PAUL RAJ A/L DAVIS v MERCEDES-BENZ SERVICES MALAYSIA SDN. BHD.

Case Significance

Confirms that where a hirer has signed the written statement in Part I of the Second Schedule under section 4(1)(a) of the Hire Purchase Act 1967, late-raised non-compliance defences do not raise triable issues, and upholds summary judgment for the arrears with the counterclaim struck out as an abuse of process.

This High Court decision concerns appeals from a Sessions Court that had entered summary judgment on a hire-purchase debt and struck out the hirer's counterclaim. The respondent, Mercedes-Benz Services Malaysia Sdn Bhd, financed the appellant's purchase of a motor vehicle under a hire-purchase agreement. The appellant fell into arrears of RM282,049.31, and after the agreement was terminated the financier issued the statutory notices under section 16 of the Hire Purchase Act 1967 but was unable to repossess the vehicle, which the appellant neither surrendered nor returned. The financier sued in the Sessions Court to recover the arrears and obtained summary judgment under Order 14 of the Rules of Court 2012, together with an order striking out the appellant's counterclaim under Order 18 rule 19. The appellant's counterclaim asserted that the agreement was void ab initio for non-compliance with sections 4(1)(b)(ii) and 5(1) of the Hire Purchase Act 1967, and sought reimbursement of RM184,637.62 said to have been paid under a void contract. On appeal, the central question was whether the appellant had raised arguable and substantive issues about compliance with the Act. The court held that section 4(1)(a) governed the relationship, because the appellant had signed the written statement in Part I of the Second Schedule as that provision required, and that the compliance points relied upon were not triable issues but afterthoughts raised to escape liability after years of using the vehicle without complaint. It considered that to allow such contentions, and to permit the hirer to recover payments while retaining the benefit of the vehicle, would be unconscionable and would set an unhealthy precedent. Concluding that the Sessions Court Judge had not misdirected herself, that the counterclaim was frivolous, vexatious and an abuse of process, the court dismissed both appeals with costs and affirmed the decision below. The judgment illustrates how the courts treat late-raised statutory-compliance defences to a hire-purchase debt on a summary-judgment application.