Subparagraph
(iii) Regardless of the existence of a hire purchase agreement, does section 32 of the CPA apply to make the dealer/supplier liable to the consumer? [20] However, according to learned counsel, there is only one core legal issue – given the hire purchase agreement entered into between the Plaintiff and the Second Defendant, was there still a contract of sale between the Plaintiff and the First Defendant? Bearing in mind that in his pleading, the Plaintiff essentially was seeking for the revocation of the contract of sale [membatalkan kontrak jualan kenderaan No. AHC 9928] and the refund of the purchase price, the whole case of the Plaintiff rested on the issue of whether there was a contract of sale of the car between the Plaintiff and the First Defendant. This, learned counsel said, was strictly a case on section 32 of the CPA as indeed was the crux of the 15 Plaintiff’s argument in the Courts below. Sections 33, 34, 38 and section 47 of the HPA were not within the ambit of the leave questions. [21] On the question whether the CPA affects the hire purchase and the law, learned counsel referred to sections 3 and 47 of the CPA. Under section 3, “supplier” means a person who, in trade, supplies goods to a consumer by transferring the ownership or the possession of goods under a contract of sale, exchange, lease, or hire or hire purchase to which that person is a party. Section 47 provides for assessment of damages in case of hire purchase agreements. So, according to learned counsel, the CPA recognised the concept of hire purchase. In addition, learned counsel submitted that by virtue of section 2(4) of the CPA, the application of the CPA shall be supplemental in nature, and without prejudice to any other law (which includes written law and case law) which regulates contractual relations. The CPA does not override and does not do away with the contractual relations of hire purchase. So, according to learned counsel, if the car was sold to the Financier (like the Second Defendant in this case), which then transferred possession to the hirer, the HPA will apply. In such a case it is not possible for the same car to be sold to the customer (hirer) and also to the finance company. The hirer will not be without any remedy. Learned counsel contended that the 16 hirer’s recourse (as rightly held by the High Court in this case) was against the financier [the Second Defendant]. [22] Learned counsel submitted that the hire purchase transaction is not a contract of sale. It is a bailment coupled with an option to buy. Once the hire purchase agreement is executed between the customer (hirer) and the finance company (owner), the dealer “drops out”. Learned counsel then referred to Helby v. Matthews (1895) AC 471, Anglo-American Corporation (M) Sdn Bhd v. Dato’ Phua Cheng Leong [1969] 2 MLJ 12, FC, United Engineers (Malaysia) Ltd. v. Lai Ping Yoon [1968] 1 MLJ 189, and Malayan Credit Ltd. v. Mohamed Kassim [1965] 2 MLJ 134. Thus, according to learned counsel there is nothing new in Ahmad Ismail. Learned counsel submitted that Ahmad Ismail had been unjustly criticized. He submitted that the principle of law that in a hire purchase transaction there is no contract of sale or an agreement to sell between the dealer and the customer, and that the customer will cease to have any contractual relationship with the dealer, was well settled by the highest authorities which can be traced back to as early as 1895 with the case of Helby v. Matthews (supra). Helby v. Matthews (supra) was referred to in Anglo-American Corporation (M) Sdn. Bhd. (supra), and United Engineers (M) Ltd. (supra). Learned counsel submitted that from those authorities the principles of law established are 17 clear where there is a hire purchase transaction. The goods in question are sold to and bought by the finance company. Property in those goods passes to the finance company who in law becomes the owner of the said goods. Unless and until the consumer fulfils all conditions under the hire purchase agreement and exercises the option to buy, he is merely a hirer and a bailee pursuant to the hire purchase agreement. The result is that there is no contract of sale or an agreement to purchase as between the dealer and the consumer. [23] He submitted that in a hire purchase agreement, the finance company who is described as the owner will buy the vehicle, and then hire it out to the customer who is described as the hirer. It is not possible for the same vehicle to be sold to the customer and also to the finance company. It is for this reason that the initial contract of sale between the car dealer and the customer will fade away and be superseded by the hire purchase agreement making the finance company the owner of the vehicle. He submitted that from the authorities he had referred to, it was clear that Ahmad Ismail’s case did not propound any novel principle of law; the Court was merely re-stating a settled and entrenched principle both here and in England. He submitted that