Bought a car with outstanding finance, finance company going to repossess it

[hello405]

On the flip side, if Mr T was informed by the finance company before the sale took place, then he would have been on notice and the right to rely on Section 27 would fall away.

Sorry, which sale do you mean? The sale from Mr S to Mr T, or the sale from Mr T to us?

Just to clarify, there is no obligation legal or otherwise for a purchaser to carry out a HPI check, particularly if the seller of the car has all the paperwork and documentation then it is reasonable to assume that the seller is acting in good faith and to my mind that is sufficient.

Having gone through this, this just seems crazy to me. If indeed the owner of the car is not listed on any of the paperwork, it seems that an HPI check *should* be mandatory and provided by sellers at the time of the sale. We bought a car and there seems to be no way for us to find out who actually owns it. We've requested information from DVLA, but it takes more than a month to get a response and I don't know if they will tell us anyway because of GDPR. There doesn't seem to be any way of finding out who owns a car at the time of a sale because HPI reports don't have names on them and the logbooks and paperwork only mention the "keeper" rather than owner. It's a bizarre system.

If you want any feedback on your response prior to it being sent, feel free to post it up (personal info removed) and I will add any comment to it.

Thank you very much. I'd appreciate your feedback:

In regard to your letter dated August 29, I assert my claim of ownership of the vehicle with registration XXX.

I purchased the vehicle in a private sale in good faith from Mr T. Before selling it, Mr T purchased the vehicle in good faith in a private sale with no knowledge of any conditional sale agreement. Therefore, Mr T had clear title to the vehicle when he sold it to me on August 2nd of this year. Under Section 28 of the Hire Purchase Act 1964, it is presumed that the debtor disposed of the vehicle to a private purchaser purchasing in good faith without notice of the relevant agreement, unless proven otherwise.

Moreover, although you continue to claim ownership of the aforementioned vehicle, you have given no evidence of any such ownership, beyond vague references to an unnamed customer. You have provided no names, dates, or amounts owed. This stands in stark contrast to my own willingness to provide evidence documenting my good faith purchase of the vehicle.

While I appreciate that you are trying to recoup your company’s losses, your claim is against your customer with whom you had an agreement, and not me, an innocent private purchaser, nor Mr T, also an innocent private purchaser.

If you have any evidence to support your assertion that I do not have good title to the vehicle, I would ask that you provide it. Until such evidence has been supplied, your claim of ownership of the vehicle is rejected. In the meantime, any attempt to repossess the vehicle will be considered a wrongful interference of goods and I reserve the right to commence legal proceedings for such unlawful interference.

[R0b]

Sorry, which sale do you mean? The sale from Mr S to Mr T, or the sale from Mr T to us?

I meant the sale from Mr S to Mr T.

Having gone through this, this just seems crazy to me. If indeed the owner of the car is not listed on any of the paperwork, it seems that an HPI check *should* be mandatory and provided by sellers at the time of the sale. We bought a car and there seems to be no way for us to find out who actually owns it. We've requested information from DVLA, but it takes more than a month to get a response and I don't know if they will tell us anyway because of GDPR. There doesn't seem to be any way of finding out who owns a car at the time of a sale because HPI reports don't have names on them and the logbooks and paperwork only mention the "keeper" rather than owner. It's a bizarre system.

HPI checks are really there for peace of mind and to alleviate any suspicions but I would disagree that it should be a lawful requirement. A V5C is not conclusive proof that the person as the registered keeper is also the owner. It is possible that they might be separate, but again there is no legal requirement to inquire beyond what is presented, unless it is blatantly obvious something is wrong then one might consider the purchaser to have negligent but even still, that would be a bit of a stretch since a purchaser owes no duty of care to the finance company. As a point to note, There is some case law that confirms a person will be deemed to have acted in good faith if he or she acts honestly, irrespective of whether that person acts negligently or not.

As for your draft letter, see my revised example below, feel free to cherry pick whatever you want to use. Anything in square brackets should be amended by you.

Dear Sir or Madam,

I am writing in response to your letter dated 29 August 2018.

In that letter you claimed that in order to rely on Section 27 of the Hire Purchase Act 1964 ('HP Act'), I must have purchaser the vehicle from your customer. I do not agree.

