PART 2 of LAW442:

HIRE PURCHASE

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HIRE-PURCHASE ACT 1967 (HPA 1967)
(Act 212)
• Applicable throughout Malaysia
• Origin : NSW Australia HPA 1960-65
• Came into force : 11 April 1968
• Jurisdiction of Ministry of Domestic Trade, Cooperatives &
Consumerism
• Went through several amendments
• Latest amendment : 2010, came into force on 15 June 2011

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Contents of HPA 1967
• Parts I – IX
• Meaning of HP, formation, rights and obligations, important terms,
process and procedures for repossession

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• Part IX includes Schedules:
 First Schedule : List of Goods (s.1)
 Second Schedule :
Part 1 :
Part 2 :
 Third Schedule :
 Fourth Schedule :
 Fifth Schedule :
 Sixth Schedule :
 Seventh Schedule :

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Application of HPA 1967
• Only in respect of goods specified in the First Schedule :
• Consumer goods
• Motor vehicle

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Definition of consumer goods
• s.2 : Interpretation
• = “goods purchased for personal, family or household purposes.”

• Effects:
• Only if hirer is a natural person
• Not for business purposes (industrial hire-purchase) – common law

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• Note : 1st Sch List is not exhaustive, but the following have been held to NOT
fall under List.
• Machine, diesel crawler tractor. See Khoo Thau Sui v United Engineers(Malaysia)
Sdn Bhd [1977] 2 MLJ 204;
• Tractors. See Supreme Leasing Sdn Bhd v Lee Gee [1989] 1 MLJ 129;
• Heavy machinery. See MBF Finance v Alluwi bin Salleh [2002] 1 MLJ 497 –
excavator, MBF Finance v Sim Peng Bee [2003] 5 MLJ 303 – ISUZU NHR 55E
• Pay Loader
• Bulldozer
• Road grader

(**however, there are cases which have been decided differently)

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• NOTE : If the goods hired fall outside the List, parties can choose to be
bound by HPA 1967.

• The High Court in Kesang Leasing Sdn Bhd v Mohd Yusof bin Ismail
[1990] 1 MLJ 291 held that the hire purchase of a personal computer
was governed by the Act, although it was not part of the goods listed
under the 1st Sch.
• As long as the parties agree to be bound by the Act, the Act will apply.

Note : Case was in 1990, ‘consumer goods’ was added in 1992 amendment.

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• Intention to be bound may be assumed by the court by looking at the
conduct of the parties.

• See HSBC Bank Malaysia v Wui Ling Timber(Bintulu) Sdn Bhd [2000] 8 CLJ
197.

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Definition of H-P
• Includes : A letting of goods with an option to purchase and
an agreement for the purchase of goods by instalments (s.2)
• United Engineering (Malaysia) Ltd, a hirer has an option to chose
• but does NOT include any agreement:
a) whereby the property in the goods passes at the time of agreement or upon
at any time before delivery of the goods; or
b) where the hirer is a trader trading in goods of the same nature and
description with the goods under hire purchase.

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Contractual nature of HP
• Elements of contract
• + formation = under HPA 1967
• Parties : Owner and Hirer. See s.2 for definition
• In Malaysia, most common – 3 parties : owner, hirer & dealer
• Triangular HP transaction

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PRE CONTRACTUAL
INFORMATION/OBLIGATIONS
s.4(1)(a) – owner (or any person acting on his behalf) must serve on the
hirer a written statement duly signed and completed by him (in
accordance to form in Part 1, 2nd Schedule)

• If the negotiation leading to hp is carried out by a dealer, s.4(1)(b)(i) –

then dealer must serve on the hirer a Part 1, 2nd Sch Notice.
• Any time after the serving of Part 1, 2nd Sch Notice but before the hp
agreement is entered into, the dealer shall serve on the intending
hirer a written notice completed & signed by him and prospective
owner in accordance with the form set out in Part II of the 2nd Sch.

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• The written notice must be served by delivering it in person to the intended
hirer/agent who shall acknowledge receipt by signing at the appropriate
column – s.4(2)

• The intended hirer upon receipt of the notices shall NOT be under any
obligation to enter into any hp agreement or pay for the preparation/service
of the statements – s.4(3)

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• s.4(4) – contravention of S 4(1)/non-compliance : hp agreement is void.
• See Affin Credit(Malaysia) v Yap Yuen Fui [1984] 1 MLJ 169.

