de Silva v. Kuruppu.
1941Present: Howard C.J. and Soertsz J.
DE SILVA v. KURUPPU.
1—D. C. Colombo, 11,260.
Hire-purchase agreement—Right to retake possession on breach of agreement—nodecree of Court is necessary—Roman-Dutch law.
The owner of a thing let on a hire-purchase agreement is entitled toexercise his right to retake possession given to him under the agreementwithout the intervention of Court, provided he uses no more ' force thanis reasonably necessary for the purpose.
de Silva v. Kuruppu.
HIS was an action brought by the plaintiff on an agreement datedFebruary 4, 1939, whereby the plaintiff took a lorry on hire-
purchase from the defendant. The plaintiff alleged that on September19, 1939, the balance due on the agreement had been paid and the agree-ment discharged. Despite such discharge, the defendant had onNovember 29, 1939, without any orders from Court forcibly removedthe lorry from the possession of the plaintiff to the latter’s damage ofRs. 3,000.
The defendant pleaded that on November 29, 1939, the plaintiff was inarrears of instalments due on the lorry and that he was entitled to retakepossession of the lorry. He claimed a sum of Rs'. 409.08 due by wayof instalments and a further sum of Rs. 1,000 as damages.
The learned District Judge held that a sum of Rs. 1,019.70 was due tothe defendant by way of arrears of instalments under the agreement. Hefurther held that the defendant could not have taken possession of thelorry without the orders of Court and that the seizure and removal of thelorry by him was unlawful for which the plaintiff was entitled to damagesin the sum of Rs. 1,000.
H. V. Perera, K.C. (with him N. K. Choksy and E. G. Wikremanayake),for the defendant, appellant.—The plaintiff came to Court on the basisthat she had become the owner of the lorry and claimed damages for theviolation of her rights of ownership. The defendant denied that theplaintiff had become owner, and claimed that, according to the terms ofthe hire-purchase agreement, he could seize the lorry for non-payment ofinstalments. On the facts, the District Judge has found that no force wasused by the defendant in the act of retaking possession of the lorry. Hehas, however, in spite of the 9th clause of the agreement (P 1), held thatthe retaking of the lorry without an order of Court was unlawful.
The District Judge was wrong in applying the Roman-Dutch lawdoctrine regarding realization of security in a mortgage. The plaintiff’sright of possessing the lorry terminated at the moment we tookpossession under the terms of the agreement. The seizure was a properexercise of a right which we had under the contract. See Vol. I. ofHalsbury’s Laws of England (2nd ed.), p. 762, para. 1250 ; Mather & Son. v.de Silva et al.'; Fernando et al v. Jayasinghe et al.’; 105—6, D.C. Colombo,6,988. ‘
N. Nadarajah (with him V. F. Gunaratne and V. M. Coomaraswamy),for the plaintiff, respondent.—The question is whether a hire-purchaseagreement is governed by the English law or the Roman-Dutch law. Ifthe English law is applicable it has to be conceded that, in a case like this,the owner is entitled to take possession in a peaceable manner. It is theRoman-Dutch law, however, which is applicable in Ceylon, for neitherCap. 66 nor Cap. 70 lets in the English law on the subject of hire-purchaseagreements. The legal, relationship between the owner and the hirer issimilar to that which exists between a lessor and his lessee—Wessels onLaw of Contract in S. Africa (1937), p. 455. There is no distinctionbetween a lease of movable and immovable property—Lee’s Introduction
1 (1933) 12 C. Late Bee. 211.s (1933) 35 N. L. R. 231 at 237.
