Court orders man to pay No Deposit Cars for ‘defective’ car

A court has upheld an €11,210 claim filed by No Deposit Cars Malta Limited, against a customer whose car it had repossessed under the terms of a hire-purchase agreement.

In a decision handed down earlier this week by the Court of Magistrates, 24-year-old Braydon Pace was ordered to pay the amount after failing to keep up with his repayments.

The defendant had claimed that the agreement was written in a language he did not understand.

Pace had also argued that the agreement was null and contained unlawful clauses, as well as claiming that the company had illegally seized the car, which he said he had received in a damaged condition.

No Deposit Cars Malta Ltd is owned by Christian Borg, who was charged earlier this year, alongside five others, on charges of kidnapping and threatening a man.

A number of No Deposit Cars and Easy Finance Motor House’s past customers have since approached MaltaToday with stories of having had their bank accounts frozen by garnishee orders after they stopped repayments for what they claim are damaged cars.

Magistrate Victor Axiak heard how Pace had purchased the Suzuki Swift from the defendant in 2019, for the price of €11,440, with monthly repayments of €190 under a hire-purchase agreement.

After having the car for a brief period, Pace had returned it to the showroom. He claimed that the vehicle had already developed some faults. On their part, the showroom staff claimed that the car had been returned simply because Pace had changed his mind and wanted another vehicle, a Toyota Vitz.

An agreement was reached, whereby the vehicles would be exchanged after Pace paid an extra €800 and the company would repair its damaged windscreen. He had called to check on the progress of repairs after several weeks and was informed that the Vitz had been sold to someone else, and that he was still contractually bound to pay the monthly instalments for the Swift. 

A No Deposit Cars representative told the court that the defendant had only paid them €190 on the signing of the contract and had not made any further repayments. The company’s directors had sent Pace several reminders until they finally reached an agreement with him to give them back the car.

Pace told the court that he had agreed to return the car, but on condition that the contract be dissolved. He added that the bills of exchange were torn up in front of him by the directors to show that there were no further contractual obligations, something which the directors denied in court.

Lack of fluency in English not reason to void a contract

In a judgment handed down on 4 April, Magistrate Axiak dismissed the defendant’s first argument that his lack of fluency in English led to the nullity of the contract, after seeing the affidavits made by No Deposit Cars’ Manager Luke Milton and employee Thorne Mangion in which they insisted that the conditions were explained to the defendant in detail. Pace had also released an affidavit confirming that he had accepted the terms of the contract and that it had been explained to him before he signed it.

The court also dismissed the defendant’s claim that the contract contained illegal clauses, under which the car was repossessed, noting that Pace had not indicated which clauses he had been referring to, bar one. “The court is not expected to analyse a contract word by word to see whether there are any illicit clauses, obviously except where some clauses are clearly against the law, in which case it would be obliged to raise the issue of nullity ex-officio as a matter of public order,” said the magistrate.

The one clause highlighted by the defendant, which reads “The Hirer irrevocably authorises the Owner to retrieve the physical possession of the. Motor Vehicle and to do all that is necessary to change the registration of the Motor Vehicle onto the name of the owner if the Hirer does not comply with the request to return possession of the Motor Vehicle to the Owner within five (5) calendar days,” referred to a contractual remedy available to the company, triggered by non-payment of the full balance within 30 days, said the court.

The court noted that Pace had “probably been thinking of” a similar clause used in residential leases, under which such a lease would be dissolved and the lessor entitled to take back possession of the property and change the locks. “It is true that a clause to that effect has been taken by our courts as not having any effect, because the law wants the property to be returned only under the authority of the court.” However, the evidence showed that the defendant had voluntarily surrendered the car keys to the company’s employees, noted the magistrate.

While it could be argued that Pace had been misled into giving up the keys or had done so by mistake, what was relevant to this case was whether possession had been taken through violence or spoliation, said the court, the case for the payment of the balance had not been filed on the basis of that clause. This defence was also dismissed.

Hidden defects

Pace’s third defence, that his consent was vitiated by the fact that the car was sold with hidden defects and that these defects also reduced the value of the vehicle, was also dismissed, the magistrate observing that from the evidence exhibited, it could not be said that the defendant had proven that the vehicle was defective at the time of purchase. Although the car had some mechanical problems, neither Pace, nor the witnesses he produced had been able to identify them. The court also pointed out that the contract had expressly excluded “any responsibility or warranty for latent defects, whether mechanical, electrical or otherwise, existing at the time of and following the date of this agreement,” a clause which was permissible under the Civil Code.

“When the defendant stopped his monthly payments he therefore lost the benefit of time and the plaintiff company, as it had every right to do, asked for the payment of the full balance,” the magistrate said.

His failure to pay after this request triggered a resolutive condition in the contract,  and therefore the plaintiff had a right to either ask for the return of the vehicle or force the other party to fulfil his obligation to pay.

The court said it was “well aware” of decisions by the courts of Magistrate and the First Hall of the Civil Court which had interpreted the contract in question differently, in cases filed by No Deposit Cars Malta Ltd but said it disagreed with them. It stressed that the company was “entitled but not obliged” to sell the vehicle once it had taken back possession. It said that a judicial sale by auction of the vehicle would not be in the interests of the defendant, who could easily get a better price for the car if sold on the open market.

The court upheld the claim made by No Deposit Cars Malta Limited and ordered Pace to pay the company €11,210 together with interest and costs of the case.

The magistrate ordered the company to return the car to him and register the necessary transfers with Transport Malta.