• s.4(5), (6) – owner / dealer shall be guilty of an offence under the Act.
• Penalty: s.46 :
• Body corporate: Fine not exceeding RM100,000 and fine not exceeding
RM250,000 for subsequent offence)
• Not body corporate : Fine not exceeding RM25,000 and/or imprisonment not
exceeding 3 years. Subsequent offence: fine not exceeding RM50,000 and/or
imprisonment not exceeding 5 years)
• (Prior to 2010 Amendment : s.46 : fine not exceeding RM3000, or
imprisonment not exceeding 6 months, or both)

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• 2010 Amendment added new section: s.30A(1)
o The owner/dealer could no longer collect/accept a booking fee from
intending hirer before the service of the Second Sch Notice and
signed by the hirer.

o If the booking fee is to be collected after the signing of the hp

agreement, it shall not exceed 1% of the cash price of the goods –
s.30A(2)
o Booking fee shall form part of the deposit – s.30A(3)
o If the hirer withdraws the booking, owner/dealer must refund 90% of
the booking fee – s.30A(4)
o Non-compliance : an offence – s.30A(5)

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Construction of a HP Agreement
s.4A(1) – must be in writing
• s.4A(1A) – shall be in English or National Language
• Non compliance – s.4A(2) – agreement is void.

• s. 45(1) – a handwritten agreement must be clear and legible. (Other

than signature or initials of any person)
• A printed agreement must be of a type size not smaller than the type
known as Ten-Point Times
• Printed in black
 Otherwise, “not deemed to be in writing”
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• s.4A(3) : Non compliance – Owner : guilty of an offence.

• Question : Can an owner recover possession of the goods where the

agreement is deemed to be void?
• s.4A(2) merely states the agreement is void.
• It does not state, eg, that the owner cannot recover possession of the
goods let nor he can enforce any guarantee related thereto.

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• Note : s.9(2)(a) which clearly states:
• The owner shall not be entitled to enforce :
i. the agreement against the hirer;
ii. any right to recover the goods from the hirer;
iii. any contract of guarantee relating to the agreement.

• …in the event that the owner fails to render to hirer a statement in writing
showing particulars before the final payment is made.

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• See opinion of Abd Shukor Ahmad (Legal Aspects of Hire Purchase, 2009).
Opinion can be supported by Else Mitchell and Parsons (commenting on the
NSW Act) who argued that non-compliance shall not affect the owner’s right
to recover the goods, to enforce any guarantee or enforce any security
provided by the hirer or guarantor.

• Further fortified by the fact that the owner is still the proprietor of the
goods. Thus entitled to statutory relief under s.66 of CA 1950.

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• HP Agreement must be signed – s.4B
- By or on behalf of all parties to the agreement – s.4B(1)
- Hirer must sign a completed document. Cannot sign a blank or incomplete
document – s.4B(2)
- Non compliance – HP Agreement is void and owner is guilty of an offence –
s.4B(3)

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Question
• If there is any alteration/addition made to the agreement after it is
signed by the hirer. What is the effect?

 s.39 : Alteration/addition has no effect, unless consented by the hirer

by signing or initialing the agreement in the margin opposite the
alteration/addition.

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Burden of proof
• When the hirer contends that hp agreement was incomplete when he
signed it and the figures were inserted later without his authority, the
owner must prove that it is the opposite.
• Credit Corp(Malaysia) Bhd v Tuanku Hishamuddin bin Tuanku Laksamana
Nasir (1985) unreported.

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Contents of the agreement – s.4C
• Date of commencement;
• Number of installments;
• Amount of each installment;
• Time for payment of each installment;
• Description of goods;
• Address where the goods are kept.
• Other info, see s.4C(1)(c)(i)-(x)
*A detailed information on the goods & financial obligations towards the
owner.
Non compliance : HP Agreement is void & owner is guilty of an offence – s.4C(3)

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• *s.4D(1) provides that if there are more than one goods hired, separate
agreements must be prepared for each item.
• Semua item shall have separate agreement on each of the item entered into
Hp, BUT, TAPI, if barang tu compliment each other ia akan dianggap sebagai
satu item and which akan ada satu agreement je seperti di bawah :-
• However, if the goods are similar or complementary to each other and sold
as a set = an item – s.4D(4)
• The effect of  Non compliance – agreement is void and owner is guilty of
an offence – s.4D(3)

