Tan has a hire-purchase agreement with Bank Koh Yak (BKY) for a car over a duration of seven years.He has been paying the instalments diligently and has two more years to complete the payments.
QUESTION
Tan has a hire-purchase agreement with Bank Koh Yak (BKY) for a car over a duration of seven years. He has been paying the instalments diligently and has two more years to complete the payments. Since Tan did not apply for moratorium in 2020, he continued to pay the instalments every month. Tan is thinking of completing it earlier as he wants to reduce his debts in view of the pandemic, but he has not taken any steps on it. In December 2020, however, Tan’s wife was hospitalized because of miscarriage. Tan was so worried about his wife and was busy handling so many things that he forgot to pay the instalment for December. On 25th January 2021, Tan received a 4th schedule notice from BKY informing him that the car will be repossessed if he fails to pay in 14 days. Two weeks later, agents of BKY towed the car from the parking lot while Tan was at the market buying groceries. Tan is upset and wants to know what he can do as he wants the car back. He is also prepared to pay up all the debts since he does not want to be tied up with paying the instalments.
Advise Tan on the above situation by applying the Hire-Purchase Act 1967 and relevant cases. Use ILAC method.
ANSWER
Legal Analysis of Tan’s Situation: Hire-Purchase Act 1967 and Relevant Cases
Introduction
In the given scenario, Tan entered into a hire-purchase agreement with Bank Koh Yak (BKY) for a car. He had been diligently making monthly instalment payments and had two more years left to complete the payments. Due to his wife’s hospitalization in December 2020, Tan forgot to pay the instalment for that month. As a result, BKY issued a 4th schedule notice, followed by the repossession of the car by BKY’s agents. Tan is now seeking advice on how to retrieve his car and settle his debts. To advise Tan, we will apply the Hire-Purchase Act 1967 and relevant case law, using the ILAC (Issue, Law, Application, Conclusion) method.
Issue
The main issue in this case is whether Tan has any recourse to retrieve his car and settle his debts after BKY repossessed the vehicle due to the missed instalment payment.
Law
The Hire-Purchase Act 1967 governs hire-purchase agreements in Malaysia. Key provisions and legal concepts relevant to this situation include:
Default in Payment: Section 16(1)(a) of the Hire-Purchase Act 1967 stipulates that a hirer is in default if they fail to pay any instalment for a period of 14 days after it becomes due.
Notice Requirements: Section 20 of the Act requires the owner (BKY) to issue a written notice to the hirer (Tan) if they are in default. The notice should specify the default, request payment within 14 days, and state the owner’s intention to repossess the vehicle upon failure to comply.
Repossession: Section 22 of the Act allows the owner to repossess the vehicle if the hirer fails to comply with the notice and settle the outstanding amount within the specified time.
Application
To determine Tan’s options and potential remedies, we need to apply the relevant laws to the facts of the case.
Default in Payment: Tan missed the December instalment payment, which rendered him in default under Section 16(1)(a) of the Hire-Purchase Act 1967.
Notice Requirements: BKY complied with the requirement of issuing a 4th schedule notice to Tan, informing him of the default and the consequences if the payment was not made within 14 days.
Repossession: BKY lawfully repossessed the vehicle in accordance with Section 22 of the Act after Tan failed to comply with the notice and settle the outstanding amount.
Conclusion
Based on the application of the Hire-Purchase Act 1967, it appears that BKY lawfully repossessed Tan’s car after he defaulted on the December instalment payment. However, Tan may still have some options to retrieve the car and settle his debts:
Contact BKY: Tan should immediately contact BKY to express his willingness to settle the outstanding amount in full and retrieve the car. He should communicate his intention clearly and provide evidence of his ability to pay off the debts promptly.
Negotiate with BKY: Tan can try to negotiate with BKY to find a mutually acceptable solution, such as agreeing to pay any repossession costs or additional charges incurred by BKY.
Seek Legal Advice: If BKY is uncooperative or if Tan’s attempts to resolve the issue amicably are unsuccessful, he should seek legal advice from a qualified lawyer specializing in hire-purchase agreements. The lawyer can assess the specific circumstances, review the relevant documents, and provide guidance on the available legal options.
It is essential for Tan to act promptly and proactively engage with BKY to increase the chances of retrieving the car and settling his debts satisfactorily. Consulting a lawyer will provide Tan with a better understanding of his rights and options under the Hire-Purchase Act 1967 and any relevant case law.
