JUDGMENT

Ramly Ali J:

This an appeal against the decision of the magistrate court, Temerloh dated 27 February 2001 wherein the learned magistrate dismissed the appellant's (plaintiff) claim against both the respondents (defendants) with costs and allowed the 1st defendant's counter claim against the appellant with costs, in respect of breach of condition and warranties arising out of a hire-purchase agreement with regard to the purchase of a motor vehicle, Mitsubishi No: BCH 718, dated 17 May 1996, entered into between the appellant (as owner) and the 1st respondent (as hirer).

Facts Of The Case

The 1st respondent approached the 2nd respondent, who, at the material times was a dealer in motor vehicle business, for the purchase of a motor vehicle: Mitsubishi bearing registration number BCH 718 (the said vehicle). On 17 May 1996, the 1st respondent entered into a hire-purchase agreement with the appellant for the purchase of the said vehicle, wherein the 1st respondent paid a sum of RM9,000 as deposit and the balance price of RM22,440 to be paid by monthly instalment of RM468 for 47 months and the last instalment of RM444. In the said agreement, the 1st respondent was described as "a hirer" while the appellant was described as "an owner", in respect of the said vehicle.

On 23 July 1997 the said vehicle was seized by the customs and excise department for an alleged offence under the Customs Act 1967, relating customs duty, after the 1st respondent has duly paid 12 monthly instalments without fail. Subsequent to the seisure of the said vehicle, the 1st respondent stopped payment of the instalment. The appellant filed a claim against both the respondents at the magistrate court, Temerloh, for a sum of RM17,776.90 being balance unpaid under the said hire-purchase agreement together with interest at 8% p.a. The 1st respondent filed a counterclaim against the appellant for a sum of RM14,616 for the deposit as well as 12 instalments payments which he has paid in respect of the said vehicle before it was seized by the customs department. The learned magistrate, after hearing all the witnesses called by both sides and submissions by all parties concerned, dismissed the appellant claims against both the respondents with costs and allowed the 1st respondent's counterclaim against the appellant with costs.

Basis Of The Claim And Counter-Claim

In it's claim against the 1st respondent, the appellant alleged the 1st respondent has failed to fulfil his obligations in making monthly instalments as stipulated by the said hire-purchase agreement, leaving a balance of RM17,776.90 remained unpaid as at 9 January 1999. As against the 2nd respondent, who was a dealer in respect of the said vehicle, the appellant alleged that the said hire-purchase agreement was entered into on the strength of inducement made by the 2nd respondent who was in actual possession of the said vehicle before being sold to the 1st respondent. The appellant further alleged that the 2nd respondent has made false representation that the said vehicle was free from any encumbrance, while in actual fact, it was not. Therefore the plaintiff claimed that the 2nd respondent should also be held liable for the amount remained unpaid by the 1st respondent under the said hire-purchase agreement.

In his counterclaim against the appellant, the 1st respondent claimed that by reason of the seisure by the customs department, the appellant has breached s. 7(1) of the Hire-Purchase Act 1967 which reads:

(1) In every hire-purchase agreement there shall be:

(a) an implied warranty that the hirer shall have and enjoy quiet possession of the goods;

(b) an implied condition on the part of the owner that he shall have a right to sell the goods at the time when the property is to pass;

(c) an implied warranty that the goods shall be free from any charge or encumbrance in favour of any third party at the time when the property is to pass.

The 1st respondent claimed that there was a total failure of consideration and