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POST CONTRACTUAL OBLIGATIONS
• Owner must send to the hirer a copy of the HP Agreement and guarantor
(if any) within 21 days after the signing of the contract – s. 5(1)
• In the event the owner is not able to serve within 21 days, the owner may
resort to s.41 which empowers the court to extend time and impose
conditions which the court thinks fit.
• + a copy of insurance payment receipt (if any)
• + a copy of insurance policy within 7 days of receipt of policy –s.5(3)

• Non compliance – guilty of an offence – s.5(4)

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• OTHER DOCUMENTS
• s.5(2) – the hirer may, before he makes a final payment, requests in
writing, from the owner a copy of any memorandum/note of the
agreement
• Owner must supply within 21 days after the receipt of such requests.

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Service of notices
• All notices & documents need to communicated and effected before
they are deemed to be valid.

• s.43 : notices sent to the hirer

i) by delivering it personally; (s.43(a))or
ii) by posting it by registered post addressed to him at his last known
place of abode or business. (s.43(c))

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Second-hand goods
• s.40
• Where goods are second hand goods, they must be described in the
agreement as such.
• Effect of non-compliance : the liability of hirer under the HPA is
reduced by the amount for term charges. Contoh dia bawah ni :-
• ie, The hirer will be relieved of all interest payments and will merely
pay the balance between the cash price and deposit as instalments.

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• However, if the owner can show that:
i. The hirer was aware at the time he/agent signed the
agreement that the goods were second-hand; or
ii. The owner was unaware at time of contract that goods were
second-hand goods

The owner will escape liability.

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• Lau Hee Teah v Hargill Engineering [1980]

Facts : A loader was previously used once for demonstration

purposes and had suffered a minor collision during the
course of demonstration, which punctured the rear tyres of
the loader.
The loader was subsequently repaired.

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TERMS IN HPA

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Introduction
• HPA 1967 – conditions & warranties*

• *the classification however does not take into account Hong Kong Fir
Shipping v Kawasaki Kisen Kaisha [1962] 1 All ER 474; innominate
term.
• See also Abdul Razak bin Datuk Abu Samah v Shah Alam Properties
Sdn Bhd [1999] 3 CLJ 231.

• See s.12(2) & (3) SOGA 1957 for definition

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Implied terms
• Terms implied to prevent abuses and provide protection to hirers.

• s.7(1)(a) implied warranty

• s.7(1)(b) implied condition the owner has the right to sell when the
goods is to pass to the hirer
• s.7(1)(c ) implied warranty, goods shall be free from encumbrance
• s.7(2) implied condition merchantable quality
• s.7(3) implied condition goods fits for purpose

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Passing of property
• *when the property is to pass in section 7(1)(b)– refers to time when :
a) The hirer exercises his option to purchase the goods;
b) The hirer exercises the right of early completion

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• Ahmad Ismail v Malayan Motor Company [1973] 1 MLJ 117.
• Ling Swee Lin v Public Finance Bhd [2007] 3 CLJ 737.

• In cases where the validity of the seizure is still being challenged, the
owner cannot be said to be in breach of s.7(1)(b) as it has not been
conclusively determined that the owner cannot pass a title in any
event.

• The only remedy for hirer is for breach of implied warranty of quiet
possession under s.7(1)(a).

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• Ahmad Ismail v Malayan Motor Company [1973] 1 MLJ 117.
• The hirer refused to accept re-delivery of a morris car seized by the
police on suspicion of being a stolen property, hirer contended that the
owner has breached section 6(1)(b) HPA 1967 (similar to s.7(1)(b)
• Court held no evidence that the car was a stolen vehicle and also no
evidence that the P had exercised his option to purchase
• There can only be breach of s.6(1)(b) if “at the time when the property is
to pass” the finance company had no right to sell the car to P

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• Lee Chuie Siang v Public Finance Sdn Bhd [2006] 5 MLJ 651
• At the time of Hp agreement was executed, the owner had passed title to
the hirer, ie, the car was registered in the name of the hirer
• Subsequently, hirer met with an accident and structural changes of the
car were made in the course of repair
• The hirer wanted to obtain a new registration card and had sent the car
for inspection, but was denied due to non compliance with s.7(1)(b).
Reason being the chassis number had been tempered with
• Hirer claimed that the HPA was void under s.7(1)(b)
• Held : hirer’s claim was dismissed as the hirer’s plight was caused by her
own fault.

