Eshun v Moorgate Mercantile Company Ltd
| Jurisdiction | England & Wales |
| Judge | THE MASTER of THE ROLLS |
| Judgment Date | 09 March 1971 |
| Judgment citation (vLex) | [1971] EWCA Civ J0309-1 |
| Court | Court of Appeal (Civil Division) |
| Date | 09 March 1971 |
[1971] EWCA Civ J0309-1
In The Supreme Court of Judicature
Court of Appeal
Appeal by defendants from judgment of His Honour Judge Dewar at Clerkenwell County Court on 24th June, 1970.
The Master of the Rolls (Lord Denning)
Lord Justice Edmund Davies and
Lord Justice Phillimore
Mr. JOHN TRENCH (instructed by Messrs. Nicholson Graham and Jones) appeared on behalf of the Appellant Defendants.
The Respondent Plaintiff, Mr. Eshun, appeared in person.
This case raises a point of some importance for finance companies. On the 29th March of 1968 the Moorgate Mercantile Co. Ltd. let on hire purchase to Mr. Eshun a Ford Anglia motorcar. The cash price was £340. The total hire purchase price was £ 40117s.3d. He paid £115 cash down. He was to pay instalments of £ 10. 11s.9d. a month for 27 months. The first instalment was due on the 28th April, 1968. The agreement stated, in accordance with the statute, that after he had paid one third of the hire purchase price, that is £133. 19s.11d., the company could not retake possession except by going to Court. It also contained a condition that, if he failed to make the payment of any instalment in full within 10 days after payment became due, then, subject to a proper notice of default being, given, the owners, the finance company, could determine the agreement and recover possession of the goods. Mr. Eshun paid the £ 115 cash down and took delivery of the car. But he did not pay the first instalment due on the 28th April, nor indeed the second instalment due on the 28th May. In consequence on the 7th June of 1968 the Moorgate Mercantile Co. Ltd. gave this notice:
"NOTICE of DEFAULT"
Date of Last Payment
Amount of arrears £21. 3. 6.
"We have not heard or received payment from you since the date quoted above on this Agreement, which has only been in force for a short time. It would appear, therefore, that you have no genuine intention of honouring the Agreement and of making payment in respect of the hiring instalments.
Unless we hear from you with payment within the course of the next nine days after the date on which you would normally be expected to receive this letter, we shall have no alternative but to assume that you do not wish to continue the hiring under the Agreement and are, in effect, terminating by repudiation.
In this case we should have the option to act accordingly, taking any necessary steps and/or legal proceedings to enforce our rights and dues under the Agreement."
That letter reached Mr. Eshun within the next day or two. Within the 9 days, on the 16th June, he paid £ 10. 11s.9d., which was the first instalment, but left the second instalment of £ 10. 11s.9d. still due. The company thereupon, without further notice, on the 1st or 2nd July took possession of the car. Mr. Eshun tried to put himself right. He pushed an envelope through their letterbox with £11 in it, covering the second instalment, and he re-took the car himself and took it back to his home.
When the company discovered this, they themselves went to his house and seized the car again. They kept the £11 and the car. They afterwards sold it. So he had paid them £ 115 plus £10. 11s.9d. plus £11 for three months use of the car, and they had taken it back.
Mr. Eshun then brought an action against the finance company claiming that they had seized the car unlawfully. He took several points before the County Court Judge, none of which succeeded. One of these was that he had paid more than one third of the purchase price, but this failed. Then the County Court Judge himself took this point: He held that the notice ofdefault was invalid because it did not comply with the Act, and accordingly that Mr. Eshun was entitled to get £115 back. The finance company appeal to this Court.
The relevant section is section 25 of the Hire Purchase Act, 1965. It is a long section. I will not read it all. The gist of it is that, if a hirer falls into arrear with his instalments and the company seeks to re-take possession on that account, then before he does so, it must give a notice of default. If it does not do so, the re-taking is unlawful. The notice of default must comply with section 25(3), which requires that it shall state:
"The amount which has become due, but remains unpaid, in respect of sums to which the relevant provision applies, and requiring the amount so stated to be paid within such period (not being less than seven days beginning with the date of service of notice) as may be specified in the notice."
It is said in one of the books that at common law no notice of default would appear to be necessary before a company exercises its rights under the agreement. I doubt whether that is correct. I think that, even at common law, a notice of default may be necessary. I would agree with what Lord Justice Sellers said in a case in the Solicitors Journal, page 889 in 1963, Reynolds v. General & Finance Facilities Ltd. "that, the agreement being a one-sided one with stringent terms, the plaintiff was entitled to a reminder that his instalments were in arrear before it could be terminated."
At any rate, under the statute the position is clear. The owner must give a notice of default. The question is: Was the notice given in this case a valid notice of default?
This notice of default talks about repudiation. The owner says in effect to the hirer: "If you do not pay we shall assume that you are terminating by repudiation and will enforce our rights accordingly." The owners had no right to make any such assumption. The mere non-payment of one or two instalments does not amount to repudiation. It is fairly obvious that this notice was an attempt - an unsuccessful attempt - to get round the decision in ( Financings Ltd. v. Baldock 1963 2 Q. B. 104). It seeks to put...
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...itself constitutes a repudiation irrespective of the consequence of the breach, then contrary to the statement of Lord Denning in Eshun v Moorgate Mercantile [1971] 1 WLR 722 at p. 726 it is possible to put upon another a repudiation which he has never committed. Fourth, there is no suggest......
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