PS Gill J:

This is an appeal by the defendant against the decision of the learned sessions court judge at Ipoh in giving judgment against the defendant in the following manner: "That the sums advanced of RM34,150 be returned by the defendant to the plaintiff. That the installments amounting to RM7092 be equally returned to the plaintiff. A sum of RM13,500 for loss of use of vehicle be awarded against the defendant. Interest at the rate of 4% be awarded on the judgment sum of RM54,742 from 5 October 1994".

The case revolves on a sale and purchase, cum hire purchase arrangement of a motor vehicle bearing registration no. WCU3303 involving financing by a finance company.

The action was brought by the plaintiff, claiming that the said vehicle had been seized by the police as it was a stolen vehicle on 5 October 1994. On 9 November 1994, the plaintiff informed the defendant of the said seizure.

For the purpose of this appeal it is convenient to refer to the defendant as the "finance company".

The following facts are not in dispute:

(1) In the purchase of the vehicle, a sum of RM34,150 was paid to one Toon Ah Choy. This is evidenced by a sale purchase agreement dated 7 October 1993. The remaining sum of RM35,000 was financed by the finance company with whom the plaintiff entered into a hire purchase agreement dated 7 October 1993.

2) There is no evidence of any nexus between the Toon Ah Choy and the finance company. Each in independent of the other.

(3) The customer had ceased making any installments when he was unable to renew the road tax of the car, after it was seized by the police.

(4) The fact that vehicle WCU3303 was a stolen vehicle was confirmed by the police investigation dated 16 February 1996.

(5) The plaintiff had terminated the hire purchase agreement on 31 January 1997.

(6) The said Toon Ah Choy has been brought in as a third party in the proceedings, but entered no appearance to it.

In the grounds of judgment, the learned Sessions Court Judge allowed the plaintiff/customer's claim on the ground, that since the finance company had no good title to give the plaintiff due to the fact that the car was stolen, there was a total failure of consideration. Further she held, that there was a fundamental breach of the contract, pursuant to s. 66 Contracts Act 1950, and therefore the entire hire and purchase agreement was null and void. Her reasons were premised entirely on the decision of Mohd Ghazali J in Public Finance Bhd v. Ehwan Saring[1996] 1 CLJ 628. For ease of reference I shall reproduce the salient aspect of her decision.

Perkara yang juga tidak boleh dipertitikkan di sini adalah kereta itu disahkan sebagai kereta curi dan defendan menyedari perkara ini tanpa sebarang keraguan - Lihat Laporan polis D11. Ekoran ini tertakluk atas isu undang-undang pihak defendan tidak ada sebarang "good title" untuk memberi kepada plaintif sebarang masa. Prinsip asas undang yang relevan adalah hanya penjual, seorang yang mempunyai hakmilik yang sah boleh menyerahkan hakmilik yang mempunyai hakmilik yang sah boleh menyerahkan hak milik yang sempurna (good title) kepada seorang pembeli. Mahkamah ingin merujuk kepada kes Public Finance Bhd v. Ehwan Saring[1996] 1 CLJ 628dimana Hakim Mahkamah Tinggi memutuskan - Dengan izin:

Section 7(4) of the Act preserves the implied condition at common law whereby the owner had to have a good title when he entered into the hire purchase agreement, and not when the final payment was made. The phrase "at the time when the property is to pass" in s. 7(i)(b) means at the time when a hirer decides to pay all sums due under a hire-purchase agreement. A breach of s. 7(i)(b) amounts to a breach which goes to the root of the agreement, entitling a hirer to recover the amount already paid by him. The Act does not differentiate between new and second-hand goods as far as ownership is concerned. It also does not provide that the implied condition and warranties under s. 7(2) do not apply to second-hand g