Section 27 of the HP Act does not state or in any way suggest that, subsequent purchasers of a vehicle on finance are not protected. On the contrary, the provisions confirm that title shall pass to the purchaser provide that the sale was made in good faith and the purchaser was without knowledge of the vehicle being under a conditional sale or hire purchase agreement. [To reiterate what I have said previously,] I purchased the vehicle in a private sale in good faith from Mr T. I was neither aware nor had any reason to believe that Mr T was entitled to sell the vehicle. Prior to the vehicle being sold to myself, I am informed by Mr T that he also purchased the vehicle in good faith in a private sale with no knowledge of any conditional sale agreement. Accordingly, Mr T was entitled to freely dispose of the vehicle when it was sold to me on 2 August of this year and title to the vehicle therefore vested in me.

You claim in your letter that Mr T has not proved to you that the vehicle was purchased from your customer or that he had the right to sell the vehicle at all. I would point out that under Section 28 of the HP Act confirms the prima facie position in that the onus is on [finance company] to prove that vehicle was sold in bad faith and with notice that the vehicle was subject to a conditional sale agreement, not the purchaser. [Despite multiple requests,] you have yet to provide me with any evidence that that supports your allegations beyond vague references to an unnamed customer.

As far as I am concerned, title to the vehicle remains with me and any interest in the vehicle claimed by [finance company] is extinguished. I would suggest that you take this matter up with your customer who has no doubt breached his or her contract.

Whilst writing, I note your intention to appoint agents to collect the vehicle from my possession. For the reasons already mentioned above, [finance company's] right to the vehicle is denied and this letter serves as notice that if [finance company] or any third party acting on its behalf, attempts to recover the vehicle from my land will be deemed as an unlawful interference with goods and I reserve the right to commence legal proceedings against [finance company] for an injunction and/or damages, including any associated costs or expenses that I have incurred.

Yours faithfully,

[Your name]

[hello405]

Thank you, R0b, this is amazing. Definitely packs much more of a punch than the first draft!

One question -- the car is not parked on private property but the city street. Does that change anything in the last paragraph? Unfortunately we do not have a private parking space.

[R0b]

If the vehicle is parked on your land then you have a cause of action for trespass in addition to wrongful interference with goods. As it is parked streetside, just remove the reference to being on your land and leave the rest in. After a second look of it I've spotted a few errors/improvements (in red below).

I must have purchased the vehicle from your customer.

... reason to believe that Mr T was not entitled to sell the vehicle.

Accordingly, Mr T was entitled to dispose of the vehicle without restriction

You further claim in your letter

I would point out that Section 28 of the HP Act confirms the prima facie position in that the onus is on [finance company] to prove that vehicle was sold in bad faith and with notice that the vehicle was subject to a conditional sale agreement. It is not the job of the purchaser to prove this.

attempts to recover the vehicle, I will consider such action to be an unlawful interference with goods

[hello405]

Thank so much for you for your help with understanding the intricacies of the HPA. I am feeling much more positively about this than I was a week ago. Let's hope they decide it's not worth the bother.

[R0b]

Hopefully it might make them think twice but I guess that depends on who the finance company is, the value of the vehicle and ultimately the person dealing with the matter.

Either way, you will have put them on notice so there is no excuse that they were never informed of your intention to pursue them if they did indeed removed the vehicle. Thinking about it, you could go one step further and add at the end that you will also report the vehicle as stolen to the police if removed from your possession. The police might argue its a civil matter but presuming you have all of the paperwork and the V5 is in your name, you could push them to go and recover the vehicle. Still, worth pointing it out in your response.

[MIKE770]

unfortunatly in the past a car sold whilst on finance has seen new buyer well ou of pocket, but of course if a Check is carried out and a negative answer and subsequently it turns out to be found to be incorrect a seperate case against the people who check it out so called.??? know a few people in the past been in that position.

[hello405]

Hopefully it might make them think twice but I guess that depends on who the finance company is, the value of the vehicle and ultimately the person dealing with the matter.

It's a 10-year-old car worth 3k, but apparently they think it's worth pursuing. We emailed and mailed the letter this morning and have already gotten a charming reply.

