RECOVERY UNDER THE HIRE-PURCHASE ACT

 CONTENTS

1.0. Introduction.

2.0. Objective.

• Main Body
• Restriction of Recovery by the Owner
• Relaxation of Owner’s Restricted Right of Possession
• Owner’s Obligation under the New Section 9 (5)
• Hirer’s Consent to Repossession
• Powers of the Court in Action to Recover Goods

4.0. Conclusion

5.0. Summary

6.0. Tutor Marked Assignments (TMA)

• References/Further

INTRODUCTION

It is important to note that recovery of goods under the hire-purchase agreement under the Act is only restricted to an action in court by the owner against the hirer. This is a welcome development as against the position under common law where the owner could even repossess without the due process being followed.

This development has been seriously criticised as it has given the hirer a blanket opportunity to default in the payment of the installment and then abscond with the goods to an unknown address, whereby making the efforts of the owner in instituting an action fruitless.

Section 9(5) of the Act lays down conditions to be followed strictly by the owner before he can institute an action. It is pertinent to note that the hirer also can consent to the repossession of the goods by the owner. Once the hirer has not paid a relevant proportion of the hire then the owner can repossess without his consent or an order of the court to that effect.

OBJECTIVE

It is expected that at the end of this unit, learners should be able to understand and  explain the rules governing the recovery of goods under the Act and at common law.

MAIN BODY

Restriction of Recovery by the Owner Otherwise than by Action

It is important to note that the most common remedy available is an action in court against the hirer, which the hirer could frustrate the effort of the owner in this regard by absconding with the goods to an unknown destination with the goods being used in a manner detrimental to the goods itself. Recovery of Goods under the Act will also be treated.

Under common law, as we have already discussed, the extremity of the right to repossession and the harshness of judicial interpretation leave the hirer with little or no claim where the owner exercises his right.

The Act has removed the power where the owner can repossess goods at his whim and caprices.

Section 9 (1) of the Act places a restriction on the right of the owner to recover the property otherwise than by action especially where the hirer has paid a relevant proportion of hire-purchase price. For the purpose of this Act what is relevant proportion has been defined as:

• In the case of goods other than motor vehicle its one half
• While in motor vehicle it is three fifths

If the owner recovers the goods in contravention of the rule then the hire purchase agreement is determined and the hirer and his guarantor are relieved of any liability under the agreement.

It is important to also note that the above provision has no effect where the hirer has exercised his right to terminate the agreement or the bailment. In this instance, the owner can repossess the goods whether the relevant proportion has been paid or not. The position under section 9 of the Act has been established by the courts. In Adesanya v. Balogun & Ors (CCHCJ/11/73), the hirer paid N1,647.00 out of the total hire-purchase price of N1,843.00 and sued for damages for seizure of the goods by the owner, without any court order. The seizure was held wrongful, and the court released the hirer of all liability under the agreement. The court, further ruled that he could recover from the owner the sum N1,647.00 which he had already paid to the owner. 

The Act is silent as to what happens where the hirer defaults before the payment of the relevant proportion of the hire-purchase price. It would appear that the common law rule will apply in such an instance.

The statutory restriction imposed on the owner under section 9(1) of the Act protects the goods from repossession not only where the relevant proportion has been paid but also where it has been tendered by or on behalf of the hirer or any guarantor.

Relaxation of Owner’s Restricted Right of Repossession

The injustice of retaking the goods by the owner has been remedied by the restriction on the right of repossession by the owner other than by action after the relevant proportion has been paid or tendered.

This restriction received the acclamation of consumers but was widely condemned by owners of goods as radical, ill-timed and retrograde.

The hardship inflicted on the owner by this provision is where the hirer defaults in payment after paying the relevant three fifth of the hire-purchase price and then abscond with the goods to an unknown address, and the owner remedy is an action in court where there is default in payment. Since the whereabouts of the hirer may remain unknown, any action brought by the owner may prove expensive and dilatory. This action drastically reduces the hire-purchase agreement especially in relation to the motor vehicle.

The new section 9(5) of the Act has seemingly reduced the hardship on the owner in relation to the repossession of goods.

Owner’s Obligation under the New Section 9(5)

The new section 9(5) appears to have at first glance relaxed the restricted right of repossession of goods after the payment of the relevant proportion. But the section has not done away with the right of action of the owner. It only lays down some conditions to be fulfilled.