3 S. C. Minutes of September 9,' 1938.
HOWARD C.J.—de Silva v. Kuruppu..
to Roman-Dutch Law (3rd ed.), p. 304 ; Morice’s English and Roman-DutchLaw (2nd ed.), pp. 180-1. In a lease, even where there is a covenantpermitting retaking of possession, intervention and assistance of Court isnecessary when the hirer does not consent to the retaking of possession.One cannot take the law into one’s own hands—Voet 19.2.18 ; Silva et at.v. DassanayakePerera v. Perera et al.’; Perera v. Thaliff *; Hongkongand Shanghai Bank et al. v. KrishnapillaiPerera v. Silva There is nosuch thing as parate execution in Ceylon—re William Perera *. A hire-purchase agreement is not a matter sui generis and should be treatedeither as a lease or a sale under Roman-Dutch law—3 Maasdorp’sInstitutes (4th ed.), pp. 233, 272 ; Ross v. Ross & Co.T
H. V. Perera, K.C., in reply.—So long as no force was used in retakingpossession of the lorry the plaintiff had no cause of action—Dustan’s Lawrelating to Hire Purchase (3rd ed.), p. 59 ; Hemmings et al. v. The StokePages Golf Club, Ltd., et al. ‘
Although, in a mortgage of immovable property, a covenant for takingpossession of the property without an order of Court is void as beingcontrary to public policy, such a covenant stands on a different footingwhere movable property is concerned-—Wille’s Principles of S. AfricanLaw, p. 195; Kotze’s Van Leeuwen (2nd ed.) p. 647 at 652 ; The CharteredBank v. Rodrigo. ‘
t i ontt„ tCur. adv. vuIt.
July 29, 1941. Howard C.J.—
This is an appeal from a judgment of the District Judge of Colomboentering judgment in favour of the plaintiff for a sum of Rs. 1,000 and onthe defendant’s claim in reconvention for a sum of Rs. 1,019.70. Thelearned Judge further directed that, to make the decree of the Courteffective, the defendant should forthwith return the lorry to the plaintiffand, if this was not done, the defendant should pay to the plaintiff afurther sum of Rs. 1,000 by way of damages. With regard to costs thelearned Judge stated that, the defendant’s act being tortious and in viewof the other circumstances of the case, the defendant should pay theplaintiff one-fourth of her taxed costs. The claim put forward by theplaintiff arose out of an agreement dated February 4, 1939, whereby theplaintiff took on hire-purchase from the defendant a lorry. The plaintiffalleged that on September 19, 1939, the balance due on the agreement hadbeen paid and hence the agreement had been discharged. In spite ofsuch discharge the defendant on November 29, 1939, without any ordersof Court forcibly removed the lorry from the possession of the plaintiffand has wrongfully refused to return the vehicle to the plaintiff. For thiswrongful seizure the plaintiff claimed as follows: —
An order directing the return of the lorry or in the alternative the
sum-of Rs. 3,000 ;
Damages Rs. 3,000 for deprivation of use of lorry and Rs. 2,500
reparation for pain of mind and body.
Continuing damages at Rs. 20 per day from November 29, 1939,
till defendant returns lorry or pays the sum of Rs. 3,000.
1 (1898) 3 N. L. R. 248.
(2907) 10 N. L. R. 230.3 (1904) 8 N. L. R. 118.
(1932) 33 N. L. R. 249.
8 (1935) 37 N. L. R. 157.
• (1904) 1 Bal. Rep. 70 at 73.■ (1917) CapeP. D. 303.
8 (1920) 1 K. B. 720.
• (1940) 41 X. L. R. 448 at 451.
HOWARD C.J.—de Silva v. Kuruppu.
In reply to this claim the defendant pleaded that inasmuch as onNovember 29, 1939, the plaintiff was in arrears of instalments due on thelorry to the amount of Rs. 409.08, the latter had committed default underthe said agreement. The defendant in these circumstances maintainedthat he was entitled to retake and recover possession of the lorry anddenied that such act of retaking was wrongful, forcible or unlawful. Heasked for the dismissal of the plaintiff’s action and claimed the amount ofRs. 409.08 hereinbefore mentioned in reconvention and also a further sumof Rs. 1,000 damages sustained by the defendant for wrongfully andunlawfully preventing his registration as the person in possession of thelorry and thereby depriving him of the use thereof.