Section 27(1) of the Act states that the section applies when the debtor (our customer) disposes of the vehicle to another person. We confirm that the relevant purchaser is Mr T and not you. Your interpretation of Section 28(3) is unfortunately incorrect, and does not put the burden of proof on [finance company]. Case law has confirmed that this section only applies when there are unknown dispositions in the chain of possession.

As this is not the case, it is for Mr T to prove to us that he purchased the vehicle in good faith without notice of the finance which he has not done.

Your legal recourse is against Mr T, and not [finance company]. Burlington Group have been appointed to recover the vehicle. Please call them on 0330 900 8000 to arrange collection.

We suggest you seek independent legal advice for clarification on the Hire Purchase Act before considering proceedings.

FWIW, we didn't include the bit about calling the police if they attempt to repossess. And also a point of interest, before starting her job at [finance company], the woman dealing with this case used to work at Citizens Advice.

[R0b]

Did you mention Section 28(3) in your letter?

Are you prepared to take this all the way to court?

[hello405]

Did you mention Section 28(3) in your letter?

Yes, we used your edited letter almost word for word, but we didn't add the suggestion to the end about calling the police, we left it as your original suggestion in post 17.

Are you prepared to take this all the way to court?

My feeling is that we didn't do anything wrong and I'm not going to give some scummy finance company Ł3000 because they are trying to frighten and bully us. So I'd rather go to court if that's what is necessary, but I have no idea how much that will cost us and what it entails. Can you shed any light? I assume we wait until they take the car, then what? And if I am looking for a solicitor, what sort of specialty should they have?

[R0b]

I agree and don't think section 28(3) specifically applies in your case but equally I don't think what that person is saying is also true. So the finance company's stance is that only the first private purchaser is protected under Section 27, which is a valid and fair point to make. There may be some case law on that but I haven't actually delved deep enough to find out but from the top of my head I am not aware of any.

In the absence of any case law, you can argue ownership two ways:

The first point is that Section 27(2) does not suggest that the first private purchaser is protected, just a private purchaser (including subsequent purchasers). So if Mr S is the debtor and then sells the vehicle to Mr T (assuming he satisfies the criteria) and in turn is sold on to you without knowledge that Mr S and Mr T's title to the vehicle is invalid, you acquire good title to the vehicle despite the fact that you purchased from Mr T and not Mr S.

The alternative argument is that even if the finance company is correct that only the first private purchaser is protected, then you nevertheless own the vehicle on the basis that it is presumed that Mr T purchased the vehicle in good faith and without knowledge of the conditional sale agreement. Section 29(3) of the HP Act says the following (my underlined):

For the purposes of this Part of this Act a person becomes a purchaser of a motor vehicle if, and at the time when, a disposition of the vehicle is made to him; and a person shall be taken to be a purchaser of a motor vehicle without notice of a hire-purchase agreement or conditional sale agreement if, at the time of the disposition made to him, he has no actual notice that the vehicle is or was the subject of any such agreement.

Therefore, the above implies that Mr T purchased the vehicle without notice of the conditional sale agreement if he simply states that no actual notice that it was subject to a conditional sale agreement (which based on what you've said he has already stated this). The burden would then shift to the finance company to show that he did in fact have actual notice of it being subject to finance.

It seems to me that the finance company is avoiding their duty to prove that Mr T had actual notice of the vehicle being subject to a conditional sale agreement. Unless they can supply that evidence which contradicts what Mr T has told you, then you are perfectly entitled to take the view that he did not have any notice due to the lack of evidence.

[R0b]

also just very quickly looking through some legal textbooks, I came across this which may support the first argument about subsequent purchasers being protected.

[hello405]

So what would my best course of action be? We can probably get a letter from Mr T saying he was an innocent private purchaser -- he has told us that, and I do believe him. However, he is not very technologically oriented, so getting the letter will probably be a bit of work unless we go find him in person. Additionally, he bought the car in Fife when he saw a sale notice in the car window and he paid in cash, so I am sure the finance company will say he has no evidence (other than getting the V5C signed over to him).

The other option is to just tell the finance company to take us to court. The tone of their letters have been unpleasant and I am honestly shocked that they can send these out and presumably repossess our car without showing any evidence that they have any claim on the vehicle.

