Emmanuel Ayodeji Ajayi v. R.T. Briscoe (Nigeria) Ltd., (PC)
BS954545
PRIVY COUNCIL
Before:-Lord Morris of Borth-y-Gest, Lord Hodson and Lord Guest.
Case No. 0. D/d.
28.7.1964.
Emmanuel Ayodeji Ajayi (trading under the name and style of The Colony Carrier Co.) - Appellant
Versus
R.T. Briscoe (Nigeria), Ltd. - Respondent
For the Appellant-hire purchaser :- J.G. Le Quesne, Q.C., and Mervyn Heald, Advocate.
For the Respondent Owners :- Dingle Foot, Q.C., and D. Taverne, Advocate.
Privy Council
Cases Referred :-
Birmingham and District Land Co. v. London and North Western Ry. Co., (1886-90) All E.R. Rep. 620 : (1888), 40 Ch.D. 268.
Central London Property Trust, Ltd. v. High Trees House, Ltd., (1946), (1956) 1 All E.R. 256 n. : (1947) K.B. 130.
Combe v. Combe, (1951) 1 All E.R. 767 : (1951) 2 K.B. 215.
Hughes v. Metropolitan Ry. Co., (1874-80) All E.R. Rep. 187 at p. 191 : (1877), 2 App. Cas. 439, 448.
Tool Metal Manufacturing Co., Ltd. v. Tungsten Electric Co., Ltd., (1955) 2 All E.R. 657.
JUDGMENT
Lord Hodson, J. - The plaintiffs ("the owners") issued their summons on Nov. 2, 1959, and by their statement of claim they relied on two agreements dated June 1, 1956, and July 31, 1956, relating altogether to eleven Seddon lorries valued at £ 24,511 6s. 8d. which had been delivered to the defendant on hire. The defendant (the hire-purchaser) had paid deposits of £ 1,071 2s. 6d. and £ 3,000 under the respective agreements and had agreed to pay the balance of £ 20,440 4s. 2d. by stated instalments on stated dates between July 1, 1956, and Jan. 30, 1957. The hire-purchaser failed to pay the instalments in accordance with the agreements and, at the date when proceedings were instituted, there was still unpaid £ 11,304 16s. 0d. This sum the owners claimed.
2. The substantial issue raised by the defence was that the hire-purchaser had been induced to enter into the agreements by fraudulent representations about facilities to be provided by the owners for repairing the lorries and providing spare parts for them. The hire-purchaser counterclaimed repayment of the money that he had already paid under the agreements on the ground that the consideration had wholly failed and rescission of the agreements. The learned trial judge found against the hire-purchaser on the issue of fraud and gave judgment for the owners for the full amount claimed as rents due on the lorries in accordance with the agreements.
3. On appeal to the Federal Supreme Court the point was taken, as the sole ground of appeal, that the hire-purchaser was not obliged to pay the arrears due on the hire-purchase agreements so long as the lorries were off the road. The hire-purchaser founded on a letter to him written by the owners' manager and dated July 22, 1957, which was in the following terms:
Seddon Tippers
We are in receipt of your letters of July 5 and July 12 and are indeed very sorry to hear about the troubles you have had with your fleet of Seddon Tippers.
We hope very soon to be able to put at your disposal the service of our engineer and on completion of our workshop in Apapa we should be able to give you a proper service for your Seddon vehicles in the time to come.
Please rest assured that we do regret the inconvenience and loss you have been put to and we confirm herewith that we are agreeable to your withholding instalments due on the Seddon Tippers as long as they are withdrawn from active service.
Yours faithfully,
(Sgd.) B.A. Heidemann,
Acting Manager."