The case of Tabansi (Agencies) Ltd v. Incar Nigeria Ltd (CCHJ/7/74), shows that the introduction of the new section under the amendment Act has not done away with the right of action but that the owner has to fulfill certain conditions before he can invoke section 9(5) of the act. The conditions are as follows:

• keep the removed goods in his possession and protect them from damages or depreciation
• retain them    (in    any    remises    he    should    determine)    pending   the determination of the case
• be liable to the hirer for any damage or loss which may be caused by the removal.

These duties placed on the owner under Section 9(5) must be adhered to strictly for an action under section 9 (1) to succeed. In Incar Nigeria Ltd v. Adeyemi (1976) CCHCJ/1127, the defendant bought a motor vehicle from the plaintiffs under a hire- purchase agreement of November 4, 1972. It is being agreed that the hire purchase price of N26,680.00 was to be paid in twelve instalments, commencing January 30, 1973. The plaintiffs removed the vehicle in August 24, 1974 from a garage where the vehicle was undergoing repairs, at which time a total of N18, 686.76 had been paid, an amount above the relevant proportion, but he was in arrears of May, June and July, 1974. The owner then sold the vehicle after they had sued for arrears and repossession of the vehicle. The defendant counterclaimed damages on the ground of unlawful repossession.

The court thereon held that the owner was liable on the counter claim for by selling the vehicle he violated the provisions of Section 9 (5) of the Act and the attendant consequence is provided for under section 9 (2) i.e. the sum of N18, 686 already paid was to be refunded to the hirer with cost of N250.

Hirer’s Consent to Repossession

The hirer has a right to voluntarily consent to the repossession of the goods by the owner, if the owner request for them. Repossession of goods with the hirer’s consent appears to have been approved by the wordings of paragraph 5 of the statutory notice of section 2 (2) (c).

Here, consent should be obtained where the hirer has glaringly shown sufficient intention to abandon the goods on which the relevant proportion of the hire-purchase price has been paid, and which may suffer deterioration if not taken into custody. In this situation then the owner is said not to be in possession of the goods. He must therefore institute an action before he can be said to be in possession of the goods.

 Powers of the Court in Action to Recover Goods

While the action is pending for the recovery of the hired goods in which the relevant proportion has been paid, the court entertaining the suit is vested with some statutory powers.

This is stated before the hearing or even at the hearing, before the hearing in order to protect the goods from damages or depreciation, the court may order at the application of the owner, pending the hearing of the action and make such order for this purpose.

At the hearing, the court may make further order (s) which may include

• An order for the specific delivery of the goods to the owner (section 10 (4)(a)).
• An order for the specific delivery of all the goods to the owner and postpone the operation of the order
• An order for the specific delivery of a part of the goods to the owner and for the transfer to the hirer of the owner’s title to the reminder of the goods

However, there is the opportunity of postmen order. This is an opportunity giving to the hirer who has defaulted in making payments after he has paid the relevant proportion a second chance to make good the defaults. While the hirer is still in possession of the goods, the court may make a specific delivery order of the goods to the owner. See the provisions of Section 12 of the Act in relations to this.

CONCLUSION

In conclusion, it is important to note that the role of the Act specifically that of section 9 of the Act cannot be ignored as it has played a major role in reducing the hardship placed by common law rule on the hirer in the contract of hire-purchase. The courts have also played important roles in addressing the issues and the owners are also not left out of the protection under subsection 5 of section 9 of the Act.

SUMMARY

It is important to note that the Act has done a lot by protecting the right of the hirer as against the backdrop of the position under the common law where the owner’s whims and caprices to recover possession without any cause of action are absolute. It is also pertinent to note that section 9 (5) has also gone ahead to protect the owner from mischievous hirers by protecting the goods from them.

TUTOR MARKED ASSIGNMENT (TMA)

• The hirer is protected under the Act after a relevant proportion of the hire- purchase price has been paid. Discuss this preposition under the Act with relevant authority and statutes
• Section 9 (5) of the Act protects the right of the owner but does not remove the right to action.

 REFERENCES/FURTHER READING

1. Hire Purchase Act. Cap 169, Laws of the
2. Sale of Goods Act,
3. Rawlings, Commercial Law, University of London Press,
4. Okany Nigeria Commercial Law, Africana-Fep Publisher, Limited,
5. Sofowora, General Principles of Business and Coop Law, Soft Associates, 1999.