[R0b]

Well your options are to return it and pursue Mr T or keep the vehicle and see what happens. If the finance company does end up repossessing the vehicle then you have the right to commence legal proceedings (to cover your back you would also be wise to join Mr T as a defendant in a counterclaim). Otherwise you wait and see if the finance company issues legal proceedings against you. At the moment it would be sensible to get a signed written admission that he purchased the vehicle without knowledge of it being on finance - even if it is a handwritten letter that would be sufficient. Ultimately you want to get him on your side if proceedings are issued.

In terms of a response, I've cobbled together an example response to their latest letter. I do agree that there is no need to enter into ping pong correspondence so really it should be your final response before any legal proceedings are commenced whether by you or by the finance company. If you do use any of the below do check it makes sense.

-----------------------------------------------------------------------------------------------

You have referred to 27(1) of the Act and appear to suggest that only the first purchasers are afforded the protection under this section (because you refer to Mr T as the relevant purchaser and not myself) however, your interpretation is somewhat misguided. Whereas 27(3) protects the “first private purchaser” in situations involving a trade or finance purchaser transaction, 27(2) merely refers to a “private purchaser” for all other transactions. Given that no trade or finance purchaser was involved in the chain of transactions for the purchase of the vehicle, 27(2) would therefore apply. Furthermore, I can see nothing within 27(2) that supports the position that the protection under this section is limited to the first purchaser and not subsequent purchasers. If it was Parliament’s intention to only protect the first private purchaser for all transactions, then it would have explicitly said so as it did in 27(3). In my view, those who can claim protection are all private purchasers (in the case of 27(2)) or the first private purchaser (in cases involving trade or finance purchasers under 27(3)).

Even if you are correct (which I do not agree with) that it is the first private purchaser who is protected under Section 27, Mr T was nonetheless entitled to dispose of the vehicle to myself, as he did not have actual notice that the vehicle was subject to a conditional sale agreement. Contrary to you maintaining that the burden of proof lay with Mr T, Section 29(3) states the following:

"For the purposes of this Part of this Act a person becomes a purchaser of a motor vehicle if, and at the time when, a disposition of the vehicle is made to him; and a person shall be taken to be a purchaser of a motor vehicle without notice of a hire-purchase agreement or conditional sale agreement if, at the time of the disposition made to him, he has no actual notice that the vehicle is or was the subject of any such agreement."

As above, this provision makes it plainly clear that a private purchaser shall be deemed a purchaser without notice of a conditional sale agreement if no actual notice was given at the time. As per my previous response to you, Mr T has confirmed to me that he was unaware of any finance attached to the vehicle and there is nothing to suggest that Mr T has acted dishonestly. Due to your continued evasiveness in providing me with evidence to disprove Mr T’s assertion (despite requesting this information from you on no less than [number] occasions), it is perfectly reasonable for me to rely on Mr T’s statement that he did not receive actual notice. Accordingly and pursuant to 29(3), the burden of proof now rests with [finance company] to show that Mr T (or myself) had actual notice that the vehicle was subject to a conditional sale agreement; constructive notice is not enough.

With reference to Section 28(3), I can confirm this was in error and it was my intention to refer to 28(2). Section 28 concerns itself with the presumptions in the sale of a vehicle to a private purchaser where the complete chain of transactions is not known. As you have yet to confirm whether it was the debtor (your customer) who sold the vehicle to Mr T, the presumptions under Section 28 continue to apply. Are you now saying that your customer sold the vehicle to Mr T?

In the circumstances, I believe I have obtained good title to the vehicle and have no intention of contacting Burlington Group to arrange collection. Whether you continue to instruct Burlington Group is entirely your prerogative but I would remind you that I have made my position clear and you are already on notice of my intention to commence legal proceedings should attempts be made to repossess the vehicle. As we appear to be in deadlock, I do not feel it necessary to engage in any further correspondence unless it is in connection with legal proceedings.

Yours faithfully

[hello405]

Thank you so much for this! I think before we send this, I'd like to send a one-liner specifically requesting information about their claim to the car (and who the debtor is?). I have brought it up several times but not specifically requested it. I suspect they will not give me anything, and then we will send your letter above. What do you think?