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• s.7(1)(b) equally applicable to second-hand goods.

• See Public Finance Sdn Bhd v Ehwan bin Saring [1996] 1 MLJ 331.

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• FITNESS FOR PARTICULAR PURPOSE
• s.7(3) – where the hirer expressly or by implication make known to the
owner/dealer/any servant/agent of the owner/dealer, the particular purpose
for which the goods are required, there shall fit for that purpose.
• Not applicable if the goods are second-hand (1) goods and that all conditions
and warranties of fitness and suitability are expressly negatived
• (2), and the owner proves that the hirer has acknowledged in writing that the
statement was brought to his notice
• (3). See s.7(3)(b) :-
• There must be prove that the hirer had expressesly negatived and the hirer
were make known of the fact upon entering the agreement
• If goods is 2nd hand goods, It’s implied condition, can be excluded. However, if
the implied were excluded, then can use this section.

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• MERCHANTABLE QUALITY
• s.7(2)
• s.7(2)(a) – where the hirer has examined the goods/sample, the
implied term does not apply to defects which the examination ought
to have revealed. (REASONABLE EXAMINATION MACAM SOGA)

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• s.7(2)(b) – no implied condition as to merchantable quality if the
goods are second-hand goods and the agreement contains a
statement to the effect that –
i. The goods are second-hand; and
ii. All conditions and warranties as to quality are expressly
negatived, and the owner proves that the hirer has
acknowledged in writing that the statement was brought to his
notice.

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Consequence of a breach
• s.12(2), s.2(3) SOGA 1957

• Questions:
• Whether the right to terminate the contract is capable to be taken
away as a result of the hirer’s conduct?
• Can the hirer’s conduct, such as continuing paying the installments
despite breach of condition, be construed as affirming/preserving the
HP Agreement?
• OR the hirer argue that there is a total failure of consideration?

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• See Yeoman Credit Ltd v Apps [1961] 2 All ER 281

• Hong Leong Leasing Sdn Bhd v Tan Kim Cheong.

Court had to consider whether the Def, by paying the installments, had
accepted the breach of contract by the Pl
Can it be said that when the Def continued paying the installments when
he was aware that the machines had not been supplied, he had accepted
the breach and instead of avoiding the contract, had affirmed it
Visu Sinnadurai J: Paying the instalments cannot preclude the Def from
thereafter bringing the contract to an end.

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Exemption Clause
• s.34 – any exclusion of rights conferred on the hirer by the HPA shall
be void and of no effect.
• Thus, implied terms in the HPA cannot be excluded by the owner.

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• Exception to implied terms boleh utk : second hand goods. Kalau
goods biasa TAK DE EXCEPTION!! INGAT!!
• s.7(2) – fitness for purpose
• s.7(3) – merchantable quality
= can be excluded by the owner provided:
The goods described as second hand in the HPA; and
Hirer has acknowledged in writing that the statement (the clause)
was brought to his notice.

• Onus is the owner.

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Liability of Owner for Misrepresentation – s.8
• Misrepresentation by dealer /owner or their servant/agent
• False statement of fact made in Orally or in writing

• s.8(1)(a) : hirer can take action against the owner – the same right to
rescind the agreement, and

• s.8(1)(b) – if the misrepresentation was made by the dealer, as

against the person who made the representation/warranty/statement,
boleh dapat the right to damages.

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• Note:
• Statement/representation/warranty made by the dealer/agent/servant
must be made “in connection with or in the course of negotiations leading
to the entering into of a hire-purchase agreement.”
• Leading to make the formation of the contract
• BEFORE THE CONTRACT WAS ENTERED, NOT BEFORE
• Not after the agreement is entered into.

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• s.8(1)(a) : as against the owner – the same right to rescind the
agreement
• Representation is deemed to have been made by the dealer as agent
of the owner.
• Right to reject or renounce the contract after notice to the owner.
(from the bank)
• Allows the bank to delete the owner’s name from the contract.

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• Lau Hee Teah v Hargill Engineering
• Fact: P alleged fraudulent misrepresentation made by the dealer.
• Held : no misrepresentation. Thus P was denied the right to rescind the
contract.

• s.65 & s.66 CA 1950

• Owner/dealer who has received advantage must provide compensation
to the hirer.

