QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL |
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B e f o r e :
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College Credit Limited |
Claimant |
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- and - |
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(1)The National Guarantee Corporation Ltd |
Defendant |
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And |
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(2) Peter William Parker (3) Sandra Elaine Parker (trading as Hannington Bailey Associates) |
Defendants/Part 20 Defendants |
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Crown Copyright ©
The Hon Mr Justice Gross :
INTRODUCTION
THE POLICY AND THE CONTEXT
" 1. INSURING CLAUSE
For the purposes of this Policy "Agreement/s" shall mean a conditional sale, hire purchase or hire agreement (both regulated by the Consumer Credit Act 1974 and unregulated) substantially in the forms which are attached and form Appendix 3 to this document and which are outside the Insured's guidelines for prime business but within the Underwriting Criteria comprised in and forming Appendix 2 to this document. The Underwriting Criteria Schedule for Customers and vehicles that are to be covered by this insurance are deemed to be incorporated in and forming part of this insurance policy.
In consideration of the above and the Insured's promise to pay the premium in respect of each Agreement due the Insurers agree as follows:
That this insurance shall apply solely in respect of losses sustained by the Insured as a result of the early termination of any Customer's Agreement/s, such termination to be as a consequence of any act of default or breach of the terms of the Agreement/s by a Customer or insolvency of a Customer and then only for:-
In the case of any vehicle which is repossessed the difference between:-
(a) The Net Outstanding Balance under an Agreement and;(b) The net sale proceeds … of any such repossessed vehicle realised at auction within 90 days of termination of an Agreement. Otherwise on day 91 after termination the value of the vehicle at the date of termination of an Agreement will be determined by reference to Glass's Guide Trade Value, adjusted for mileage, or other similar point of reference agreed with the Insurers.
If the Vehicle is not repossessed within such 90 day period and provided the Insured confirms in writing that the Insured has made all reasonable efforts to recover the Vehicle then the Insured's losses shall be a sum equal to (a) above….
2. CONDITIONS PRECEDENT TO THE LIABILITY OF THE INSURERS
The following are conditions precedent to the liability of the Insurers:
(a) The Insured fully and accurately declares to the Insurers all new Agreements incepted during the Period of this insurance.(g) Only the Agreements as specified in Appendix 3 hereto or such other Agreements as may from time to time be approved in writing by the Insurer are to be used and the Underwriting Criteria Schedule as detailed in Appendix 2 attached must be complied with at inception to enable an Agreement to be covered by this insurance.
It is agreed that any failure by the Insured to observe the above conditions at any time shall entitle the Insurers to revoke coverage in respect of the relevant Agreement under this insurance at their sole option.
3. DEFINITIONS
CUSTOMER – means any private individual, sole trader or partnership who enters into an Agreement, as detailed in Appendix 3 …., for the purpose of obtaining credit to acquire the vehicle shown on an Agreement.
AGREEMENT/S – any Hire Purchase, Conditional Sale or Hire Agreement under which any Customer hires or purchases a vehicle which becomes the Customer's property before or at the end of the Agreement and any such Agreement will be in a form similar in all material respects to the Agreements which have been agreed by the Insurers and are specified in Appendix 3 ….
NET OUTSTANDING BALANCE – means the balance outstanding representing the capital balance (excluding Payment Protection, GAP and any other insurance premiums) and all interest charges….at the date of termination of the Agreement less a rebate calculated …in accordance with the Consumer Credit (Rebate on Early Settlement) Regulations 1983….
UNDERWRITING CRITERIA SCHEDULE – means the terms, as set out in Appendix 2, which must be complied with at inception of the Agreement by the Insured if an Agreement is to be covered by this insurance…..
MAXIMUM LOAN RATE – means 18% per annum flat …to be charged on the balance financed under any Agreement
5. CONDITIONS
(n) No legal action may be brought under this insurance in respect of any Agreement unless the Insured has complied with all the provisions of this insurance in relation to such Agreement….
APPENDIX 1
MANDATORY INSURANCE SCHEDULE
…..
Premium per Agreement will be 5.70% of the balance financed on an agreement inclusive of Insurance Premium Tax applicable at the prevailing rate."
" Maximum Advance Glass's Guide Trade Value (mileage adjusted)"
The remainder of the Schedule dealt with a variety of matters, which may be summarised as going to the Customer's profile and characteristics (age, length of time on the Voters Role, occupation, credit history, Driving Licence status and so on). From time to time, Appendix 2 was varied by agreement between CCL and NIG, broadly (the detail does not matter) in the direction of a relaxation of the criteria – no doubt with a view to encouraging more business to be written. By way of example, the "Maximum Advance" came to be "110% Glass's Guide Mileage Adjusted Trade Value".
" TO: COLLEGE CREDIT LTD
We offer to sell you the Goods described in the attached Conditional Sale Agreement ("the Agreement") for the total cash price shown therein … and hereby warrant that:
(1) The total initial payment shown has in fact been paid to us …"
There then followed a number of other warranties of which at least some would have been relevant had not CCL and NIG reached the partial settlement already described.
" CUSTOMER INSURANCES
£ p
Initial Payment provided by Customer
Less: Accidental Death Benefit, if required
GAP Insurance Premium, if required
Amount available for Deposit
FINANCIAL TERMS
Total Cash Price of Goods (A)
Deduct Deposit
Balance Financed
Add: Interest on Balance Financed (B)
Title Transfer Payment (C) …
Total Amount Payable by Instalments
Payable by
[ ] consecutive monthly instalments of
the first being due one month after the date of the Agreement
followed by [ ] monthly instalment of
TOTAL CHARGE FOR CREDIT (B+C)
APR including (C)
TOTAL AMOUNT PAYABLE (A+B+C)"
THE RIVAL CASES IN OUTLINE
" The purpose of the 'maximum advance' criteria is to create a direct link between the amount of credit risk which NIG is agreeing to insure (namely the Net Outstanding Balance defined as excluding GAP and other customer insurance premiums) and the value of the security which is to be available to NIG, namely the car."
DISCUSSION