upon the coming into existence of the hire purchase agreement made between the Plaintiff and the financier (the Second Defendant), the contractual relationship 18 between the First Defendant and the Plaintiff had been superseded by the said hire purchase agreement. DECISION OF THIS COURT [24] In his submission before us, learned counsel for the Plaintiff also argued on the liability of the First Defendant under the CPA as a “manufacturer”. In his submission, learned counsel for the First Defendant contended that this was raised for the first time in this Court and that the point was not pleaded by the Plaintiff. We agree. It is well settled that the Court should not decide on an issue that was not pleaded by the parties. Where a vital issue was not raised in the pleadings it cannot be allowed to be argued and to succeed on appeal [see Ambank (M) Bhd v. Luqman Kamil B. Mohd Don [2012] 3 MLJ 1 FC, Poraviappan Arunasalam Pillay (Sebagai Pentadbir Harta Pesaka Nadajarah Sithambaram Pillai) v. Periasamy Sithambaram Pillai & Anor [2015] 6 CLJ 857, FC, Saiman bin Umar v. Lembaga Pertubuhan Peladang and Another Appeal [2015] 6 MLJ 492]. We have considered the pleadings of the Plaintiff, and the submissions made on his behalf in the Courts below. We agree that the Plaintiff’s case against the First Defendant was its liability as a “supplier” for the alleged breach of the provision relating to implied guarantee as acceptable quality under section 32 of the CPA, and 19 alternatively, for breach of the provision relating to implied condition as to quality and fitness under section 16 of the SGA. This position is also reflected in the Memorandum of Appeal filed by the Plaintiff for the purpose of the appeal to this Court [See page 8-10, Rekod Rayuan (Jilid 1)]. Indeed, this is also reflected in the question of law in respect of which leave to appeal to this Court was allowed. [25] This brings us to that question which we set out at paragraph 9 of this judgment. First, the question refers to the contractual relationship between the “dealer/supplier” and the consumer being superseded by the hire purchase agreement as stated in Ahmad Ismail. “Supplier” is defined under section 3 of the CPA which includes a person who, in trade, supplies goods to a consumer by transferring the ownership or possession of the goods under a contract of hire purchase. In the context of the question and the facts of this case, it does not make sense to talk about the contractual relationship between the supplier [as person who transfers possession of the goods under a hire purchase], thus the contractual relationship was the hire purchase agreement, being superseded by hire purchase agreement. In our view therefore, the words “the dealer/supplier” in the question should be substituted with the words “the dealer”. 20 [26] The question of law posed raises the issue of applicability of the principle decided by this Court in Ahmad Ismail to the transaction relating to the purchase of the car in this case. As would be recalled, the High Court found the transaction to be a hire purchase transaction. It applied Ahmad Ismail and held that it was not correct for the Plaintiff to have sued the First Defendant in this case. It dismissed the Plaintiff’s case. The Court of Appeal affirmed the High Court’s decision, and applying Ahmad Ismail, held that “once the Plaintiff has entered into the hire purchase agreement with the finance company, any contractual relationship between the Plaintiff and the car dealer has been extinguished; the legal effect of which is that the Plaintiff has no claim against the car dealer … the Plaintiff’s claim against the First Defendant is unsustainable. There is no contractual relationship between the Plaintiff and the First Defendant to found the basis of the claim under the CPA and/or the SGA 1957.” [27] In Ahmad Ismail, the plaintiff wanted to buy a second hand Morris car bearing registration no. BW 343 from the first defendant, a car dealer, for $4,900.00. The plaintiff turned in his own car for which he was given a credit of $1,200.00. He also paid the first defendant $1,000.00 in cash. He had to find another $2,700.00. It was agreed that this should be settled on or before 19th December 1969, failing which the deposit of $1,000.00 cash would be forfeited. Since the plaintiff had no money to pay for the 21 balance of the purchase price, he was introduced by the car dealer to the second defendant (a finance company), resulting in the plaintiff entering into a hire purchase agreement with the second defendant, under which the second defendant was referred to as “the owner” of the car, and the plaintiff as “the hirer”. Under the agreement, the plaintiff was to pay the second defendant monthly instalments of $150.00 each beginning on 19th January 1970. The plaintiff paid four instalments. On 30th April 1970, the car was detained by the police on suspicion that it had been stolen. The plaintiff stopped paying the monthly instalments. On 4th July 