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• s.8(1)(b) – as against the person who made the
representation/warranty/statement, the right of damages.
• (hirer can take action against the dealer)

• In addition to right to rescind the contract with the owner, the hirer also
has the right to claim damages from dealer.

• Owner’s right of indemnity against the person who made the

misrepresentation and person he made statement on behalf of - s.8(3)
• eg, dealer and dealer’s servant/agent.

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STATUTORY RIGHTS OF
HIRER

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1) Right of Assignment
• s.12(1) – assignment of the right, title and interest with the consent of
the owner, or if his consent is unreasonably withheld, without his
consent.
• Boleh transfer contractual rights to another person.
• However, s.12(4) – provides the owner with the right to determine
the form of assignment and to impose reasonable costs arising from
the preparation of the assignment and stamping.
• See also s.12(4)(b)

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• s.12(2) – the owner can only refuse to the assignment for
reasonable reasons.

• So, if the hirer is unhappy with the reasons advanced by the owner
in refusing such assignment, he may apply to the High Court for a
declaration that the consent has been unreasonably withheld.
s.12(3)
• Then the hirer may consent to the particular third party

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• Examples of unreasonably withheld consent:

• s.12(2) – where the owner requires payment or other

considerations for the consent.

• s.12(5) – where the owner requires other or additional

guarantors when the same guarantors have agreed to guarantee
the assignee’s obligations or the assignee.

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• s.12(4) – Nevertheless, before he gives consent, the owner is allowed to impose
conditions: (condition tht the owner can impose, he may)

a) The hirer to make good all defaults under the agreement; and

b) Require hirer and assignee to execute and deliver an assignment agreement in

the form approved by the owner whereby –
i. The hirer continues to be liable to the owner in respect of the obligations
imposed on him by the original agreement;
ii. The assignee agrees with the owner to be personally liable to pay the
installments remaining unpaid and to perform and observe all the other
terms of the original agreement during the remainder of the term;
(assignee agrees to pay all the unpaid installment)
iii. The assignee agrees to indemnify the hirer in respect of his liabilities
mentioned in (i) above. Hirer has the right to be indemnify by the assignee
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2) Right to have right/title/interest to be passed by
operation of law
• If the hirer passes away/becomes mentally disabled or a company is
placed under liquidation.
• s.13 – hirer’s right, title, interest shall be capable of being passed, by
operation of law, to the personal representative of the hirer, or to
liquidator, who may exercise the same right under the hp agreement.
• But they shall not be relieved from compliance with the terms of
agreement if they decide to continue with the agreement.

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3) Right to Early Completion
• Hak untuk Bayar perhabis semua installment, right to complete the
agreement before scheduled
• s.14
• At any time during the continuance of the hp agreement – s.14(3)
• Written notice to owner tk boleh oral notice
• By paying to the owner the net balance due under agreement– s.14(1)
• The late charges (if any)
• Balance originally payable under the agreement, LESS any amount
paid, statutory rebate for term charges (if any) and statutory rebate
for insurance (if any) – s.14(2)

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• WHEN CAN THE RIGHT BE EXERCISED?

i. At any time during the continuance of the hp agreement

ii. Within 21 days after the service of the 4th Sch Notice (intention to
repossession notice)
iii. Owner has re-possessed goods, within 21 days after the service of 5th
Sch Notice (goods repossessed and hirer served with the option to
effect an early completion). Hirer pays owner net balance &
reasonable costs…

Authority: s.14(3)

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4) Right to Terminate the HP Agreement
• s.15(1) *to end the contract
• By returning the goods to the owner during ordinary business hours
at the owner’s place of business or place specified in agreement.

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• CONSEQUENCES OF TERMINATION BY RETURNING THE GOODS:
s.15(5): Hirer may require the owner to sell the goods to
• On hirer : any person introduced by the hirer who is prepared to
buy the goods for cash at a price agreeable to the
owner.
- Hirer is entitled to the difference where the value of
the goods (at time it is returned to owner) is more than
the balance outstanding under s.15(5)(b) , such money
until paid is a debt due (so hirer kena topup balance
outstanding)

• Owner is getting money from the new hirer, but he may hv to return it to the
hirer

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• On Owner : s.15(5)(c) – entitled to the difference where the value of the
goods at the time it is returned to the owner is less
that the balance outstanding under the hp agreement.
• When the value is less, the owner will be entitled for the balance
• Recoverable as a debt due
• Include interest
• They need to know does to hirer owed the owner money, or owner owed
the hirer money?

