A finance company license is not required unless engaging in deposit-taking activities; the Hire-Purchase Act applies only to specific transactions.

[1] This is an appeal against the decision of the Sessions Court which had after a full trial dismissed the claim by the appellant (the plaintiff in the proceedings at the Court below) for balance of payment said to be due from the first, second and third respondents under a hire-purchase agreement.

[2] This judgment touches on an analysis of the legal nature of a hire-purchase, discusses its relationship with lending, and clarifies its relevance to the defined term of "finance company business" under the now-repealed Banking and Financial Institutions Act 1989 ("the BAFIA").

Key Background Facts

[3] The appellant is a company incorporated under Companies Act 1965, and is principally involved in the business of licensed money lending, hire purchase and equipment leasing. The respondents are partners in a business registered as Nur Enterprise under the Business Registration Act 1956 which activities include lorry transportation, rental of supply contract and wholesaler of construction materials.

[4] Pursuant to an offer made by the appellant as stated in a letter of offer dated 3 August 2012 (which was accepted by the respondents in writing), and a separate letter of authorization by the respondents to the appellant dated 14 August 2012 expressly confirming acceptance of the offer, the appellant extended a hire-purchase facility to the respondents for the amount of RM170,000 in respect of the purchase of one unit of Rebuild Hino Tipping Truck ("said Vehicle"). The respondents had also signed another letter dated 14 August 2012 in favour of the appellant confirming their agreement to pay the outstanding amount under the hire-purchase facility between the appellant and the respondents should the appellant lose ownership of the said Vehicle. The respondents then made an initial payment of RM80,000 to Hong Seng Assembly Sdn Bhd, being the seller of the said Vehicle who on 26 December 2012 issued not only a receipt to the respondents for the said payment but also an invoice to the appellant for the purchase of the said Vehicle. The appellant then made the requisite payment of RM170,000 to Hong Seng Assembly Sdn Bhd to complete the purchase from Hong Seng Assembly Sdn Bhd of the said Vehicle at the total purchase price of RM250,000, with the initial part payment RM80,000 having been made by the respondents.

[5] On 19 January 2013 the appellant and the respondents executed a Hire-Purchase Agreement in respect of the said Vehicle. Quite apart from other fairly standard conditions embodied therein, some of which I shall allude to later, the key financing term is that the respondents entered into a hire-purchase agreement for the amount of RM272,185 to be paid by way of an initial payment of RM80,000 and the remainder in 36 monthly rental installments.

[6] The payment obligation of the respondents under the Hire-Purchase Agreement was further guaranteed pursuant to a Guarantee Agreement dated 19 January 2013 by Sim Ying and Ng Kok Kee who are the fourth and fifth defendants at the trial before the Sessions Court.

[7] The said Vehicle was delivered to the respondents who duly acknowledged acceptance thereof. On 20 May 2013, the first respondent was notified that the said Vehicle was missing from the store. Following therefrom, and coupled with the respondents' failure to pay monthly repayments, the appellant decided to terminate the Hire-Purchase Agreement, and filed the writ action in the Sessions Court for the entire outstanding amount of RM168,787.48 as at 23 October 2013.

[8] The key findings of the Sessions Court in dismissing the claim of the appellant are as follows:-

(a) The High-Purchase Agreement is not valid, is void and unenforceable since the appellant, being a company carrying on