Sulewa v Nambawan Finance Ltd [2000] PGDC 6; DC71 (25 April 2000)

Unreported District Court Decisions

[2000] PNGDC 3 - BLAKE SULEWA V NAMBAWAN FINANCE LTD

[2000] PNGDC 3

PAPUA NEW GUINEA

[DISTRICT COURT OF JUSTICE]

CASE NO. DCC 1941/99

BETWEEN

BLAKE SULEWA

COMPLAINANT

AND

NAMBAWAN FINANCE LIMITED

DEFENDANT

Port Moresby

Geita SM

2-3 March 2000

14 April 2000

25 April 2000

SALE OF GOODS - Rights of seller – Lease Agreement – Action by seller for breach of lease agreement – Seller entitled to recover damages.

Cases Cited

Rowland Vs. Divall [1923] 2. K.B.500.

REASONS FOR DECISION

GEITA SM:  The brief facts of the case are these:

By a written agreement dated 1st June 1998 the Defendant Nambawan Finance Limited and Mr Isaac Sogo entered into a “Lease Agreement”.  The Defendant agreed to lease for a twenty four (24) months period the subject  motor vehicle to Mr Sogo in consideration for a monthly rental payment of K480.66  during the period of the lease.

A copy of the lease was tendered into Court as evidence.  Like most other leases, standard express terms and conditions were agreed too and contained therein.  One of which was  not to sell the said motor vehicle without the Lessor’s prove written consent or to sell or encumber nor agree to sell.

On 19th March 1999, Mr Isaac Sogo sold the same motor vehicle Nissan Navara Utility Registration No.BAI-304 to Mr Blake Sulewa the Complainant in this case for K7,000.00.  The motor vehicle was than registered under the complainants name.  Registration papers were tendered into Court as evidence.  Unknown to the complainant Mr Isaac Sogo still had an outstanding amount of K2,600.00, or so he claims to the Defendant Company.

Upon learning that ownership of the motor vehicle had changed hands the defendant company exercised its right to repossess and subsequently repossessed it on 28th April 1999 in front of Super Value Supermarket at Murray Barracks.

According to the Complainant, he met up with Isaac Sogo who admitted owing the Defendants money in outstanding rentals totally K2,600.00.  Both Isaac Sogo and the Complainant went to the Defendant’s Company and paid K1,340.00 followed by another cash payment of K1,300.00 the next day.  Having made those payments of which the Complainant claims to be final outstanding payments to the Defendant, the Complainant now claims that Defendant has no legal title to the car.

The Defendant Company on the other hand is claiming that at the purported sale Isaac Sogo was till leasing the motor vehicle from the Defendant.  As such he had no right to sell the said same car.  Hence the Complainant did not acquire any better right or title to the property in the motor vehicle than that which Isaac Sogo had.

ISSUE

The issue lease is deal  the Complainant acquire good title in the subject motor vehicle from Isaac Sogo?

First, I look at the question of title.  Section 21 (1) of the Goods Act Chapter No.251 provides that where the goods are sold by a person who is not the owner and does not sell them under the authority or with the consent of the owner the buyer acquires no better title to the goods than the seller had unless the owner of the goods is precluded by his conduct from denying the sellers authority to sell.

The question now before this Court  is at what point in time did title to the said motor vehicle change  hands between the Defendants and the previous owner Isaac Sogo?

According to Defendants evidence the Complainant had an outstanding balance of K10,575.52 as at 1st October 1998.  Likewise the Complainants evidence is that around  April 1999, (the month of repossession), his outstanding rental was about K2,600.00.

This Court has not been assisted by the Complainant as to what payments if any were made earlier by the previous owner.  One could argue that they were not of his doing and were of no concern to him.  This Court thinks otherwise.  The previous owner Isaac Sogo may be the answer to this riddle.  Obviously the previous owner has disappeared from the secure as is the case in most similar transactions.  In the absence of any credible repayment details to rebut the defendants claim of outstanding rentals, the defendants version must be believed.  The previous owner who is  the key witness in this case has not been called to give evidence or his affidavit obtained  in rebuttal.  No reasons were forthcoming as to why this was not so.

In the absence of any evidence in this regard I have taken it upon myself to digest the relevant account ledger statement submitted by the Defendant in Annexure “D” to satisfy myself on this question.

From the 5th June 1998 up to 1st October 1998 (4 months) the Complainant had an accumulated debt balance of K10,575.52 as claimed by the Defendant.  Between the 5th June 1998 and 8th July 1998 two lots of monthly rentals were paid totally K961.32.  On 4th May 1999 K1,360.00 was paid to the Defendant.  Presumably this is the payment referred to by the Complainant in his affidavit.  It shows an amount of (K1,340.00).