A number of issues were framed, but it is unnecessary to consider themall. The learned Judge has found in reply to issue (9) that an amount ofRs. 1,019.70 is payable to the defendant by way of arrears of instalmentsunder the hire-purchase agreement. In reply to issue (1) he holds thatthe defendant is entitled to recover this sum from the plaintiff. In replyto issues (4), (5) and (6) the learned Judge finds that the defendant on orabout November 29, 1939, forcibly seized and removed the said lorry fromthe possession of the plaintiff, that the defendant could not have takenpossession without the intervention of the orders of Court, and suchseizure was wrongful and unlawful. In reply to issue (7) he, therefore,holds that the plaintiff is entitled to Rs. 1,000 as damages. With regardto the defendant’s claim in reconvention the learned Judge states that,the seizure of the lorry being unlawful, the Rs. 1,000 claimed as damagesby the defendant goes by the board, but the plaintiff being in arrear withher instalments must pay them to the defendant and they will be set offagainst the damages payable to the plaintiff.
The learned Judge has held that on September 19, 1939, the agreement—P 1—was not mutually terminated and that the plaintiff was in arrearswith her instalments. This finding of fact has not been impugned byeither party in this Court. The only questions, therefore, that arise forconsideration are whether the learned Judge was right in holding that insuch circumstances the retaking of the vehicle by the defendant onNovember 29, 1939, was wrongful and unlawful, and if so, whether theplaintiff was entitled to Rs. 1,000 as damages and whether an ordergranting a further sum of Rs. 1,000 if the vehicle was not returned couldbe made.
In holding that the retaking of the lorry without, the intervention ofCourt was unlawful the learned District Judge applied the law laid downwith regard to forfeiture clauses in leases. He cited the case of Sanjordv. Don Peter in which it was held that a forfeiture clause in a contract oflease or hire is nothing more than a mere security for the payment of rent.Silva v. Dassanaydke 2, in which it was held that for non-payment of rentthe lessor has no right to re-enter without an order of Court, was alsoreferred to by the learned Judge. The same principle was laid down byWood-Renton J. in Perera v. Perera‘, where the learned Judge statedthat “ the necessity for judicial authority for the cancellation of a leaseresults from the decision in Silva v. Dassanayake The learned Judge
* 2 S.C. if. 35.• 3 X. L. R. 248.
*10 X. L. R. 230.
HOWARD C.J.—de Silva v. Kuruppu.
also relied on the decision of the Full Court in Perera v. Silva', wherePoyser J. in the course of his judgment stated as follows : —
“ The preponderance of authority, in my opinion, leaves no doubtthat under the Roman-Dutch law a landlord’s lien on his tenant’sproperty can only become effective by means of judicial process. ”After citing these cases the learned District Judge states that in hisopinion the same principles apply to a forfeiture clause in a hire-purchaseagreement. He also considers that the enforcement of such a penaltyclause without a decree of a Court appears not only to be against the law,but it may give rise to other undesirable consequences. The person inpossession may resist the seizure of the vehicle on the road and a fightmay take place which may endanger the lives not only of the persons inthe vehicle but also of innocent passers by. No authority is cited insupport of this opinion. The only local authorities to which we havebeen referred indicate a contrary view. In Mather & Son v. de Silva1,no question was raised as to the right of the owner of a car under a hire-purchase agreement to retake possession on failure of the hirer to complywith the conditions of the agreement. In S.C. Nos. 105 and 106/D.C. (F)Colombo, 6,988, a Court constituted by Hearne and Keuneman JJ., heldthat the owners of'a car let out to a hirer by virtue of a hire-purchaseagreement were acting within their rights in retaking possession. More-over the English authorities do not lend support to the view of the learnedJudge that the same principle applies to a retaking of possession fornon-payment of instalments under a forfeiture clause in a hire-purchaseagreement as to forfeiture of a lease for non-payment of rent. In Volume16 of Halsburi/s Laws of England (Hailsham ed.), para. 783, it is stated asfollows: —‘
“ Although the owner may have the right under the agreement toenter upon the premises where the chattel may be and retake possessionof it, yet he must do so in a peaceable and orderly manner and not withforce, as it is a misdemeanour, both at common law and by statute, toenter forcibly upon any lands or tenements without due warrant of law.”In paragraph 784 the following passage occurs : —
“ Apart from any special stipulations to the contrary, if the ownerretakes possession of hired chattels under powers conferred by the hire-purchase agreement for non-payment of hire-rent he is not disentitledfrom recovering arrears which have accrued at the date of resumingpossession unless the agreement is in truth not one of hire with anoption to buy, but one of purchase and sale in which case his remedy isto sue for damages for breach of contract, as by seizing the chattels hedetermines the original contract.”
