Recovery of Goods Under Common Law and the Act

Recovery of Goods under the Common Law

Under the common law, the owner’s right to recover the goods from the hirer is unqualified. If there is any slight default in payment, he can take possession of the goods, even without a court order. This worked hardship on the hirer in a lot of respects.

Firstly, the hirer has no right to redeem the goods after a default in payment of instalments. This is regardless of the fact that the default is regarding the last instalment. See Atere vs. Amao 957 WRNLR 176.

Secondly, failure on the part of the hirer to pay the instalment on the particular date constitutes a breach, even though there it is just a one day delay. This entitles the owner to retrieve the goods even if it the default concerns the payment of the last instalment. See Bentworth Finance Nig Ltd vs. Debank Transport Ltd 1968 3 ALR 52.

Thirdly, the hirer has no legal interest in the goods after they have been recovered. This is regardless of the fact that the goods, when sold, might yield a sum which is more than the amount owed by the hirer- Williams vs. UAC Ltd 1937 3 NLR 134.

Recovery by the Owner Under the Act

It is important to note that the most common remedy available is an action in court against the hirer, which the hirer could frustrate the effort of the owner in this regard by absconding with the goods to an unknown destination with the goods being used in a manner detrimental to the goods itself. Recovery of Goods under the Act will also be treated.

Under common law, as we have already discussed, the extremity of the right to repossession and the harshness of judicial interpretation leave the hirer with little or no claim where the owner exercises his right.

The Act has removed the power where the owner can repossess goods at his whim and caprices.

Section 9 (1) of the Act places a restriction on the right of the owner to recover the property otherwise than by action especially where the hirer has paid a relevant proportion of hire- purchase price. For the purpose of this Act what is relevant proportion has been defined as:

           a.      In the case of goods other than motor vehicle its one half

           b.      While in motor vehicle it is three fifths.

If the owner recovers the goods in contravention of the rule then the  hire  purchase agreement  is determined and the hirer and his guarantor are relieved of any liability under the agreement.

It is important to also note that the above provision has no effect where the hirer has exercised his right to terminate the agreement or the bailment. In this instance, the owner can repossess the goods whether the relevant proportion has been paid or not. The position under section 9 of the Act has been established by the courts. In Adesanya v. Balogun & Ors (CCHCJ/11/73), the hirer paid N1,647.00 out of the total hire-purchase price of N1,843.00 and  sued  for damages for seizure of the goods by the owner, without any court order. The seizure was held wrongful, and the court released the hirer of all liability under the agreement.  The court, further ruled that he could recover from the owner the sum N1, 647.00 which he had already paid to the owner. The Act is silent as to what happens where the hirer defaults before the  payment  of  the relevant proportion of the hire-purchase price. It would appear that the common law rule will apply in such an instance.

The statutory restriction imposed on the owner under section 9(1) of the Act protects the goods from repossession not only where the relevant proportion has been paid but also where it has been tendered by or on behalf of the hirer or any guarantor.

Relaxation of Owner’s Restricted Right of Repossession

The injustice of retaking the goods by the owner has been remedied by the restriction on the right of repossession by the owner other than by action after the relevant proportion has been paid or tendered. This restriction received the acclamation of consumers but was widely condemned by owners of goods as radical, ill-timed and retrograde.

The hardship inflicted on the owner by this provision is where the hirer defaults in payment after paying the relevant three fifth of the hire-purchase price and then abscond with the goods to an unknown address, and the owner remedy is an action in court where there is default in payment. Since the whereabouts of the hirer may remain unknown, any action brought by the owner may prove expensive and dilatory. This action drastically reduces the hire-purchase agreement especially in relation to the motor vehicle. The new section 9(5) of the Act has seemingly reduced the hardship on the owner in relation  to the repossession of goods.

Owner’s Obligations under the New Section 9(5)

The new section 9(5) appears to have at first glance relaxed the restricted right of repossession of goods after the payment of the relevant proportion. But the section has not done away with the right of action of the owner. It only lays down some conditions to be fulfilled.

The case of Tabansi (Agencies) Ltd v. Incar Nigeria Ltd (CCHJ/7/74), shows that the introduction of the new section under the amendment Act has not done away with the right of action but that the owner has to fulfill certain conditions before he can invoke section 9(5) of the act. 

The conditions are as follows:

                              i.            Keep the removed goods in his possession and protect them from damages or depreciation.

                                              ii.            Retain them (in any remises he should determine) pending the  determination  of  the case.

                                            iii.            Be liable to the hirer for any damage or loss which may be caused by the removal.

These duties placed on the owner under Section 9(5) must be adhered to strictly for an action under section 9 (1) to succeed. 

In Incar Nigeria Ltd v. Adeyemi (1976) CCHCJ/1127, the defendant bought a motor vehicle from the plaintiffs under a hire-purchase agreement of November 4, 1972. It is being agreed that the hire purchase price of N26, 680.00 was to be paid in twelve instalments, commencing January 30, 1973. The plaintiffs removed the vehicle in August 24, 1974 from a garage where the vehicle was undergoing repairs, at which time a total of N18, 686.76 had been paid, an amount above the relevant proportion, but he was in arrears of May, June and July, 1974. The owner then sold the vehicle after they had sued for arrears and repossession of the vehicle. The defendant counterclaimed damages on the ground of unlawful repossession. The court thereon held that the owner was liable on the counter claim for by selling the vehicle he violated the provisions of Section 9 (5) of the Act and the attendant  consequence  is  provided for under section 9 (2) i.e. the sum of N18, 686  already paid  was to be refunded to  the hirer with cost of N250.

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