On 21st May 1999 K1,100.00 was paid to the Defendant.  A further K160.00 was paid on the 8th June 1999.  Presumably these were  the second lots of payments referred too by the Complainant in his affidavit.  An amount of (K1,300.00) was shown.  Of interest to this Court is that these payments were not made a day apart as claimed by the Complainant.  They are a weeks apart and the amounts not consistent.  Somebody is not being very truthful with his recollection of payments and events.

One observation made by this Court is  that as from 1st October 1998, Isaac Jacob’s arrears stood at K10,575.52.  Having deposited these 3 lots of payments in May, June 1999 and a further lounge payment of K8,000.00 on 20th September 1999, his outstanding  balance with the Defendant still stood at K484.39 according to the ledger.

Again in the absence of a rebuttal one could draw inferences that as at 20th September 1999 – title to the motor vehicle still had not passed to the previous owner, Mr Isaac Jacobs. His account was subsequently closed with a bad debt write off of K842.40 inclusive of rebates and VAT charges.

Under the circumstances, as at 19th March 1999 when the Complainant bought the motor vehicle from the previous owner, he did not acquire any better right or title to the property than that which Isaac Sogo had.  Put simply he was not the owner and therefore had no authority to sell.  He therefore could not pass on to the Complainant any better title than what he himself had.

Next is question of the agreements entered into by the three (3) parties.  The Lease Agreement is a private contract entered into by the Defendant and Mr Isaac Sogo.  It is governed by the Hire Purchase Act Chapter No. 252 S.1.  It is a contract when only the owner lets or hires out goods to another person called the hire at a fixed periodic rental.  The ultimate aim being to enable the hirer to acquire ownership of the relevant goods.

The hire purchase agreement gives the owner the right to repossess the goods in certain circumstances of default by the hirer.

Under a hire purchase agreement possession and the right of use, of the goods pass all over to the hirer, but the property or ownership remains with the owner.  It is only after the total amount of the rental installments has been paid that the hirer will be able to exercise the option to purchase the goods and acquire ownership of the goods.

In this case arrangements were made with the Defendant who bought the car from a dealer at their cash selling price.  The Defendant than hired out the car under a lease arrangement or hire purchase agreement.

The parties to this agreement were the hirer Isaac Jacobs and Nambawan Finance Company.

Both parties agreed to certain conditions in their lease agreement.  One of which was not to disposed the said Motor Vehicle without the owner’s consent etc.  The owner now claims this condition was breached by Mr Sogo.

The agreement between the Complainant and Mr Isaac Sogo is also good for their purpose as far as they go.  I have already touched on that question and will not dwell further on it.

I feel I should say two things before parting with this case.  Firstly, I express my indebtedness for the thorough and helpful way it was argued by both Counsels.  Both Counsels have raised very convenience legal arguments for and against their clients.  A lot of research and work has obviously gone into your submissions and both Counsels must be commended for the high standard of research put into your submissions.

This Court has been reminded that the ownership, possession, use and dealings relating to motor vehicles are governed by the Motor Traffic Act, and the Motor Traffic Regulations Chapter No.243 & Chapter No.295.

The Complainant has attempted to show Court that by virtue of registration he holds legitimate title to the said motor vehicle.  Whereas the Defendant does not have title but only has possession and not ownership right.  I tend to differ with the Complainants submission.  The relevant have here is that of the Hire Purchase Act Chapter No. 252.

As I have mentioned above earlier under a hire purchase agreement or lease agreement in the case, possession and the right to use, of the goods pass at once to the hirer, but the property or ownership remains with the owner.

I am more inclined to agree with the Defendant that the fact of registration of the motor vehicle in owner’s name is not conclusive evidence of ownership.  Although the registration document is not a document of title, it is the best evidence of title.

The Counsel for the Complainant has raised some very important arguments on ownership and has requested this court to rely on the  Motor Vehicle Legislation and find for his client.  This Court has found his arguments and logic to be very interesting and persuasive however the crux of the matter is that he has not convinced this Court that his clients claim of ownership of the said motor vehicle is conclusive.  Nor has he shown to the Court that the previous owner Mr Isaac Sogo has paid all rental installments due under the agreement to the Defendant Company.

For as long as some outstanding rentals remains unpaid, however small it may be, good title cannot possibly be said to have passed from the lessee or lessor or in the case from the Defendant to Mr Isaac Sogo.  I am not convinced that he has successfully completed his loan repayments, as claimed.  Therefore the Complainant cannot claim that he has a good title to the car.

The end result is that the Complainants claim must fail.  I agree with the Defence Counsels submission that the Complainant is not left without a remedy.  He can sue Mr Isaac Sogo for the return of his price as  money paid on a consideration  which had failed.  See the leading case of Rowland Vs Divall [1923] 2. K.B. 500.

I therefore make orders in the following terms.

ORDERS

N1>1.       The Complainant’s claim  is dismissed.

N1>2.       Both parties to pay its own costs.

Lawyers for the Complainant:  Eric Kwa

Lawyers for the Defendant:  Simon Keten