The same view with regard to the law is expressed in the 3rd Edition ofDunstan’s Law relating to hire-purchase at page 59, where it is stated asfollows: —
“ If the hirer makes default in the payment of any instalment theowner may resume possession of the goods and this right he can exercise,but in exercising it he must guard against rendering himself liable to
the hirer in trespass;”
1 37 N. L. R. 157.
* 12 C. L. R. 211.
Silva v. Kuruppu.
In Hewison v. Ricketts', and Brooks v. Beimstein*, the right of theowner on the hirer being in arrear with his rent to retake possession of theproperty hired was not questioned. In both of these cases the phraseologyof the clause in the agreement conferring such power on the owner wasvery similar to the corresponding clause in the hire-purchase agreementfor the lorry in this case. The case of Hemmings and wife v. The StokePoges Golf Club, Ltd., and another *, also merits attention. In that casethe plaintiffs, a man and his wife, lived in a cottage belonging to thedefendants, the man being in their service and being required by them tolive in a cottage as part of his service and for the performance of his duties.He left their service, but refused to give up the cottage after notice to quitduly given. Thereupon, by command of the defendants, several personsentered the cottage and removed the plaintiffs and their furniture, usingno more force than was necessary for that purpose. In an action by theplaintiifs for assault, battery and trespass it was held that the defendantswere not liable, their right of entry being a defence to civil proceedings forthe acts complained of. From the decision in this case it would appear-that under English law, even in the case of premises occupied by a tenant,a landlord who is entitled to possession can retake possession withoutrecourse to the intervention of the Courts provided he uses only a reason-able amount of force. So far as hire-purchase agreements are concerneda clause in the agreement giving a right to retake possession on non-paymentof instalments due.gives the owner under English law the right to exercisethis remedy without the intervention of the Court.
The next point for consideration is whether a similar position withregard to hire-purchase agreements exists under Roman-Dutch law. Ithas to be borne in mind that the hire-purchase agreement is a contractof modern development. Hence the treatment of the subject in thetext-books to which we have been referred is somewhat scanty. Nodoubt the law with regard to immovables makes it clear that a lessorcannot take the law into his own hands and expel the lessee from theleased premises without first obtaining an order of Court for that purpose,vide Maasdorp (4th ed.) on “ The Law of Obligations ”, Book 111., p- 270.Counsel for the respondent relies to a certain extent on a statement in the3rd Edition gf Lee on “ Roman-Dutch Law ”, p. 304 to the effect that therules with regard to the contract of hire of land are in many respectsapplicable to the hire of movables as well. With regard to land we findthe following passage in Voet, Book XIX., tit. II., s. 18 :—
“In those cases in which the expulsion of tenants before the expiryof the lease is allowed by law or usage, it has to be observed, thattenants of rural and urban tenements are not to be disturbed by privateauthority nor withou the public auhority of a judge, when they refuseto quit after private warning; and otherwise the persons ejecting themare liable to the interdict de vi et vi armata. It must be observed thattenants must not be expelled abruptly, but only after previous timelynotice to quit at the next usual term established by local custom or law,so that the tenant may in the interval consult his own interest byrenting another land suitable to his purposes and condition. The right* (1894) 63 L. J. Q. B. Til.* (1909) 1 K. B. 98.
(1920) 1 K. B. 720.
HOWARD C.J.—de Silva v. Kuruppu.
of ejecting the tenant is not prevented by the circumstance that thevery land leased has been mortgaged to the tenant as security againsthis being deprived of it before the expiry of the lease. A tenant cannotbe ejected for every abuse, but only, in the discretion of the Judge, forthose of a serious character.”
The hiring of movables is also considered at pages 180-181 of the 2ndedition of Morice’s Treatise on English and Roman-Dutch Law. I can findnothing in this treatise to indicate that the Roman-Dutch law withregard to hire-purchase agreements differs from the English law. In factthe author states that the English and Roman-Dutch law on the subjectof the hire of movables closely resemble one another. In Wessels on theLaw of Contract in South Africa, Vol. 1., p. 456 the following passageoccurs:—
“ Parties are free to make any contract they like, provided it is notillegal, and if they agree that a thing is to be let by the one to the otheruntil a future event occurs, and then to be regarded as having been soldby the former to the latter, there is nothing to prevent them fromdoing so.”
