CITICORP COMMERCIAL FINANCE (H.K.) LTD. v. TONG LAI SING, DANIEL

IN THE COURT OF APPEAL

1996, No. 208

(Civil)

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J U D G M E N T

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Godfrey, J.A. :

Introduction

1. This litigation arises out of a hire purchase agreement made on 28 January 1994 between Citicorp Commercial Finance (H.K.) Ltd ("the owner") and Tong Lai Sing, Daniel ("the hirer"). The subject of the agreement was a new Mazda EUNOS 800 motor car. The hirer fell into arrears with the instalment payments due under the hire purchase agreement, and, on 8 March 1995, the owner posted a notice of termination of the agreement addressed to the hirer; but, apparently, this did not reach him until 11 March 1995. By then, the owner, quick off the mark (perhaps too quick), had (on 9 March 1995, at 1:30 a.m.) already re-possessed the car. The hirer, aggrieved by this, has resisted the owner's proceedings for payment of the sums due to it under the agreement. There is before us an appeal from Seagroatt, J., who, on 9 September 1996, dismissed the hirer's appeal from an order of Master Chu made on 7 May 1996 striking out the hirer's defence (the only point raised in which, and raised before us, was the point to which I have referred, of premature re-possession of the car) and giving judgment for the owner for $74,262.82 with interest and costs. I should add that the hirer's notice of appeal was not served on the owner within 14 days after the date on which the judgment of Seagroatt, J. was perfected, that is to say, 25 September 1996; and the point is now taken by the owner that the appeal is therefore out of time. That may be so, but I am of the opinion that, in the interests of justice, we should extend the hirer's time for appeal until today so as to enable us to dispose of the appeal on its merits.

The hire purchase agreement

2. The hire purchase agreement of 28 January 1994 is in the owner's standard form, and contains printed terms and conditions to some only of which I need to refer.

3. By clause 3, it is provided that the hirer is to pay to the owner the balance of the hire purchase price by the instalments specified in the schedule to the agreement. By clause 32, it is provided that time is to be of the essence in respect of all matters under the agreement. By clause 16, it is provided that if the hirer should make default in payment of any of the sums payable under the agreement, the owner may, by notice in writing to the hirer, determine the agreement "and thereupon this Agreement and the hiring thereby constituted shall for all purposes determine and thereafter the Hirer shall no longer be in possession of the Vehicle with the Owner's consent". By clause 24, it is provided that all notices required to be given to the hirer may be given in writing and posted to the hirer at his address specified in the schedule, and that "The day following the day of such posting shall be deemed to be the day of receiving such notice by the Hirer." (Emphasis added.)

The facts

4. The owner, dissatisfied with the failure of the hirer to pay on time an instalment due under the agreement, and unmoved by the hirer's attempts to obtain an extension of time, gave notice in writing to the hirer exercising its right of termination of the agreement. The notice, dated 8 March 1995, and in standard form, reads as follows :

"We refer to our previous letter(s) and note that we have received no response nor any payment.

Accordingly, consequent upon the default referred to in our previous letter(s), we hereby exercise our right of termination of the Agreement with immediate effect and, accordingly, pursuant to the terms of the Agreement, you are deemed to have repudiated the Agreement which repudiation is hereby accepted by us. You are therefore no longer in possession of the equipment/vehicle, as defined in the Agreement, with our consent."

5. The car was re-possessed on 9 March 1995 at 1:30 a.m., as I have said, and on the same day the owner sent a further notice to the hirer, captioned "Notice of Re-possession" which reads as follows:

"Subsequent to your default under the agreement having the reference number referred to in the attachment hereto (the 'Agreement') and its consequent termination, we have repossessed the Equipment/Vehicle pursuant to the terms of the Agreement.

Unless within 7 days from the date of repossession, satisfactory arrangements are made with us with regard to your obligations under the Agreement, we will dispose of the Equipment/Vehicle without further notice pursuant to the terms of the Agreement, and will take such further action as may be necessary to protect our interests.

Please contact us immediately."

6. This appears to offer the hirer, what (if I may be forgiven for using the phrase) may be described as a locus poenitentiae, an opportunity to put matters right by approaching the owner to see if the agreement might be reinstated. However, nothing of the sort happened, and the car was in due course sold; the present proceedings instituted; and the hirer's defence, based on the allegation of a premature re-possession of the car, was struck out.