1970, the plaintiff terminated the hire purchase agreement. The plaintiff sued the first and the second defendants in the Sessions Court for damages for breach of contract, alleging that there had been a breach of the implied condition under section 6(1)(b) of the HPA that the owner shall have the right to sell the goods at the time when the property was to pass. The learned President of the Sessions Court dismissed the claim against the first defendant, holding that after the plaintiff had gone to the finance company, the car dealer faded out of the picture and there ceased to be any contractual relationship between him and the plaintiff. The learned President also dismissed the claim against the finance company on the ground that there was no proof that the car had been stolen (this was agreed by counsel before him) and therefore there had been no breach by the finance company of the condition implied by section 6(1)(b). The 22 plaintiff appealed to the High Court, which dismissed his appeal. The plaintiff’s appeal to the Federal Court was also dismissed. It was held that the sale agreement between the first defendant (the car dealer) and the plaintiff was superseded by the hire purchase agreement and therefore the plaintiff had no claim against the first defendant. In delivering the judgment of the Court, Suffian F.J. (as His Lordship then was) said at page 67: “The learned President on 18th December, 1971, dismissed the claim against the first defendant, holding that after the plaintiff had gone to the finance company, the car dealer faded out of the picture and there ceased to be any contractual relationship between him and the plaintiff. The learned President also dismissed the claim against the finance company on the ground that there was no proof that the car had been stolen (this was agreed by counsel before him) and therefore there had been no breach by the finance company of the condition implied by section 6(1)(a). The plaintiff appealed to the High Court, which dismissed his appeal. He has now appealed to us. The questions to be determined in this appeal are as follows. After the execution of the hire-purchase 23 agreement between the plaintiff and the finance company did there remain any contractual relationship between the plaintiff and the car dealer so that the plaintiff has a claim against him? … … The first ground of appeal concerns only the first defendant. It is said that the learned appellate judge was wrong in holding that there remained no contractual relationship between the plaintiff and the first defendant. It is said that despite the existence of the hire-purchase agreement there still remained a contractual relationship between the two of them and that the learned appellate judge should have held that the first defendant had only assigned his rights in the car to the finance company. We regret we cannot accept this argument. It is true that by exhibits P1 and P2 there was a sale by the car dealer of the car to the plaintiff on certain conditions. But ultimately these documents were superseded by the hire-purchase agreement exhibit P3 and from the language of this document it is plain that the car dealer completely faded out of the picture and the only contract that remained then was between the plaintiff and the finance company, and accordingly the plaintiff has no claim against the car dealer.” [28] The working of the principle that the hire purchase agreement supersedes the sale by the car dealer to the plaintiff and that the former 24 completely fades out of the picture leaving the hire purchase agreement between the plaintiff and finance company as the only contract in respect of the car can be seen in the description of the nature of a modern hire purchase transaction by Lord Denning in his judgment in the House of Lords case of Bridge v. Campbell Discount Co. Ltd. [1962] 1 All ER, 385 at page 398: “… in order to determine this case it is as well to remember what is the nature of a hire-purchase transaction. It is in effect, though not in law, a mortgage of goods. Just as a man who buys land may raise part of the price by a mortgage of it, so, also, a man who buys goods may raise part of the price by hire-purchase of them. And just as the old mortgage of land was not what it appeared to be, so, also, the modern hire-purchase of goods is not what it seems to be. One might well say of a hire-purchase transaction what Maitland said of a mortgage deed: “That is the worst of our mortgage deed … it is one long suppressio veri and suggestio falsi”: see his LECTURES ON EQUITY (2nd Edn) (1949), p 182. Take this present transaction. If you were able to strip off the legal trappings in which it has been dressed and see it in its native simplicity, you would discover that the appellant agreed to buy a car from a dealer for £405 but he could only find £105 towards it. So he borrowed the other £300 from a finance house and got them to pay it to the dealer, and he gave the finance house a charge on the car as security