We were in court this week with a client who made a simple but potentially costly mistake when buying in a vehicle.
Our dealer purchased the vehicle from a customer who said the vehicle was clear of finance. Our dealer did run an HPI check but, in error, not one which documented outstanding finance. The vehicle was sold on to a customer but some weeks later our dealer was contacted by a finance company who advised that the vehicle was still on finance and thus was still owned by them. This of course means the original seller did not have the right to sell it to us and so in turn our dealer had no right to sell it to the new customer.
The finance company contacted our dealer’s customer but as an innocent purchaser under the Hire Purchase Act 1964, they were rightly able to keep the vehicle and have nothing further to do with the matter. Now in this scenario, the finance company normally go straight to the dealer for compensation as the easier target in terms of getting their money back. This is pretty much a slam dunk for the finance company as our dealer would have no defence. However, in this particular case, we ascertained that the finance company had already issued a claim against their HP customer (the person from whom our dealer bought the vehicle) and a repayment deal had been agreed as part of those court proceedings. This opened up a possible defence for our dealer on two different technicalities, one based on the Civil Procedures Rules and one from the Torts of Interference Act 1977. We ran these defences and made a separate Part 20 application to add the original customer to the claim which really muddied the waters for the court.
Now in all honesty, the trial could have gone either way but the judge, seemingly sensing some difficult technical arguments coming their way, suggested that the parties may want to step outside and come to a deal. We had organised a barrister to accompany our client to the trial and they negotiated a mutually satisfactory outcome which shaved a few thousand pounds off our client’s potential liability. Needless to say our client is another happy bunny but is someone who will be very careful to do the right HPI checks in the future.
We were ‘lucky’ in this case as normally there is no defence to these type of claims but fortunately we were able to find two technical holes in the other side’s case which we used to our client’s advantage. This will not always be possible but we do always try!
Next step, helping our client recover monies from the person who sold them the car. Watch this space.