4. Reliance was placed on the equitable principle stated by Lord Cairns, L.C., in Hughes v. Metropolitan Ry. Co., (1874-80) All E.R. Rep. 187 at p. 191; (1877), 2 App. Cas. 439 at p. 448 which was ten years later held to have general application in the case of Birmingham and District Land Co. v. London and North Western Ry. Co., (1886-90) All E.R. Rep. 620; (1888), 40 Ch.D. 268 where the principle was interpreted by Bowen, L.J., (1886-90) All E.R. Rep. at pp. 627, 628; (1888), 40 Ch.D. at p.286 as follows:
"...if persons who have contractual rights against others induce by their conduct those against whom they have such rights to believe that such rights will either not be enforced, or will be kept in suspense or abeyance for some particular time, those persons will not be allowed by a court of equity to enforce the rights until such time has elapsed, without at all events placing the parties in the same position as they were before."
5. It was argued that the principle applied to this case for the suspension of the obligation to pay instalments still operated, no notice having been given to the hire-purchaser that the lorries were available for active service nor any other step taken to cause the suspension to cease. The judgment of the Federal Supreme Court was given by Taylor, F.J., who held that he could not see in what way the hire-purchaser had altered his position or could be said to have acted on the promises contained in the letter under consideration.
6. Before their lordships the hire-purchaser has taken the same point as he took in the Federal Supreme Court arguing that the owners could not enforce payment in the circumstances of this case pending the happening of a certain event which had never occurred. This event is the return to service and availability for service of the lorries. He claims that he has altered his position and relies on the following circumstances. First he says that the relevant terms of the agreements (cl. 14 in each case) provided for the determination of the hiring if the hirer did not make punctual payments of the instalments of rent. He maintains that the conduct of the parties is inconsistent with determination in accordance with this clause because after instalments had fallen into arrear and after the payments ought to have been completed the lorries remained in the possession of the hire-purchaser with the consent of the owners, that three were never returned and eight were later returned to the owners with their approval and remained thereafter in their possession subject to the terms of the agreement in that it was open to the hire-purchaser to complete the transaction by paying the balance due and becoming the owner of the lorries. By the letter of July 22, 1957, it is said that the owners made plain that they were not going to enforce their rights and would not insist on payment before the lorries were all back in service. By this letter they gave the hire-purchaser all that he asked for, since he had written on July 12, 1957, pointing out that he had been compelled to lay up the lorries and had no desire to forfeit the large sums of money involved. In that letter the hire-purchaser proposed to make the necessary contribution for all essential repairs, which were to be debited to his account and payment made when the vehicles were again in service. It is said that the hire-purchaser acted on the letter of July 22 by not putting forward proposals alternative to those he had already made in his letter of July 12. Further it is said that after the letter of July 22 he did lay up the lorries by delivering eight to the owners after that date with the result that they were out of service and earned no revenue. Lastly it is said that he organised his business on the basis that the lorries would be put in repair and he would not have to make the payments due on them until they were back in service and accordingly were earning revenue.
7. The hire-purchaser's final contention was that having altered his position in the manner indicated the owners never gave notice that the period of suspension was at an end before issuing their summons and that accordingly the lorries never having been returned or made available for service he was entitled to rely on the equitable defence as defined by Bowen, L.J., in the Birmingham and District Land Co. case [1886-90] All E.R. Rep. at pp. 627, 628; (1888), 40 Ch.D. at p. 286. Alternatively he went further and contended on the authority of the cases of Central London Property Trust, Ltd. v. High Trees House, Ltd. (1946), [1956] 1 All E.R. 256 n.; [1947] K.B. 130 and Combe v. Combe [1951] 1 All E.R. 767; [1951] 2 K.B. 215 that the promise given by the letter of July 22 was irrevocable unless the lorries were made available for service and that, since this never happened, the owners cannot enforce their claim.