for repayment. But if you tried to express the transaction in those 25 simple terms, you would soon fall into troubles of all sorts under the Bills of Sale Acts, the Sale of Goods Act, and the Moneylenders Acts. In order to avoid these legal obstacles, the finance house has to discard the role of a lender of money on security and it has to become an owner of goods who lets them out on hire: see Re Robertson, Ex p Crawcour , McEntire v Crossley Brothers, Ltd. So it buys the goods from the dealer and lets them out on hire to the appellant. The appellant has to discard the role of a man who has agreed to buy goods, and he has to become a man who takes them on hire with only an option to purchase: see Helby v Matthews. And when these new roles have been assumed, the finance house is not a moneylender but a hire-purchase company free of the trammels of the Moneylenders Acts: See Transport & General Credit Corpn, Ltd v Morgan ([1939] 2 All ER at p 28; [1939] Ch at p 551). So you arrive at the modern hire-purchase transaction whereby (i) the dealer sells the goods to a finance house for cash; and (ii) the finance house lets them out on hire to a hirer in return for rentals which are so calculated as to ensure that the finance house is eventually repaid the cash with interest; and (iii) when the finance house is repaid, the hirer has the option of purchasing the car for a nominal sum. The dealer is the intermediary who arranges it all. The finance house supplies him with the printed forms, and he gets them signed. In the result, the finance house buys a car it has never seen, and lets it to a hirer it has never met, and the dealer seemingly drops out. 26 When hire-purchase transactions were first validated by this House in 1895 in Helby v Matthews, the contract of hire had most of the features of an ordinary hiring. In particular, the hirer was at liberty to terminate the hiring at any time without paying any penalty. He could return the goods and not be liable to make any further payments beyond the monthly sum then due. There was no clog on his right to terminate. And this was one of the reasons why the House saw nothing wrong with the transaction. LORD MAC NAGHTEN in characteristic fashion pointed out what a benefit this was to the hirer: “… if a coveted treasure is becoming a burthen and an encumbrance it is something, surely, to know that the transaction may be closed at once without further liability and without the payment of any forfeit.” [29] Helby v. Matthews (supra) and Bridge v. Campbell (supra) were referred to in United Engineers v. Lai Ping Yoon (supra) where in his judgment, Gill J (as His Lordship then was) at pages 193-194 also set out how the House of Lords in Helby v. Matthews (supra) distinguished Lee v. Butler [1893] 2 OB 318: “Perhaps it will be useful at this stage to discuss the development and nature of hire-purchase transactions. As Cheshire and Fifoot on the Law of Contract (6th edition) says at page 179, hire-purchase agreements had their origin in the desire on the part of manufacturers and traders to reach 27 potential customers who could not afford at once to pay the price of their goods. Suppliers began to make contracts under which the price was payable by instalments and the possession of the goods passed at once to the customer, but they retained ownership until the last instalment had been paid. By this means they hoped to protect themselves even if the customer, before completing payment, improperly sold the goods to an honest buyer. But by section 9 of the Factors Act, 1889, substantially reproduced in section 25(2) of the Sale of Goods Act, 1893, a person who has agreed to buy goods and who has obtained possession of them with the seller's consent may, by delivering them to a bona fide purchaser or pledgee, pass a good title. A case in point is the case of Lee v Butler [1893] 2 QB 318 in which one W. E. Hardy on May 5, 1892 let furniture on a "hire and purchase agreement" to Helen Caroline Lloyd who was to pay £1 on May 6 and the balance of £96 4s. on August 1st, 1892. The furniture was to become Mrs. Lloyd's property only when the final payment was made. Hardy duly assigned the agreement and all his interests thereunder to the plaintiff. Before the condition of the agreement was satisfied Mrs. Lloyd sold and delivered the furniture to the defendant in whose possession it was when the action was brought. The Court of Appeal held that on the proper construction the agreement Mrs. Lloyd was under an obligation to pay all the instalments and that she had therefore "agreed to buy the furniture". She had accordingly passed a good title to the defendant who could not be sued by the plaintiff. 