The issues

7. The first matter which we have to consider is whether the hirer is correct in his assertion that the owner prematurely re-possessed the car. The second matter is whether, if he is correct, the consequences are such as to afford him a defence to the owner's action.

8. As to the first matter, the answer to the question whether or not the owner re-possessed the car prematurely must depend on the construction to be placed on the relevant provisions of the agreement. This much is clear; the owner was entitled to give notice in writing to the hirer to determine the agreement; "thereupon" the agreement and the hiring thereby constituted would determine; and "thereafter" the hirer would no longer be in possession of the vehicle with the owner's consent. But to what time do the words "thereupon" and "thereafter" speak? Do they speak to the time at which the notice was posted, as the owner contends, or do they speak to the time at which the notice was received, or is to be deemed to have been received, as the hirer contends? The owner, in support of its contention that the words speak to the moment of posting of the notice of termination, relies on the case of Drages Ltd. v. Owen (1935) 52 T.L.R. 108. In that case, Porter, J. held that a notice sent by post under a similar agreement to the one we have to construe terminated the agreement from the moment the notice was posted. There, the agreement contained a clause authorising the owner to terminate the agreement in certain events "by written notice sent (by post or otherwise) to, or left at, the hirer's last known address".

9. I do not find this case of any assistance, except perhaps for the purpose of identifying, as I think it does, the question we have to decide : to what time does the language speak? For the purpose of answering the question, we must, I think, construe the agreement actually before us. For my part, I am not satisfied that on the true construction of the agreement before us the posting of this notice was sufficient to terminate the agreement at the moment of posting. Clause 24, which I have already quoted, demonstrates, as I read it, that the whole object of the notice is to bring the contents of that notice to the attention of the hirer, and that it is to take effect only when it is received or is to be deemed to have been received.

10. If I am right so far, then (subject to a point as to the owner's acceptance by conduct of the hirer's repudiation of the agreement, which I shall mention in a moment) the hirer is correct in his contention that the car was prematurely re-possessed.

11. The point I have mentioned is this. Since the hirer was in default in payment of an instalment due under the agreement, and since time was of the essence of the agreement in that respect, the failure of the hirer to pay the instalment on the due date was a repudiatory breach of the whole agreement, which the owner was entitled to accept by re-possessing the car on 9 March 1995; the owner by his conduct in re-possessing the car clearly evinced an intention to treat the agreement as at an end.

12. For my part, I do not accept this. I accept that an agreement may be repudiated, otherwise then in accordance with its terms, as a matter of general law; but, as it seems to me, in the present case this agreement was setting out a complete code to regulate the relationship between the owner and the hirer, including rights of termination. Further, the language of the notice of termination itself points to an intention on the part of the owner to rely, not on any common law right it might have had, but upon its rights under the agreement.

13. That leaves then the second matter, whether if, as I would hold, the car was prematurely re-possessed, the hirer is entitled to rely on that fact as a defence to the owner's action. In my judgment, he is not. I cannot see how the fact that the car was re-possessed at 1:30 a.m. on 9 March 1995 when it should not have been re-possessed before the notice was received can afford any defence to the hirer to the owner's claims made in the action. Whether or not the fact that the hirer might wrongly have been deprived, for some hours, of the use of the car would afford him a right to counterclaim for any damage he may be able to prove he has suffered as a result of the premature re-possession, I do not pause to inquire, for the matter is not before us. The one matter we have to consider is whether the premature re-possession affords the hirer any defence to the action. I cannot see how it can possibly do so.

The result

14. I am satisfied that the judge was right to uphold the order of the master and that we must uphold the order of the judge. It is not for us, as I think, to make any comments on the way the owner conducts its business. It is not for us either to compare the state of the law of Hong Kong with that of England and Wales under the regime prescribed by the Consumer Credit Act 1974. The hirer (unaware of the difference) took the point that under that regime a default notice does not take effect immediately; the hirer is given a statutory 7 days in which to make his peace with the owner. But, in Hong Kong, the point does not avail him.

15. For the reasons I have endeavoured to state, it seems to me we have no option but to dismiss this appeal.

J. Chan, J. :

16. I concur, with nothing to add.

Litton, V.P. :

17. I, too, concur. The result is that the appeal is dismissed.