No finance recorded on HPI but there actually was?


This article might give you several “Twitchings”.

Author: Jason Williams
Reading time: 3 minutes

This article is 8 months old.

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We hear it from clients every now and then.  They have taken a car in part exchange, done a HPI check on it and all is clear, no finance. 

Then, sometimes years later, a client receives a letter from a solicitors acting on behalf of a finance company alleging “conversion”.  Conversion is where a person treats and disposes of goods as if they owned them when they actually did not.  The letter will say the car has outstanding finance of thousands of pounds and, if client doesn’t pay up, they will issue court proceedings for selling a car that belonged to the finance company and not the car dealer.

Your initial response will be that it was HPI clear before it was sold.  Unfortunately, the House of Lords decision in Moorgate Mercantile Co Ltd v Twitchings 1977 – yes 1977 but still binding on lower courts – states that because there was no legal obligation for a finance company to use the register, the car dealer was nevertheless liable.  

Of course, HPI in 1977 as opposed to HPI more than 40 years later may mean that if the same case was heard again, the outcome might be different. HOWEVER, it would probably require a court of equal or superior rank to the now obsolete House of Lords – such as the Supreme Court – to change it.  This is because of the deeply entrenched legal concept that a lower court cannot overrule a judgment given in a higher ranking court when the facts are the same.

Some light relief though comes in the form of the 2014 High Court decision in Chatfield’s Martin Walter v Lombard North Central, which came to a different conclusion because the facts were slightly different.  Here, the court found against the finance company who DID note their interest in a vehicle on the HPI register but who subsequently removed their interest in error.   There is, therefore, a difference between a finance company that fails to register their interest with HPI and one which does and then alters the register by removing it.  

It might be said that the High Court was simply doing its best to find a distinguishing factor to remove an age-old legal anomaly. It might have been good law in 1977 when HPI was in its comparative infancy, as opposed to now, where it is the place that everyone goes to and relies upon when checking cars for theft, insurance write offs, and outstanding finance.

Jason Williams

Legal Advisor

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