The Hire-Purchase Act mandates that guarantee agreements exceeding liabilities must be executed in the presence of a magistrate or commissioner to be enforceable.

Ramly Ali JCA (delivering judgment of the court):

There are two appeals before this court heard together, namely:

(a)Appeal No W-02–1503 of 2009:an appeal by AmBank (M) Bhd, as the owner of the vehicle in question against an individual, Pang Tee Chiang @ Phang Nyiok Pan, as the guarantor to the hire purchase transaction, against the decision of the Kuala Lumpur High Court in Civil Suit No D7–22–210 of 2002 in dismissing the owner’s claim with no order as to costs; and

(b)Appeal No W-02–1590 of 2009:an appeal by the hirer of the said vehicle, Trade Ocean Exporters Sdn Bhd against AmBank (M) Bhd, as the owner, and Ace Active Trade (M) Sdn Bhd, as the dealer against the decision of the Kuala Lumpur High Court in Civil Suit No D7–22–183 of 2000 which dismissed the hirer’s claim against the owner and allowed the owner’s counterclaim against the hirer.

BRIEF FACTS

The facts in this case revolve around the hire purchase of a motorcar, Mercedes Benz W220 S320L bearing registration No WGY 911. On 24 July 1999, the dealer sold the vehicle to the hirer at a purchase price of RM988,700. The hirer had entered into a hire purchase agreement on 24 July 1999 for 60 months commencing from 24 August 1999 at a monthly installment of RM15,750. A deposit of RM289,250 was paid. The hire purchase was therefore for a sum of RM700,000 with an interest of RM245,000 making it RM1,234,250 in total (including the deposit). The agreement specifies that the vehicle being hired is ‘One Unit New Mercedes Benz W220 S320L’.

The guarantor had by a guarantee dated 24 July 1999 guaranteed the payment of the installments by the hirer to the owner.

The hirer defaulted the first two installments (due on 24 August 1999 and 24 September 1999) and a Forth Schedule notice of intention to repossess was issued on 25 September 1999. Five days later (on 30 September 1999) the hirer received the registration card of the said vehicle and found the endorsement on the card that the vehicle was an imported used car (kenderaan import terpakai). The hirer then refused to pay the installments.

On 5 November 1999 the said vehicle was seized by the Royal Customs and Excise Department for investigation. On 9 December 2000 (slightly more than one year later) the Customs Department returned the said vehicle to the owner as their investigation disclosed no offence has been committed with regard to the said car.

The owner took back the vehicle from the Customs Department and on 13 December 2000 issued the Fifth Schedule notice to the hirer and the guarantor. There was no response from the hirer and the guarantor. The vehicle was subsequently auctioned to a third party on 5 December 2001 for a price of RM545,000, leaving a shortfall of RM380,548.07 as at 11 March 2002.

The hirer filed a claim against the owner vide Civil Suit No D7–22–183 of 2000 for misrepresentation and breach of warranty and condition by the owner resulting in the said hire purchase agreement being void and thus a claim for refund of the alleged deposit of RM289,250 paid to the dealer. The owner on the other hand filed its counterclaim against the hirer for the shortfall outstanding under the said hire purchase agreement after disposal of the said vehicle at RM380,548.07. The hirer’s claim was dismissed and the owner’s counterclaim was allowed by the Kuala Lumpur High Court.

In the other case, ( Civil Suit No D7–22–210 of 2002 ) the owner had filed a claim against the guarantor under the guarantee agreement date 24 July 1999 for the shortfall outstanding under the said hire purchase agreement after disposal of the said vehicle at RM380,548.07. This claim was dismissed by the court.

At the trial at the High Court, all parties agreed that there are only three issues to be tried, as follows:

(a)whether the owner and/or the dealer misrepresented to the hirer that the said vehicle was new or secondhand;

(b)whether the hirer had complied with the terms of payment of the deposit of RM289,250 to the dealer; and

(c)what is the effect of t