The execution of a hire purchase agreement extinguishes the contractual relationship between a car dealer and the hirer, preventing any claims based on the prior sale agreement.

[1] The sole issue in this appeal is whether a car dealer can maintain an action against the purchaser / hirer based on the sale and purchase agreement between them upon the execution of a hire purchase agreement by the latter with a finance company. The learned Sessions Judge answered the question in the affirmative.

[2] A little background assists in understanding the factual matrix of this appeal. The defendant (the appellant here) and her husband attended the plaintiff's (the respondent here) showroom to buy a new Toyota Camry model 2.0(G) ('the car"). Following a brief discussion with a sales officer there, the defendant agreed to buy the car for the sum of RM 159,800.00 and signed a retail customer order. The defendant agreed to pay a deposit of RM 16,000.00. He was given a rebate of RM 10,000.00 for National Day Promotion leaving a balance of RM 6,000.00. He has paid a deposit of RM 3,564.00.

[3] The defendant then obtained a hire purchase loan from Bank Kerjasama Rakyat Malaysia Berhad ("Bank Rakyat") for RM 143,800.00. Upon the approval of the hire purchase loan, the defendant signed an undated hire purchase agreement with Bank Rakyat. A letter of undertaking dated 11 August 2014, was thereafter issued by Bank Rakyat to the plaintiff informing its readiness to disburse the loan provided that the defendant has signed the delivery note upon taking delivery of the vehicle and subject to other conditions. Whereupon, the defendant was registered as the owner of the car with Bank Rakyat's ownership claim endorsed on the registration card.

[4] The defendant refused to collect the car when he discovered that some particulars in the vehicle invoice had been amended without his consent and instructed Bank Rakyat not to release any monies. Whereupon, the plaintiff sued the defendant for damages for breach of contract and succeeded in the Sessions Court.

[5] It seems to me that the issue before this Court is similar to that faced by the Federal Court in Ahmad Ismail v. Malaya Motor Co & Anor, [1973] 2 MLJ 66. There, the hirer sued both the car dealer and the finance company for damages for breach of contract on the ground that his car was seized by the police on suspicion of being a stolen car. In dismissing the hirer's appeal against the dismissal of his claim against the car dealer, Suffian FJ explained:

The questions to be determined in this appeal are as follows. After the execution of the hire-purchase agreement between the plaintiff and the finance company did there remain any contractual relationship between the plaintiff and the car dealer so that the plaintiff has a claim against him? As between the plaintiff and the finance company, did the seizure by the police of the car in the particular circumstances of this case constitute a breach of the implied condition under s 6(1)(b) by the finance company so as to entitle the plaintiff to rescind the hire-purchase agreement and claim damages for that breach?

The first ground of appeal concerns only the first defendant. It is said that the learned appellate judge was wrong in holding that there remained no contractual relationship between the plaintiff and the first defendant. It is said that despite the existence of the hire-purchase agreement there still remained a contractual relationship between the two of them and that the learned appellate judge should have held that the first defendant had only assigned his rights in the car to the finance company.

We regret we cannot accept this argument. It is true that by exhs P1 and P2 there was a sale by the car dealer of the car to the plain