The Court of Appeal has clarified in the case of Public Islamic Bank Berhad v Edwin Cassian Nagappan Marie [2026] 2 MLRA 360 (“Edwin Cassian Case”) that an application for leave under section 16(1A) of the Hire-Purchase Act 1967 (“HPA”) may be made ex parte, and that such procedure does not contravene the principles of natural justice. This decision provides guidance on the procedural nature of section 16(1A).
 
The right to repossession
 
Where payment of instalments amounts to not more than 75% of the total cash price of the goods comprised in the hire-purchase agreement and there have been two successive defaults of payment by the hirer, the owner may exercise its right to repossess the goods under section 16(1) of the HPA after the expiry of the period fixed in the statutory notices. The statutory notices comprise the Fourth Schedule under the HPA, and the notice issued pursuant to Regulation 15 of the Hire-Purchase (Application of Permit and Procedure of Repossession) Regulations 2011.
 
Where the hirer has paid instalments of more than 75% of the total cash price of the goods under the hire-purchase agreement, section 16(1A) requires the owner to first obtain leave of court before issuing these statutory notices.
 
Facts of the Edwin Cassian Case
 
The appellant, being the owner, entered into a hire-purchase agreement with the respondent, as the hirer, for a reconditioned Mercedes Benz CLS 350. As of January 2017, the respondent had defaulted on at least seven (7) monthly instalments, however, the total instalments paid exceeded 75% of the cash price.
 
The appellant filed an ex parte originating summons at the Magistrate’s Court for leave under section 16(1A). Leave was granted by the learned Magistrate and thereafter, the appellant issued the statutory notices before repossessing the vehicle on 15 February 2019.
 
On 31 May 2019, the respondent filed an application to set aside the leave granted by the Magistrate and contending that the application ought to have been made inter partes. This application was dismissed by the Magistrate.
 
Dissatisfied, the respondent filed an appeal to the High Court. On 10 March 2020, the High Court allowed the appeal and set aside the leave order on the ground that granting leave ex parte was in breach of the principles of natural justice. The appellant obtained leave from the Court of Appeal and appealed the decision of the learned High Court Judge.
 
Issue to be determined
 
The issue before the Court of Appeal was whether it is mandatory for an Originating Summons filed for the purpose of obtaining leave of court under section 16(1A) of the HPA 1967 to be filed inter partes.
 
Decision of the Court of Appeal
 
Having considered the matter, the Court of Appeal allowed the appeal and reinstated the Magistrate’s Court order, holding that a section 16(1A) application was limited only to obtaining leave to issue the statutory notices in situations where more than 75% of the vehicle's cash price had been paid by the respondent.
 
The Court held that section 16(1A) is procedural in nature and does not confer or determine the right of repossession, which arises under section 16(1). Instead, section 16(1A) operates as a pre-condition to the issuance of Fourth Schedule notices in cases where the hirer has made substantial payment. The Court further held that the hirer’s right to be heard was already incorporated in the Fourth Schedule Notice, which provides notice of arrears and an opportunity to remedy the default before repossession occurs.
 
Comments
 
The decision by the Court of Appeal in the Edwin Cassian Case affirms the limited and procedural role of section 16(1A) within the hire-purchase enforcement framework. It provides clarity that leave applications under section 16(1A) may be made ex parte.
 
Case Note by Alyshea Low (Partner) of the Hire Purchase and Leasing Sub-Practice of Skrine.