the Agreements, Clause 8 by implication excludes the plaintiffs' right to damages.
It is hardly necessary to consider the other points raised by the learned Counsel for the defence in view of my decision. But I propose, however, to follow the Supreme Court in Abdallah's case and non-suit the present plaintiffs with 60 guineas costs to the defendants.