Case No.:

HC-637-1957

Court:

The High Court

Issue No.:

1964

Principles

Judgment

(HIGH COURT)

BUILDING CO. (SUDAN) LTD. v. AHMED MOHAMED RAMADAN

AND BABIKER RAMADAN

HC-637-1957-

Michel Cotran D.J. January 17. 1960:—The facts of this case are fully stated in admissions (1) to (5) preceding the issues and also in the judgment of the Court of Appeal in AC-APP-2I-I958 and I need not repeat them.

The only point I have to decide is whether the transaction was a complete sale or hire purchase.

Learned counsel for defendants, relying on the judgment by the Court of Appeal in Contomichalos Darke & Co. Ltd. v. Hussein Mahmoud and another, AC-APP-21-1929 contends that since seven promissory notes were given by defendants to plaintiffs to cover the remaining price of the tractor, and since these promissory notes are negotiable instruments, the transaction is clearly a complete sale and the ownership of the tractor had been transferred to the purchaser (first defendant). According to learned counsel for defendants, therefore, the plaintiffs’ remedy is to bring an action on the promissory notes and they cannot sue on the hire-purchase agreement by seeking a decree for the unpaid instalments and for retaking possession of the tractor.

I am definitely of opinion that defendants’ arguments are unfounded. The case decided by the Court of Appeal (Contomichalos Darke & Co. Ltd. v. Hussein Mahmoud and another, supra) is totally different from the present case. The decision of the Court of Appeal was based on the fact that in that case no reference at all was made to promissory notes in the hire-purchase agreement and the promissory notes in that instance were treated as a separate transaction. In the present case the promissory notes were simply taken by plaintiffs as a collateral security and not by way of conditional payment. This is clearly and specifically mentioned in the hire-purchase agreement, clause 2 of which reads as follows:

On the signing of this agreement the hirer shall deposit with the owners promissory notes signed by the hirer and the surety as security for the payment of the respective monthly payments of the said hire rent, provided that such promissory notes shall be deemed to be deposited as collateral security only for such payment as aforesaid and not by way of conditional payment and that the deposit hereof shall not prejudice the title of the owners to the said tractor and implements or their rights under this agreement

These provisions in the agreement do not leave the slightest doubt that the promissory notes were only given as a collateral security and do not in any way change the character of the transaction from being one of hire purchase. It should be remembered that plaintiffs kept the promissory notes all the time as a deposit and never attempted to negotiate them. It follows that the ownership of the tractor and implements remain vested in the plaintiffs until all the instalments have been paid. Defendants admit that they are indebted to plaintiffs in the sum of £S.964 value of remaining instalments, and in the sum of £S.108.450 m/ms. as interest.

In the result, I hold that plaintiffs are entitled to judgment for the amount claimed and for retaking possession of the tractor and implements, with costs. A decree will be issued accordingly.

The seven promissory notes given by defendants to plaintiffs as a collateral security shall be cancelled and returned to defendants.