8. Their lordships are of opinion that the principle of law as defined by Bowen, L.J., [1886-90] All E.R. Rep. at pp. 627, 628; (1888), 40 Ch.D. at p. 286 has been confirmed by the House of Lords in the case of the Tool Metal Manufacturing Co., Ltd. v. Tungsten Electric Co., Ltd. [1955] 2 All E.R. 657, where the authorities were reviewed, and no encouragement was given to the view that the principle was capable of extension so as to create rights in the promisee for which he had given no consideration. The principle, which has been described as quasi estoppel and perhaps more aptly as promissory estoppel, is that when one party to a contract in the absence of fresh consideration agrees not to enforce his rights an equity will be raised in favour of the other party. This equity is, however, subject to the qualification (a) that the other party has altered his position, (b) that, the promisor can resile from his promise on giving reasonable notice, which need not be a formal notice, giving the promisee a reasonable opportunity of resuming his position, (c) the promise only becomes final and irrevocable if the promisee cannot resume his position.
9. The difficulty of this case stems in great part from the fact that the equitable defence was never expressly pleaded and no part of the argument at the trial appears to have been directed thereto. Certainly the trial judge made no reference to it. True it is that the defence contains in para. 29 a reference to the letter of July 22, 1957, by which
"the [hire-purchaser] was asked to withhold the instalments due on the Seddon Tippers as long as they are withdrawn from the road."
Again para. 30 reads
"The [hire-purchaser] avers that the fleet of Tippers were not on the road on the receipt of this letter and ever since they have not been on the road (eight are with the [owners] and three lying in the [hire-purchaser's] garage)."
10. These paragraphs are contained in a narrative statement of facts pleaded in order to establish the allegation of fraud and although the letter of July 22, 1957, was put in evidence it was used not in support of the doctrine of promissory estoppel but to show that the hire-purchaser "was told not to pay at all any more". It is not surprising that the trial judge did not address his mind to the implications of the letter which are now relied on and indeed made no express finding on the question whether or not the lorries were ever made available to the hire-purchaser for return to service. The owners' witness, Mr. Gram-Hanssen, chief accountant to the owners, gave evidence that the hire-purchaser had been asked to remove the lorries after repairs but had failed to do so. This was denied by the hire-purchaser.
11. The correspondence is incomplete and there is a gap between letters written in July, 1957, and a letter written on behalf of the hire-purchaser in April, 1958. It can be inferred from the last mentioned letter, but not with certainty, that during this period the owners were making demands for payment of the instalments due under the agreements.
12. Their lordships have referred to these matters of fact not to exclude the raising of the equitable defence but to show that the facts relied on, although covered by the pleaded defence, were not investigated at the trial through no fault of the owners. Battle was joined by the hire-purchaser on the issue of fraud and on that issue the owners succeeded. The defence was first put forward effectively in the Federal Supreme Court and further elaborated before their lordships on inadequate material. It would not be just to the owners to remit the matter either for a new trial or for a decision to be given at this late stage on facts which have not been expressly found. Their lordships agree with the Federal Supreme Court in thinking that an application to that end should be rejected, especially as the defence sought to be raised is of a suspensory or delaying nature and not of itself decisive to defeat the owners' claim for all time.
13. The question remains whether the hire-purchaser has made good the defence. In their lordships' opinion he has not succeeded in so doing. The hire-purchaser did not alter his position by not putting forward counter proposals after receipt of the letter of July 22, 1957. There is no evidence to support the contention that he did so by organising his business in a different way having regard to the fact that the lorries were out of service, and it cannot be inferred from the evidence given that such reorganisation was necessary. It can be said that the lorries were laid up and there is evidence to support the view that they were laid up after the receipt of the letter of July 22, 1957. Nevertheless, in view of the evidence given by the owners' witness, not rejected by the trial judge (although contradicted by the hire-purchaser), it cannot be said to have been proved that the lorries were not made available for the hire-purchaser after they had been repaired.
14. The hire-purchaser has accordingly failed to establish any defence to the owners' claim. Their lordships will therefore humbly advise Her Majesty that the appeal be dismissed. The appellant hire-purchaser must pay the costs of the appeal.
.