28 In Helby v Matthews [1895] AC 471 the owner of a piano agreed to let it on hire to one Brewster. The hirer was to pay the rent by monthly instalments, on the terms that the hirer might terminate the hiring by delivering up the piano to the owner, he remaining liable for all arrears of hire. The agreement also provided that if the hirer should punctually pay all the monthly instalments, the piano should become his sole and absolute property, and that until such full payment the piano should continue to be the sole property of the owner. The hirer received the piano, paid a few of the instalments and pledged it with a pawnbroker as security for an advance. In an action by the owner against the pawnbroker for conversion of the piano the pawnbroker contended that Brewster had "agreed to buy" the piano and so passed a good title under section 9 of the Factors Act, 1889. This contention was upheld by the Court of Appeal, but the decision of that court was reversed by the House of Lords. The decision of the House of Lords was that upon the true construction of the agreement the hirer was under no obligation to buy but had an option either to return the piano or to become its owner by payment in full, that by putting it out of his power to return the piano he had not become bound to buy, that he had therefore not "agreed to buy the goods" within the meaning of section 9 of the Factors Act, and that the owner was entitled to recover the piano from the pawnbroker. Lee v Butler was distinguished on the ground that:– “There was there an agreement to buy. The purchase-money was to be paid in two instalments, but as soon as 29 the agreement was entered into there was an absolute obligation to pay both of them, which might have been enforced by action. The person who obtained the goods could not insist upon returning them and so absolve himself from any obligation to make further payment" (per Lord Herschell L.C. at page 478).” Helby v Matthews is the leading case on hire-purchase agreements and the hire-purchase agreement which the House of Lords had to consider in that case has been the basis of all hire-purchase agreements ever since. In Bridge v Campbell Discount Co Ltd [1962] 1 All ER 385 at page 398 Lord Denning said:– “When hire-purchase transactions were first validated by this House in 1895 in Helby v Matthews, the contract of hire had most of the features of an ordinary hiring. In particular, the hirer was at liberty to terminate the hiring at any time without paying any penalty. He could return the goods and not be liable to make any further payments beyond the monthly sum then due. There was no clog on his right to terminate. And this was one of the reasons why the House saw nothing wrong with the transaction.” [30] His Lordship then referred to the nature of a hire purchase transaction as explained by Lord Denning in his judgment in Bridge v. Campbell Discounts Co. Ltd (which we have referred to at paragraph 28 of this judgment). 30 [31] Further at page 194, His Lordship explained: “A contract where the property passes at once but the price is payable by instalments is clearly a credit sale. A hire-purchase agreement is more than a simple contract of hire, for it confers upon the hirer an option to purchase the goods. Thus a bailment coupled with an option to buy, as in Helby v Matthews, is clearly a hire-purchase agreement. By granting the option, the owner makes an irrevocable offer to sell the goods to the hirer if the conditions laid down in the agreement are fulfilled. On his part, however, the hirer is under no obligation to buy the goods. He may exercise the option, that is to say, he may accept the offer once he has fulfilled the conditions, if he so wishes, but he may also elect to terminate the hiring and return the goods to the owner without buying the goods. He has a power to accept the offer, but is not bound to do so. The importance of the option to purchase lies in the fact that the hirer is unable to pass a good title to a third party, because he is not a person who has bought or agreed to buy the goods. Since the property in the goods remains in the owner who lets them on hire, the retention of the ownership of the goods and the inability of the hirer (except in special circumstances) to pass a good title provide the owner with some measure of security in case the hirer defaults. The hirer, on the other hand, obtains the benefit of a credit transaction in that he receives the possession and use of the goods in advance of the payment of the price, and is enabled to purchase the goods once the 31 price has been paid. (See Guest on the Law of Hire-Purchase, pages 10 and 11, paragraphs 23 and 25).” [32] A true hire purchase agreement as explained in Helby v. Matthews (supra) was subsequently referred to with approval in Anglo-American Corporation (supra), where in delivering the judgment of this Court, Gill F.J. said at page 14: “A true hire-purchase agreement, as explained by the House of Lords in Helby v Matthews, is an agreement by which the owner of a chattel lets it out on hire and undertakes that it shall become the property of the hirer when the hirer has paid the last of a certain number of payments specified in the agreement, but so that the hirer may return the goods at any time without any obligation to pay any balance