QUEEN'S BENCH DIVISOIN
BIRMINGHAM DISTRICT REGISTRY
ON APPEAL FROM THE WANDSWORTH COUNTY COURT
B e f o r e :
| WELCOME FINANCIAL SERVICES LIMITED
|NINE REGIONS LIMITED
(trading as LOG BOOK LOANS)
Counsel for the Respondent: Paul Joseph instructed Wiesmayers of Great Bookham
Crown Copyright ©
any other place." [Clause 7]
"21.- Sale by person not the owner.
(1) Subject to this Act, where goods are sold by a person who is not their owner, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell."
"(2) Where the disposition referred to in subsection (1) above is to a private purchaser, and he is a purchaser of the motor vehicle in good faith without notice of the hire-purchase or conditional sale agreement (the "relevant agreement") that disposition shall have effect as if the creditor's title to the vehicle has been vested in the debtor immediately before that disposition."
"(2) In this Part of this Act "trade or finance purchaser' means a purchaser who, at the time of the disposition made to him, carries on a business which consists, wholly or
(a) of purchasing motor vehicles for the purpose of offering or exposing them for sale, or
(b) of providing finance by purchasing motor vehicles for the purpose of bailing or (in Scotland) hiring them under hire-purchase agreements or agreeing to sell them under conditional sale agreements, and "private purchaser" means a purchaser who, at the time of the disposition made to him, does not carry on any such business."
"Part 111 of the Bill is concerned with protecting the man who buys a car in good faith and later finds that, because it was the subject of a hire purchase agreement, he has no title to it. ... The first two subsections of the new clause in amendment no.77 contain what is really the basic provision: that where the hirer sells the car to a person who buys it in good faith and without notice of the hire-purchase agreement, that person gets a good title, or, to be strictly accurate, as good a title as was possessed by the finance house who had let the car to the fraudulent hirer. The scheme is for the protection of the
public, and, quite reasonably, the finance houses did not think that motor dealers or finance houses should be so protected since they can and should be on their guard against buying cars which are on hire purchase ... My Lords, fraudulent sales of cars on hire-purchase have caused a real hardship to the victims. We are glad that it has been possible to introduce these provisions to protect such people in a reasonably simply way.
We feel confident that they will be generally welcomed."
"It may be asked: why was no protection given to trade or finance purchasers? No doubt because Parliament thought they were well able to take care of themselves. There is available to them in the Hire-Purchase Information Service. Whenever a car is offered to a trade purchaser or motor dealer for sale, he at once wants to know whether it is on hire-purchase of not? He then gets an answer on which he can safely act: see Moorgate Mercantile Co Ltd v Twitchings  225."
Review of the Judgment of District Judge Habershon
"The present case is very different, and in my view easily distinguished from GE Capital Bank Ltd v Rushton and another because the purpose of the purchase of the car in this case was (a) not for the purpose of offering or exposing it for sale; and (b) not bought with a view to selling it at a profit. Indeed, Mr Foster, in his evidence was very clear that C goes to considerable lengths to avoid selling any of the vehicles it owns. He said that C's business would not be profitable if its intention were to resell the vehicles and where borrowers from it were in default other methods of recovering the sums due to it were always employed wherever possible and a sale of a vehicle would be a remedy of last resort. Mr Foster also pointed to the fact that, while he was not able to provide precise details, the proportion of repossessed and sold cars each year was very small as a percentage of its business."
"I have been asked to determine whether C was a private purchaser"
by determining what the purposes were rather than what they were not. She merely answered what the purpose was not.
"The loan obtained from C therefore had no connection with the acquisition of the car and was doubtless used by her for completely unrelated purposes" [Paragraph 14].
"Clearly, therefore, there was no conditional sale agreement and the loan provided to borrowers from C (and in this case Miss Scott) could not be defined as 'hire purchase' since it was not intended for, or linked to, the acquisition of a vehicle. I am of the view that the mere fact that C may be defined as a Finance Company does not, of itself, exclude it from the definition of 'private purchase' although I agree that the use of a Bill of Sale rather than a hire purchase agreement or conditional sale agreement would be insufficient to protect C. My reason for finding that C does not fall within section 29(2)(b) is, as I have said, that the finance provided is not for the purpose of, or in any way linked to, the acquisition by the user of the car. In the case of loans by C the vehicle is merely [some] security for a loan for unrelated purposes." [paragraph 15]
Hire purchase agreements; and
Agreeing to sell them under conditional sale agreements.
His Honour Judge Simon Brown QC
Specialist Mercantile Judge
22nd April 2010