In Book V., Chapter VIII. of Vol. II. (Appendix) of Van Leeuwen’sRoman-Dutch Law (2nd ed.), the question of the validity of an agreementfor parate execution is considered. At page 652 the author cites the viewof Bynkershoek to the effect that there is nothing invalid in an agreementof parate execution, its object being to avoid expensive methods ofjudicial execution. It is also stated that the spirit of modern juris-prudence is in favour of the liberty of contract. An observation ofVilliers C.J., in Henderson v. Hanekom is also quoted as follows : —
“ All modern commercial dealings proceed upon the assumption thatbinding contracts will be enforced by law. However anxious the Courtmay be to maintain the Roman-Dutch law in all its integrity, theremust in the ordinary course be a progressive development of the law,keeping pace with modern requirements.”
After a careful consideration of the views expressed in the various textbooks on Roman-Dutch law- I can find no authority for the propositionthat the law with regard to hire-purchase of movables differs from theEnglish law. Having regard to the extracts I have cited from VanLeeuwen it cannot be urged that'a clause inserted in a contract of hire-purchase providing for the retaking of possession by the owner afterdefault by the hirer in paying instalments is contrary to public policy. Infact the following passage from Van Leeuwen, pp. 647-648, negatives anysuch idea : —%
“ Our author here lays down that in Holland a creditor cannotstipulate for the right of selling a thing pledged to him, but the pledgemust be sold after a judicial decree or sentence to that effect. Atwo-fold reason is generally assigned for the introduction of this rule in-Dutch practice. It is said to have been introduced in order to protect
» 20 S.C. at p. 519.
HOWARD C.J.—de Silva v. Kuruppu.
debtors and prevent creditors taking undue advantage of the impecu-nious position of their debtors. An additional reason is sometimes alsogiven for not recognizing a stipulation in favour of parate execution,inasmuch sis we are told that such a right cannot be acquired andexercised by a creditor, for that will be tantamount to his taking thelaw into his own hands, which no one is permitted to do. We need not,however, attach any importance to this latter objection. A pressingcreditor, who, for instance, obtains from his debtor the right to take ahorse or cow from his field in order to sell it to the best advantage insettlement of the debt due, and to hand over any balance of the proceedsto the debtor, is in no different position from one who has stipulated forparate execution, yet he is at full liberty to sell and give legal title tothe purchaser. In neither case can it with reason be said that thecreditor is taking the law into his own hands, for in both instances heis acting with the full consent of the debtor and owner. There is moreweight in the first ground advanced in support of the rule. A carefulconsideration, however, of what has been said and written on thesubject shows that the practice in Holland was apparently not uniform,for there existed a difference of opinion among the Dutch jurists of theseventeenth century and those of the eighteenth century in regard tothe observance of the correct rule ”
Moreover in Maasdorp, Book III. (4th ed.), at p. 234 it is stated asfollows : —'
“ It has also been provided that if the lessor resumes possession of thegoods the lessee may within twenty-one days thereafter reclaim, themupon payment in full of the balance of the price.”
This is a statement of the South African law and indicates that itsLegislature recognizes the right of the lessor in a hire-purchase agreementto resume possession without the intervention of the Court subject to theright of the hirer to claim relief. Hence the validity of a clause allowingthe owner to retake possession cannot be challenged.
In these circumstances the defendant was, ,under the terms of theagreement, entitled to seize the lorry provided he used no more forcethan was reasonably necessary for this purpose. The evidence of theplaintiff’s husband indicates that no force was employed in the seizure ofthe lorry. It is impossible, therefore,, to support the judgment of thelearned District Judge. His order is set aside and there must be judgmentfor the defendant for the sum of Rs. 909.08, an amount made up ofRs. 409.08 on account of arrears of instalments and Rs. 500 on accountof loss accruing from being prevented from registering the lorry,together with costs in this Court and the Court below.
Soertsz J.—I agree.