[*223] 1985 December 31.
(KALLIS, D.J.)
IN THE DISTRICT COURT OF NICOSIA
Michael Charalambous and Another,
Plaintiffs,
v.
Charalambos Stefanou,
Defendant.
(Action No. 4565/84).
Contract - Fraud or fraudulent misrepresentation - Burden of proof - It rests with the party asserting fraud - Hire Purchase - Even though in this case it is a contract between the plaintiffs and a finance corporation, the plaintiffs would succeed, if they proved that they were induced to enter into the contract by the misrepresentation of the defendant.
E. Kekkou (Miss), for the Plaintiffs.
E. Neophytou, for the Defendant.
JUDGMENT
The following judgment was delivered by:
KALLIS, D.J.: This litigation arose out of a transaction between the parties whereby the plaintiffs bought a car from the defendant. According to the statement of claim plaintiffs agreed with the defendant, who is a motor car dealer to purchase a Peugeot car (“the Peugeot”) from him at the agreed price of £2,800. Defendant personally and/or through his servants and/or agents agreed and/or assured and/or guaranteed that plaintiff would pay no other amount either to himself or to any other person. As against the purchase price plaintiffs [*224] paid to the defendant in advance an amount of £1,220. - and there remained a balance of £1,580. For payment of the purchase price defendant accepted to buy another car (“the mini”) owned by the Bank of Cyprus Finance Corporation (“the Finance Corporation”) and in the possession of the plaintiffs, by virtue of a hire-purchase agreement, and to pay in full the balance of the price thereof. Defendant accounted £1,220. - towards the amount of the purchase price of £2,800. - which sum - of £1,220 - consisted of part of the purchase price of the “mini” which had already been paid including the amount of the hire-purchase agreement which was paid by plaintiffs. The balance of £1,580. - represented the balance of the purchase price of the “mini” i.e. £1,080. - plus £500. this latter amount was the balance of £900. - which was agreed by the parties to be paid over and above the price of the mini. For the payment of the above balance of £1,580. - it was agreed between the litigants that defendant would sell the Peugeot car to the Finance Corporation and thereafter the plaintiff would pay the Finance Corporation through a hire-purchase agreement. Defendant and/or his agents and/or his servants by false representations and/or under circumstances amounting to fraud and/or by fraud and/or in breach of a guarantee he has given and/or agreement persuaded plaintiff to proceed with the said purchase of the Peugeot car and thereafter to enter into a hire-purchase agreement with the Finance Corporation as a result of which plaintiffs paid and/or undertook to pay to the Finance Corporation the amount of £284.500 as hire-purchase fees beyond the said balance of £1,580. [*225]
The following, inter alia, particulars of fraud and/or false representations were given:
(a) Defendant knew and or he ought to have known that the Finance Corporation would impose and/or collect fees.
(b) Defendant concealed from the plaintiffs that they would be bound to pay the said fees and on the contrary he assured them that since they have paid the fees for the purchase of the “mini” they were under no other obligation beyond the amount of £2,800.
(c) At the stage when the application for a hire - purchase was about to be signed by the plaintiffs defendant wrote off ( “*” ) that part of the application which provided for the payment of fees and subsequently at a time unknown to the plaintiffs, he completed and/or inserted therein the amount of £284.560.
(d) Defendant persuaded the plaintiffs to enter into the above agreement having assured them that they would not pay any amount beyond the purchase price of the said car.
Hence this action for £284.560 mils damages suffered by plaintiffs as a result of breach of an agreement between the litigants and/or as damages for the above sale through false representations and/or through fraud. [*226]
On the other hand the defendant denied the allegations of the plaintiff regarding fraud and/or false representations and contended that plaintiffs knew that through the hire-purchase of the said car from the Finance Corporation the relevant fees would have been paid by them; and to this end plaintiffs signed the relevant hire-purchase contract which expressly provided that the hire-purchase fees are always paid by the purchasers.
Plaintiffs’ case rested on the evidence of plaintiff and according to his testimony after selecting a Peugeot car he agreed with defendant’s son that he would give him the mini plus £900, out of which £400.- in cash and the balance to be added to the existing balance under the contract regarding the mini which was £1,080.- thus making a total of £1,580. When preparing the relevant contracts the son of the defendant told him that since he has already paid interest he had to pay £1,080.- plus £500. He signed the contract - exh. 1 - and he took it home to be signed by his wife - plaintiff 2 - as well. The contract is printed and the blanks were filled in by defendant’s son in his presence. At the time of signing the contract there was nothing therein regarding payment of any amount as hire-purchase fees. About one month after the signing of the contract he received a letter from the Finance Corporation together with a copy of the contract whereby he was informed that in addition to the £1,580. - there has been added a further amount of £274. The contract he signed was for £1,580. - and he had agreed with defendant that that was the final amount that the car would cost. [*227]
Cross-examined he said that the Peugeot was the third car he was purchasing under a hire-purchase contract and though regarding the previous purchases he did not agree with the seller that the hire-purchase fees would be paid by him in the previous contract the fees were stated in the contract and he could check them before signing the contract. He further said that he is a mechanical engineer, university graduate; and that before signing the contract he had read only its basic parts.