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Other Rights of Hirer
a) s.11 – Right to apply to a Magistrate for an order to remove goods.
- Refer to s. 4C on contents of HP agreement
- Oh it’s an amendment to the agreement applied to the Magistrate to change
the alamat written on the agreement
a) s.9(1) – Right to a copy of statement of financial position.
- Any time before final payment, may req in writing full statement on the amount
paid, balance, amount unpaid , amount of interest on overdue installment
b) s.10 – Right to appropriation of payment when there is more than one
agreement.
- Applicable where hirer entered into more than one H&P agreement with the
same owner
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a) s.10 – Right to appropriation of payment when there is more than one
agreement.
- Applicable where hirer entered into more than one H&P agreement with
the same owner
- Contoh satu bulan tu bayar tk cukup contoh tv rm500, fridge rm300, but he
only paid rm600, so hirer boleh ada rights to allocate berapa ringgit untuk
bayar the installment which is maybe 300 for tv and 300 for fridge
- If the hirer didn’t allocate, the law will do so, where it stated the payments
shall be paid in according to the order of which the agreement were
entered into. Contoh hirer beli fridge baru tv, then the law akan allocate
500 for fridge, tv 100. kalua fridge beli dulu, then fridge dulu bru tv
- APPLICABLE ONLY IF THE OWNER IS THE SAME OWNER

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REPOSSESSION BY THE OWNER
• s.16(1) – right to repossess arises where:
i. Payment of instalments amounts to not more than 75% of the
total cash price of the goods; and
ii. There had been 2 successive defaults of payment; and
iii. Owner has served 4th Schedule Notice in writing. Period given is
not less than 21 days and period has expired.

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• If the instalment payment made is more than 75%, the owner must apply
for an order from the court to repossess. – s.16(1)(1A)
• s.16(1)(1B) – when order obtained from the court under (1A) and 4th Sch
Notice has been served to the hirer & the period fixed has expired (at
least 21 days), the owner may exercise right to repossess.

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• Hirer is deceased – s.16(1C) : repossession is only in cases of 4
successive defaults of payment.

• Rationale : to enable the beneficiary to make application for the letter

of administration/probate.

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PROCEDURE OF REPOSSESSION

• Before
• During
• After

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Before…
• s.16(1) – Served on the hirer a 4th Sch Notice (intention to repossess)

• Period of notice : 21 days (min) before repossession takes place.

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• Affin Finance Bhd v Vasantha Gobi Govindasamy [2010] 1 LNS 840
The court ordered judgement in fav of the P(Owner) repossession took
place after the expiry of 21 days

• Asri Chin v Hong Leong Finance Bhd [2010] 1 LNS 1148.

• The service of the notice was properly effected

• Koh Siak Poo v Med Bumikar Mara Sdn Bhd [1994] 3 CLJ 368.
• Facts : 4th sch notice was served after respossession took place
• Held : wrongful seizure and hirer was entitled of damages

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s.43 : By way of personal service or registered post to last known
address.

s.16(2) – notice may be dispensed with if the owner has reasonable

grounds to believe that the hirer will conceal/remove the goods to
another place.
Burden of proof is on owner.
If owner ada ground to believe the goods will be concealed then no
need 4sch notice

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• If challenged by the hirer of the absence of notice and owner fails to prove
‘reasonable grounds’, the repossession is defective and owner may be
liable for damages for wrongful repossession.

• See Pang Brothers Motors Sdn Bhd v Lee Aik Seng [1978] 1 MLJ 179

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• United Manufacturers sdn bhd v sulaiman bin ahmad & anor
• The court held s 16(1) only requires notice to be given before respossession
• Etc but s 16(1) does not specify any time limit within which an owner must
reposses after service of notice
• Thus owner can repossess at any time after expiry of period of notice (not
less than 21 days after service of notice ), the notice doesn’t cease to be
effective merely because owner didn’t actually respossess until two years
after service of notice- as long as overdue installments and interests remain
payable and unpaid

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• s.16A – If the hirer voluntary returns the goods within 21 days after
service of 4th Sch Notice, the hirer shall NOT be liable for:
i. cost of repossession,
ii. cost incidental to the repossession process, and
iii. cost of storage.