of rent accruing after the return. Until those conditions have been fulfilled the property remains in the owner. Since no property in the chattel passes to the hirer until he has made the last of the payments specified in the agreement, the agreement need not be registered as a bill of sale. Such an agreement differs from a sale inasmuch as the hirer does not agree to buy. He merely has an option to buy on fulfilment of certain conditions, or he may return the goods on payment of a sum stated in the contract. In other words, a hire-purchase agreement is not an agreement to buy goods, unless it contains an obligation whereby the hirer is bound to buy. 32 The hallmark of a true hire-purchase agreement is that there is reserved to the hirer power to return the goods, either during the hiring, thereby determining the bailment, or after the conclusion of the hiring and before the payment of such further sum as is required to complete the purchase, so that the agreement is not a contract of sale but an agreement to hire with an option to purchase. In short, it is a bailment coupled with an option to buy. The agreement normally provides for a sum of money to be paid "in consideration of the option to purchase" thereby granted either initially or at any time during the period of the hiring or at the end of the hiring.” [33] Learned counsel for the Plaintiff contended that upon the enactment of the CPA, it must be assumed and considered that earlier provisions of law and decisions of the Courts not in consonant with and contrary to the provisions of the CPA cannot be regarded as good law. Accordingly, he submitted that the decision in Ahmad Ismail was no longer applicable. We are unable to agree. The application of the CPA shall be supplemental in nature, and shall be without prejudice to any other law regulating contractual relations. This is clear from section 2(4) of the CPA which provides: “The application of this Act shall be supplemental in nature and without prejudice to any other law regulating contractual relations.” 33 [34] In this regard, in Public Prosecutor v. Viran [1947] 1 MLJ 62, in a criminal appeal from the decision of a District Judge, the Court had to construe the effect of section 3 of the Firearms and Ammunitions (Unlawful Possession) Ordinance, 1946 [“Ordinance No. 28”] which provides: “3. Without prejudice to the provisions of any written law in force in any part of the Malayan Union relating to unlawful possession of arms or ammunition, any person who shall, after the commencement of this Ordinance, be in unlawful possession of any firearm or ammunition shall be liable to imprisonment of either description for a term which may extend to ten years or to a fine not exceeding ten thousand dollars or to both such imprisonment and fine.” [35] We find the following remarks by Spencer-Wilkinson J. in that case instructive with regards to the use of the phrase “without prejudice” in the aforesaid provision: “The next question is whether this general rule is affected in this instance by the opening phrase of Section 3 of Ordinance No 28. I think the meaning of the expression "without prejudice" in the context is not really open to doubt. One meaning of the expression "to prejudice" is "to impair", and I read the words "without prejudice to the provisions of 34 any written law in force in any part of the Malayan Union relating to unlawful possession of arms or ammunition" as meaning that what follows is not to impair the force of any of the existing provisions and is therefore not to override or repeal them.” [36] Reverting to section 2(4) of the CPA, the effect of the words “without prejudice” [“tanpa menjejaskan” in the national language text] in that section is that the application of the CPA is not to impair the force of any other law regulating contractual relations. The CPA does not override or repeal any other law regulating contractual relations. The CPA supplements the latter. In our view, the HPA and the laws relating to it which come within the ambit of “any other law regulating contractual relations” continue to apply together with the CPA. Hence, the principle decided in Ahmad Ismail relating to contractual relations in a hire purchase transaction is still applicable. [37] As we have said, the Plaintiff’s pleaded case against the First Defendant was that he purchased the car from the First Defendant, and that the latter was liable as a “supplier” for the alleged breach of the provision relating to implied guarantee under section 32 of the CPA, and alternatively, for breach of the provision relating to implied warranty or condition as to quality and fitness under section 16 of the SGA. It was 35 contended on behalf of the Plaintiff that the receipt of a sum of RM71,506.45 by the First Defendant and the issue of the sale invoice (Exhibit P3) as well as the delivery order (Exhibit P6) established the existence of a contract of sale between the Plaintiff and the First Defendant. However, it is an agreed fact that