In the course of the testimony of plaintiff I learned counsel for the defendant conceded that the column in the contract regarding hire-purchase fees was blank at the time it was signed by plaintiffs.
The case of the defendant mainly rested on the evidence of Theodotos Stefanou - the son of the defendant - who testified that following the agreement for the sale of the peugeot car to plaintiffs and when plaintiff 1 told him that he would be financed by the Finance Corporation he - the witness - prepared the contract exhibit 1 by filling in the purchase price, the advance payment and the balance. The column stating “Hire-purchase fees” was left unfilled by the witness because it is completed by the Finance Corporation. He did not agree with plaintiff 1 that he - the witness - will let him off (χαρίσει) the hire-purchase fees or pay the interest regarding the mini nor did plaintiff ask him why the column relating to the hire-purchase fees remained blank. It was, however, clarified between [*228] them before the signing of the contract that any hire- purchase fees would be paid by plaintiffs. Plaintiff 1 did not ask for the fees to be let off (*) and had he done so the witness would not have proceeded with the transaction. When plaintiff 1 was in the process of signing the contract he explained to him that the contract would go to the Finance Corporation so that the fees would be assessed. The witness could not assess the fees because he did not know the mode of their calculation because he was only for three months in the business.
D.W.2 Anthi Evagorou, an employee of the Finance Corporation, produced the relevant hire-purchase agreement - exh. 1 - and, also, said that the part of the contract relating to the hire-purchase fees in most of the instances is filled in by the dealer but in isolated cases it is completed by the Corporation. According to their practice the hire-purchase fees are always paid by the hire-purchasers.
Now looking at the contract exhibit 1 it is clear that it was a contract between the Finance Corporation and the plaintiffs. Further nothing appears therein to the effect that defendant has written off (*) the column regarding the hire-purchase fees as alleged in paragraph (c) of the particulars of fraud.
Even though the hire-purchase contract was between the Finance Corporation and the plaintiffs the latter could succeed in their claim against the defendant if they prove that they were induced to enter into the [*229] contract by the aforesaid representations of the defendant (see the following passage from Anson’s Law of Contract 25th ed., pp. 128-129; and the cases therein cited. See, also, Hire-Purchase Law and Practice by R.H. Goode 2nd ed., p. 642):
“…… The device of a collateral warranty has also been employed where the principal contract is one to which either the person giving, or the person receiving, the assurance is not a party. In Shanklin Pier, Ltd. v. Detel Products, Ltd. (1951) 2 K. B. 854:
“The plaintiffs were the owners of a pier at Shanklin, in the Isle of Wight. They wished to paint the pier and consulted the defendants, a firm of paint manufacturers. The defendants told them that their paint was suitable for the purpose, and, acting on the faith of this statement, the plaintiffs caused to be inserted in their agreement with the contractors who were to paint the pier a term requiring the use of the defendants’ paint. The paint proved unsuitable and the plaintiffs sued the defendants for breach of warranty.
“McNair J. held that the plaintiffs were entitled to damages. In his judgment he said at p. 856:
“I see no reason why there may not be an enforceable warranty between A and B supported by the consideration that B should do some other act for the benefit of A. [*230]
“This principle is particularly applicable to cases of hire-purchase where a dealer first sells the article to a hire-purchase finance company which then lets it on hire to the hirer. If the dealer gives a warranty, and thus induces the hirer to enter into the contract of hire, this warranty is enforceable against him by the hirer, even though the actual contract of hire-purchase is not made between them. Andrews v. Hopkinson, (1957) 1 Q .B. 229; Yeoman Credit, Ltd. v. Odgers, (1962) 1 W.L.R. 215.”
As already stated the averment in para. (c) of the allegations of fraud is not correct. Having anxiously considered the evidence in the light of the demeanour of the two protagonists to the transaction, I have no hesitation whatsoever in accepting the testimony of D.W.I and rejecting that of P.W.I. In adopting this course I took into account the fact that D.W.I has made to me a better impression as a witness, having given his testimony in a more convincing manner. Plaintiff 1, a well educated and ingenious person, who has had previous experience in such transactions, the transaction in dispute being his third one, gave me clearly the impression that he is not the sort of person that could give faith to and rely on the word of anybody, be deceived by him and light-heartedly repose confidence on him, but he is rather the sort of person who knows perfectly well how to look after his interests and to tie effectively his adversary. All in all he gave me the impression that he is rather trying to shelter behind [*231] the fact that the column in the hire-purchase contract relating to the fees was not filled in at the time of signing the contract. But as already stated the defendant was not a party to the contract; and he was not the one who filled in, subsequently, the column in question.
In the light of my above evaluation of the evidence 1 find that plaintiffs failed to prove the alleged fraud or false misrepresentations and the burden was on them so to do because it rests with the party asserting fraud. I, further, find that the column in exh. 1 relating to the hire-purchase fees was not filled in by the defendant and was blank at the time of the signing of the contract. Relying on the evidence of D.W.1 and D.W.2, I can safely draw the inference that it was filled in by the Finance Corporation. Having regard to my above findings, I hold that the plaintiffs were not induced to enter into the contract - exh. 1 - by virtue of the alleged representations and/or fraud of the defendant; and for all these reasons the action must fail.
In the result the action is dismissed with costs to be assessed by the Registrar.