James Foong J:

Introduction

The 1st and 2nd defendants/appellants hirer and guarantor respectively of a second hand car (the said goods) under a hire-purchase agreement with the plaintiff/respondent. Due to the default of the 1st defendant, the plaintiff repossessed the said goods. It was subsequently sold and there is a short fall between the proceeds received from this and the balance outstanding. For this, the plaintiff claims from the defendants a sum of RM10,236.34 with interest and cost.

Pursuant to an application by the plaintiff for summary judgment, the learned magistrate granted the relief sought by the plaintiff. Dissatisfied, the defendants appealed to this court.

The Parties' Arguments

Mr. Nantham, counsel for the defendants, much to the appreciation of this court, submitted that the defence has only one ground for this appeal. This is the issue of deposit. He pointed out that from the invoice issued by the dealer of the said goods to the plaintiff, a down payment of RM16,298.13 is listed as paid. But what is significant is that this invoice is dated 8 October 1997. He then drew the attention of this court to the hire-purchase agreement, which reads: "12 November 1997" and a deposit of the same amount as having been made by the 1st defendant. Accordingly to him, this implies that the 1sf defendant had paid for the goods and became owner of it before the hire- purchase agreement was entered into. This, he said, makes the entire hire-purchase agreement void since it was a sham transaction to cover up a money lending deal.

The plaintiff, on the other hand, argued that: (a) the deposit, explicitly expressed in the hire-purchase agreement, was actually paid by the 1st defendant when the hire-purchase agreement was executed; (b) the down payment, as revealed in the dealer's invoice, is a matter between the 1st defendant and the dealer prior to the hire-purchase agreement and; (c) there was no sham transaction to cover up a money-lending scheme between the parties.

Analysis

At the outset, this court must bear in mind Mr. Nantham's reminder that all that was required by the defendant was to satisfy the learned magistrate that there is a triable issue raised. Bearing this, I shall now proceed to analyze the facts of this case to determine whether the learned magistrate has erred in his decision.

Firstly, I noticed there is no allegation of the hire purchase transaction being void for the reason that it was a sham to cover up a money lending arrangement in any of the defendants' pleadings and affidavits. Just because there was payment by the 1st defendant to the dealer prior to the execution of the hire-purchase agreement does not, in my view, render such agreement void. There must be an assertion why it is void followed by some evidence to support this claim. In the absence of such an allegation, there is no basis for the defendants to raise this claim.

Secondly, even if such claim is considered raised, to recapitulate the essential principle of hire purchase, the owner of the goods lets out on hire must be the owner of such goods. If the owner possesses no title to the goods or that the goods belong to the hirer instead, then such an arrangement cannot be considered as a hire-purchase and the hire-purchase agreement entered into between the parties would be void. In the presentation forwarded by the defendants, I gathered that they were trying to impress the court that the 1st defendant, by paying the down payment to the dealer, had become the owner of the goods under hire. To support this contention two cases were cited: Low Ping Ming v. MBf Finance Bhd [2000] 2 CLJ 307and MBf Leasing Sdn Bhd v. Ban Huat Group Holding Sdn Bhd & Ors [2000] ; [2001] 1 AMR 329.

The first, Low Ping Ming's case, in my view can be distinguished. There substantial payments made by the hirer to the dealer at different intervals to imply that the owner possesses no title to or ownership of the hired goods at the time when the hire purch