the Second Defendant provided hire purchase facility to the Plaintiff for the purchase of the car [Defendan Kedua telah memberi kemudahan sewa beli kepada Plaintif bagi pembelian kenderaan Toyota Camry 2.0G (A) dengan nombor pendaftaran AHC 9928 (selepas ini dikenali sebagai “kenderaan tersebut”)] [See page 97 of Rekod Rayuan (Jilid 3)]. In fact, credit facility for RM80,000.00 was provided by the Second Defendant. In this regard, it is also clear that on 22.3.2010, the Plaintiff and the Second Defendant entered into a hire purchase agreement [Exhibit P5, pages 283-288, Rekod Rayuan (Jilid 6)]. Under this hire purchase agreement, the Plaintiff is “the hirer” of the car and the Second Defendant is “the owner”. Under the law what was obtained by the Plaintiff under P5 was possession, not ownership of the car which remained with the Second Defendant. Under Clause 15(1) of P5, the Plaintiff may at any time terminate the agreement by returning the car to the Second Defendant. Under Clause 16, the Second Defendant as owner may terminate the hiring under P5 and resume possession of the car in the circumstances provided for in that Clause. In Clause 17 (Option to Purchase), it is provided that if the hirer 36 duly performed and observed all the stipulations and conditions in this agreement and pay to the owner all sums of money payable to the owner by the hirer, the hirer shall have an option of purchasing the goods and upon payment of the last instalment, the hirer is deemed to have exercised such option and the hiring shall come to an end and the goods shall become the property of the hirer and the owner shall assign all rights, benefits and interests in the goods to the hirer. But, until the option has been exercised, the goods shall remain the absolute property of the owner and the hirer shall not have any right or interest in the goods other than of a bailee. It must also be added that the fact that (as shown in the registration card) [page 270, Rekod Rayuan (Jilid 6)] the Plaintiff was the registered owner of the car did not make him the legal owner of the car [See Credit Corporation (M) Bhd v. The Malaysia Industrial Finance Corporation & Anor [1976] 1 MLJ 83, per Abdul Hamid J (later CJ)] at page 86, Butterworth Used Car Sdn Bhd v. Mayban Finance [1991] 1 CLJ (Rep) 520, per Abdul Hamid Mohamed PK (later CJ) at page 523]. P5 is the type of hire purchase agreements to which the HPA applies so that until the Plaintiff has exercised his option to purchase the car by paying all the sum of money payable under the agreement and fulfilling all of his obligations under the agreement and paying the last instalment, no property in the car passes to the Plaintiff and he is only a bailee. In the sale invoice (Exhibit P3), in the column “term”, (which must be the term of 37 the transaction of the purchase of the car), it is stated as “Hire Purchase”. Much was made by learned counsel for the Plaintiff of the receipt of RM71,706.45 by the First Defendant from the Plaintiff. But, this, as described in Exhibit P3, was actually paid as “Deposit”, the payment of which is a requirement of entering a hire purchase agreement under the HPA. Under section 31 (provision of minimum deposits) of the HPA, an owner who enters into a hire purchase agreement without having first obtained a deposit in cash or in goods, or partly in cash and partly in goods, to a value of not less than one-tenth of the cash price shall be guilty of an offence under the Act. Under section 32(2) of the HPA, the provision as to obtaining of a deposit shall be deemed to have been complied with by the owner if a deposit has been obtained by the dealer, or an agent or employee of the owner. In Chan Hoon Piaw & Anor v. Cempaka Finance Bhd [2003] 1 CLJ 762, James Foong J. (later FCJ) said at page 765: “In fact s. 32 of the Hire-Purchase Act 1967 even allows a presumption that the mandatory deposits, required by the law to be made by the hirer to the owner in a hire purchase transaction, as having been made by the hirer if there had been earlier payment of such sums to the dealer. With such acknowledgment, I am of the view that the down payment made by the 1st defendant to the dealer in this case could not have been taken as conferment of ownership to the 38 hirer of the said goods. Such payment would be treated as deposit towards the hire purchase, as was probably the case, by the reflection of the invoice which was addressed to the plaintiff from the dealer.” [38] Applying Ahmad Ismail (supra) to the facts of this case, whatever contractual relationship between the Plaintiff and the First Defendant was superseded by the hire purchase agreement (Exhibit P5). The First Defendant completely faded out of the picture, and the only contract that remained was the hire purchase agreement (Exhibit P5) entered into between the Plaintiff and the Second Defendant. [39] On the Plaintiff’s contention on the alleged liability of the First Defendant under section 32 of the CPA, that provision provides: