L B FINANCE LTD V WELIGAMAGE AND OTHERS

L. B. FINANCE LTD V. WELIGAMAGE AND OTHERS

SUPREME COURT
J.A.N. DE SILVA, CJ.
AMARATUNGA, J. AND
RATNAYAKE, J.
S.C. APPEAL NO. 19/2009
S.C. (SPECIAL) L. A. APPLICATION NO. 157/2008
COURT OF APPEAL NO. CA 246/97 (F)
D.C. COLOMBO CASE NO. 95406/MHP
2ND DECEMBER 2009

Consumer Credit Act - Section 18 (1)- Owner to provide 2 weeks notice to the hirer as a condition precedent to the act of termination - Section 19 - Consequences of the termination of the agreement.- Strict observance Necessary? What is Notice?

The Plaintiff entered into a hire purchase agreement with the Defendant. The Plaintiff instituted this action on the basis that the Defendant had defaulted the payments under the said agreement. The main issue was the application of Section 18 of the Consumer Credit Act as to whether actual notice is sufficient in terms of Section 18 or whether strict observance of the Section is necessary. Section 18(1) positively requires the owner to provide two weeks' notice in writing as a condition precedent to the act of termination and the said notice of termination to be given to the hirer in writing.

Held:

(1) The notice of termination referred to is not a precursor to a fresh period of notice, but the culmination of the process of termination of the hire purchase agreement and hence the word 'notice' must be understood as being synonymous with "inform".

Per J.A.N: De Silva. CJ.-

"in my view Section 18(1) requires the owner to give the hirer a clear 14 day period. That is, an explicit statement in no uncertain terms as to the date of commencement of period of notice and the date of expiry, the time interval being 14 days."

(2) The proviso to Section 18(1) provides the hirer with a right to pay back the arrears without facing rejection and ensuing termination. The owner at the same time is prevented from terminating the agreement. These rights and disabilities only exist during the pendency of the notice period. At its expiration the hirer looses the right and the option of termination is available to the owner.

(3) By deprivation of a full notice period of two weeks, the owner has deprived the hirer the full extent of his rights of repayment and has created unto himself the entitlement to terminate the agreement earlier than at a date he would have been entitled to Originally. Therefore it is clear that the owner has encroached upon the right of the hirer.

J. A. N. De Silva, CJ.-

"It is pertinent to note that the said section (Section 18(1)) does not prevent the hirer remedying his failure by setting in motion the steps provided in Section 18 without prejudice to either party".

AN APPEAL from a judgment of the Court of Appeal.

Harsha Amarasekera for Plaintiff - Respondent - Petitioner

Hemasiri Withanarachchi for 1st Defendant - Appellant - Respondent.

Cur.adu. vult.

April 01st 2010

J.A.N. DE SILVA CJ

    This is an appeal from a decision of the Court of Appeal dismissing the application of the Plaintiff-Respondent- Appellant (hereinafter referred to as the Plaintiff). The circumstances relating to the dispute in question is as follows. The Plaintiff, a well known finance company, entered in to a hire purchase agreement with the Defendant-Appellant - Respondent (hereinafter referred to as the Defendant). The Plaintiff instituted Action on the basis that the Defendant

defaulted upon payments under the agreement and sought recovery of such sums. The Plaintiff according to his reading of the Consumer Credit Act 29 of 1982, claims to have served notice on the Defendant by letter dated 16-11-1984 (marked P7). Thereafter the Plaintiff further claims termination of the agreement by letter dated 03-01-1985 (marked P8). The Defendant argues that the termination was contrary to the provisions of the said Act and therefore bad in law.

    When this matter was supported for special leave the Supreme Court granted leave on the following two question suggested

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