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2011 MarsdenLR 1003
HIGH COURT MALAYA, JOHOR BAHRU
AM FINANCE BHD – Appellant
Versus
LAM SEANG TING – Respondent
[Civil Appeal No. 12B-270-2011]
Defendant is liable for rental instalments under a hire purchase agreement despite the theft of the vehicle, as obligations under the contract remain binding regardless of circumstances.
Headnote:(A) Contracts Act 1950 - Section 183 - Claim under motorcar hire purchase agreement - Plaintiff’s claim for RM47,552.28 upheld as defendant's obligation to pay rent instalments exists despite theft of the vehicle - Court found defendant liable to pay monthly rent instalments per HPA terms despite theft (Paras 6-8).
(B) Agency Law - Agent cannot be bound by contracts on behalf of the principal if no privity exists - Plaintiff not liable under insurance contract as no privity of contract with the 3rd Party (Paras 10-13).
Facts of the case:
Plaintiff sought recovery of RM47,552.28 under HPA for stolen vehicle; defendant denied liability citing theft notification to plaintiff and insurance coverage.
Findings of Court:
Trial judge misdirected on law and facts; plaintiff entitled to claim; no defense on merits.
Issues: Whether defendant liable to pay instalments for stolen vehicle; impact of insurance on liability.
Ratio Decidendi: Contractual obligations remain binding despite loss of the subject matter; agent cannot be liable for failures of the principal’s insurance; misapplication of agency principles by trial judge.
Result: Plaintiff's claim allowed.
| Table of Content |
|---|
| 1. plaintiff's claim for rental arrears under hpa (Para 1 , 2 , 3) |
| 2. defendant's denial of liability involving motorcar theft and insurance (Para 4 , 5) |
| 3. contractual obligation to pay regardless of theft (Para 6 , 7 , 8) |
| 4. no binding insurance contract between plaintiff and 3rd party (Para 9 , 10 , 11 , 12 , 13) |
1. The plaintiffs claim is for RM47,552.28 being the amount owing under a motorcar hire purchase agreement (HPA) taken up by the defendant.
2. Under the HPA dated 15.7.2002, the defendant agreed to pay to the plaintiff 59 monthly rental instalments of RM1.263.00 and a final instalment of RM 1,233.00; the first instalment commencing on 15.8.2002.
3. On 17.6.2004, the plaintiffs solicitors issued a notice to the defendant demanding for payment of the arrears of the monthly instalments for Feb 2004 till June 2004.
4. In her statement of defence, set off and counterclaim, the defendant denied liability on the following grounds:
(i) the motorcar was stolen on 29.3.2004;
(ii) the plaintiff was informed of the theft;
(iii) a police report was lodged by the defendant on 30.3.2004;
(iv) the police wrote to Am Assurance Bhd (the 3rd Party) on 19.7.2004 informing that investigations were carried out but the motorcar could not be located;
(v) the 3rd Party is liable to pay on the loss as the motorcar was insured with the 3rd Party at all material times.
5. The defendant is claiming (1) the plaintiffs claim of RM47,552.28 be set-off against the sum insured of RM72,000.00, and (2) that the plaintiff pay to the defendant the balance of the insured sum of RM24,447.72.
6. In this case the plaintiff's claim is based on the HPA. The issue for determination is whether the defendant is liable to continue paying the monthly rental instalments if the motorcar is stolen.
7. This question can be determined by reference to the HPA itself. Clause 2.1 of the HPA stipulates that the defendant is liable to pay the monthly rent instalments notwithstanding that the motorcar is stolen, lost, damaged or otherwise dispossessed.
8. As this is a claim based on a contract, the defendant is bound by the terms of the contract, namely the HPA. As such, the defendant's obligations to pay the monthly rental instalments subsist even though the motorcar was stolen.
9. If so, is the defendant's liability affected in any manner by the insurance policy taken with the 3rd Party? The insurance policy was taken out by the defendant through the agency of the plaintiff.
10. It is clear that in the process of facilitating the insurance coverage for the motorcar, the plaintiff was acting as an agent for the 3rd Party. However, this does not detract from the fact that the insurance contract is between the defendant and the 3rd Party.
11. In a case such as this, an agent cannot personally enforce, nor be bound by contracts on behalf of the principal (s 183 Contracts Act 1950).
12. Therefore, the plaintiff is not bound by the insurance contract entered between the defendant and the 3rd Party.
13. In fact, the plaintiff has no privity of contract in relation to the insurance contract. Even though the plaintiff and the 3rd Party are associate companies this fact is immaterial as in law there are separate and distinct legal entities.
