Augustine Paul JC:

The plaintiff and the defendants entered into an agreement on 20 September 1974 ('the agreement') for the hire of a 1969 model Caterpillar D8H Tractor ('the tractor') for three months at a rent of RM36,000 per month. As the plaintiff failed to make some of the payments the defendants repossessed the tractor. The issue for determination is whether the repossession was lawful.

The material parts of the agreement read as follows:

THE EQUIPMENT

ONE UNIT USED CATERPILLAR D8H TRACTOR, SERIAL NO. 68A1566 C/W ANGLEDOZEN BLADE.

CLASSIFICATION:- SERVICED.

Terms of Rental

1. The equipment shall at all times during the continuance of this Agreement remain the property of the owner and will be rented to the hirer for 3 (THREE) months on payment being effected as follows:

Date Amount

29.9.74 RM36,000

29.10.74 RM36,000

29.11.74 RM36,000

2. The residual value as at 29th December 1974 will be RM36,000.

3. Default in payment or any of the above rental amounts on the due dates or failure by the hirer, in the opinion of the owner, to observe any of the conditions of this Agreement will nullify the Agreement and the owner is entitled to take possession of the equipment without prior notice and without the hindrance of the hirer.

4. The owner is entitled to take whatever course of action is necessary to recover amounts due from the hirer.

Conditions of Rental

1. The hirer will at his own expense at all times during the course of this Agreement, comprehensively insure with an Insurance Company approved by the owner and show in such insurance policy the interest of the owner.

2. The Hirer will be responsible for transportation of the equipment to and from the owner's premises and shall reimburse the owner any such expenses so incurred by the owner in carrying out this service at the conclusion of the hire period. The hirer shall at all times advise the owner of the location of the equipment under hire and shall not use the equipment for purposes other than those advised to the owner.

3. The hirer will be responsible for the supply of competent operators, fuel and lubricants and for the carrying out of engine oil changes and filter changes every 250 hours.

4. The equipment shall remain the property of the owner and nothing contained in this Agreement shall confer or be deemed to confer any interest in the equipment to the hirer.

5. No liability shall be attached to the owner either in contract or in tort for loss injury or damage sustained by reason of any defect in the equipment whether such defect be latent or apparent on examination.

6. The hirer will be responsible for the repair of all damage caused by accident or misuse and all normal operating repairs and maintenance and will only use manufacturer's genuine spare parts. Normal warranty will be available where applicable. On conclusion of this Agreement and return of the equipment to the owner, the Hirer shall be responsible to the owner for any repair charges incurred by the owner which in the opinion of the owner are necessary, due to accident or misuse of the equipment by the hirer or for any expenses arising other than caused by normal wear and tear of the equipment

The plaintiff (PW1) said that the agreement, though signed as a rental agreement, should have been a sale and purchase agreement. He said that he bought the tractor from the defendants for RM144,000 to be paid in four monthly instalments of RM36,000 each and was asked to sign the agreement in respect of it. He made the first payment of RM36,000 by cheque. He gave another three post-dated cheques for RM36,000 each. The tractor was delivered to him on 28 September 1974. The delivery note is at p. 3 of the Agreed Bundle of Documents ('Exh. B'). Page 5 of Exh. B contains the invoice. It describes the tractor and specifies its price as RM144,000. After PW1's first cheque was cashed he ran short of funds. He then negotiated with the defendants to trade-in one of his used tractors to make up the amount due to