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Additional requirements under Hire Purchase (Application of Permit and
Procedure of Repossession) Regulations 2011 (came into effect on 15/6/2011).
(i) Default by hirer – s.16(1) & s.16(1A)
(ii) Service of 4th Schedule Notice.
(iii) After service of (ii), owner shall send to hirer a notice informing him that
owner intend to take possession of goods. By registered post. Not
earlier than 14 days after service of (ii). Regulation 15.
Period of notice : not stated but normally 7 days or the remaining days
under the 4th Sch Notice.

Non compliance – an offence. Rule 23.

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Question : Must notices be served to Guarantors?
• RHB Bank Bhd v Hassan Mawi [2007] 10 CLJ 706.
• Neither the act or the regulations require service on the guarantors to
notify regarding the repossession and thus no need.

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During Repossession
• Hire Purchase (Application of Permit and Procedure of Repossession)
Regulations 2011.

• If the repossession is carried out by the owner personally, the owner

must show his identity card and provide the name and address of the
company to which he belongs to.

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• In addition, new sections inserted by 2010 amendment (Act A1384)
• s.17A(1) no person shall undertake repossession without a written permit
issued by the Controller (s.3: appointed by the Minister)
• Kena ada permit baru boleh repossess
• s.17A(2) non compliance : an offence under HPA.

• s.17B(1) an owner shall appoint as his agent to undertake repossession a

person who is a permit holder under s.17A(1).
• s.17B(2) non compliance : an offence

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• Regulation 16 :
• If re-possession is carried out by owner’s agent, agent must produce and
show:
• permit (granted under Reg 6)
• ID
• produce re-possession order
• Reg 17 : contained
• Name of repossession agent
• Permit number
• Storage place of owner
• Name and address of owner

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• s.16(4) – Where goods have been repossessed, the owner/agent must
serve to hirer personally a document acknowledging receipt of goods.
• If hirer was not present at the time of repossession, send document to
hirer immediately after taking possession.

• Contains a short description of goods repossessed, date, time and place

where repossession had taken place – s.16(5).

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After Repossession
• s.16(3) – Owner must serve to the hirer and to every guarantor a
written 5th Sch Notice (Notice to Hirers) within 21 days after
repossession takes place.

• Contains rights of hirer after repossession.

• Eg: amount of installment due
• Cost of re-possession
• How to remedy the breaches

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• s.19(1): Within 21 days after the service of 5th Sch Notice, if:
i. The hirer makes payment of the amount due,
ii. The hirer has remedied any breach of the agreement, and
iii. The hirer has paid the owner reasonable costs & expenses incidentally
incurred by the owner in taking possession and returning to hirer.

• The hirer may give a written notice to the owner to require the owner to re-
deliver the goods to hirer - s.18(1)(a)(i)
• Or require owner to sell goods to any person introduced by hirer - s.18(1)(a)
(ii)

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• NOTE
• In relation to hirer’s obligation to pay reasonable costs and expenses
incidentally incurred by the owner in taking possession and returning to
hirer
• Khoo Thau Sui v United Engineers
• The court held that the hirer had contractually agreed to pay such costs
and expenses so he cannot dispute his obligation to pay
• Hirer can only dispute the total cost incurred when owner takes
possession.

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Re-sale
• The owner may only resell the goods after the expiration of the 21
days in the 5th Sch Notice, unless with the consent of the hirer. – s.17

• The hirer may introduce a cash buyer to buy the repossessed goods
by giving a written notice to the owner. – s.18(1)(a)(ii)

• If the value exceeds the money owed to the owner, hirer is entitled to
the difference. – s.18(1)(b)

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• If the owner decides to sell through public auction, must give notice to the
hirer – s.18(4)(a)

• In any event, if the proceeds from the sale is not enough to recover the
debt, owner shall proceed against the hirer personally to recover such sum.
(ie, civil suit) – s.18(1)(b)

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Questions
a) Can owner/agent enter the hirer’s land without the consent of the hirer?
 PP v Mohamed Nor [1988] 3 MLJ 119
 The court held isn’t guilty when the hirer asked the agents of the owner to leave the
house and when the agent refused, the hirer may use reasonable force to oust the
repossessors

b) Can the repossessor use force? The Act and Regulation are silent.
But s.42 can be implied to also mean that the owner is barred from any use of force
in the process of regaining possession.
s.42 : Owner may complain to the Magistrates’ Court of his failure to take possession
of the goods. Court may summon the hirer to appear and order the goods to be
delivered to the owner.
Failure to deliver : an offence.
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