Law Report: Bank had no title to car sold on hire purchase

LAW REPORT: 1 December 1995; Barber v NWS Bank plc; Court of Appeal 17 November 1995

Barber v NWS Bank plc; Court of Appeal (Lord Justice Kennedy, Lord Justice Peter Gibson and Sir Roger Parker) 17 November 1995

It was a condition of a hire- purchase agreement that the bank financing the transaction had title to the goods and was able to pass it on to the purchaser once he had completed payment. If the goods were still subject to a prior finance agreement, so that title had not yet passed to the vendor, the purchaser was entitled to rescind the hire-purchase agreement, reclaim the money already paid and return the goods.

The Court of Appeal unanimously allowed an appeal by the plaintiff, Barry William Barber, reversed the decision of Sir Gervase Sheldon sitting as a deputy High Court judge on 23 April 1993, and restored the decision of Master Creightmore on 8 March 1993, ruling in the plaintiff's favour on questions of law raised by summons under Order 14A of the Rules of the Supreme Court, and awarding him judgment against the defendant bank for pounds 6,850.58 with damages and interest to be assessed.

Nicholas Strauss QC and David Walbank (Slaughter & May) for the plaintiff; Iain Milligan QC and Michael Wood (Kathryn Cook, Chester) for the defendant.

Sir Roger Parker said that in October 1989 the plaintiff bought from Kestrel Garages (Eastbourne) Ltd a Honda Accord motor car for pounds 7,995. A deposit of pounds 3,800 was satisfied by part exchange of his old Audi car. The remainder was to be paid through the familiar mechanism of a sale by Kestrel to a finance company, in this case the defendant bank, and the bank then agreeing to sell to the plaintiff under a conditional sale agreement regulated by the Consumer Credit Act 1974.

Clause 6 of the agreement provided:

Upon the customer duly paying to the company the said balance of the total cash price . . . the property in the goods shall pass to the customer but until such time the property in the goods shall remain vested in the company.

The plaintiff paid the instalments until May 1989 but then decided to sell the Honda, buy a cheaper car, and pay off the bank out of the proceeds. He wished to accept an offer from Lewis Road Car Sales but was told there was a prior finance agreement with monies outstanding and that no dealer would touch it.

It transpired that another finance company, Mercantile Credit Co Ltd, had registered a prior interest in respect of the earlier hire purchase of the car by Car Comfort Hire Ltd, which operated from the same address as Kestrel and was owned by the same man. The plaintiff sought to rescind the agreement with the defendant bank on the ground that the bank had no title, and claimed repayment of instalments paid so far. The bank counterclaimed for arrears.

The bank now accepted that it was an express term of the agreement that it was at the date of the agreement the owner of the car, so that once the balance had been paid the property would pass to the plaintiff. The question was whether, as the plaintiff contended, this term was a condition, breach of which of which would give him the right to rescind, or merely a warranty or innominate term, breach of which would only give him the right to recover damages, as was contended by the bank.

In his Lordship's judgment, the term must be a condition. It was fundamental to the transaction that the bank had the property in the Honda at the time of the agreement and would retain it until paid in full. Only on this basis could the agreement operate.

If the bank had no title, the plaintiff was therefore entitled to rescind and to recover all monies paid under the agreement, notwithstanding that he had use of the car for a considerable time.

It followed that the plaintiff's appeal should be allowed and the bank's counterclaim dismissed.

Lord Justice Peter Gibson and Lord Justice Kennedy agreed.

Paul Magrath, Barrister

News
people

Actress sees off speculation about her appearance in an amazing way

Arts and Entertainment
Serge Pizzorno of Kasabian and Noel Fielding backstage at the Teenage Cancer Trust concerts
musicKasabian and Noel Fielding attack 'boring' musicians
Arts and Entertainment
Julianne Moore and Ellen Page are starring together in civil rights drama Freeheld
film
Voices
'Irritatingly Disneyfied': fashion vlogger Zoella
voicesVicky Chandler: Zoella shows us that feminism can come in all forms
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Sport
nflAtlanta Falcons can't count and don't know what the UK looks like
News
i100
Arts and Entertainment
High notes, flat performance: Jake Bugg
music

Review: Despite an uphill climb to see Jake Bugg in action, his performance is notably flat

News
The Putin automaton will go on sale next month in Germany
videoMusical Putin toy showing him annexing Crimea could sell for millions
News
news

Powerful images of strays taken moments before being put down

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Norwegian Speaking Trainee Recruitment Consultant

£18000 - £23000 per annum + competitive OTE: SThree: Progressive in Manchester...

IT Support Analyst - London - £22,000

£20000 - £22000 per annum + Benefits: Ashdown Group: IT Support Analyst - Chel...

Learning Support Assistants-Nantwich area

£8 - £9 per hour: Randstad Education Chester: We are currently recruiting for ...

Primary Teachers-Northwich area

£85 - £110 per day: Randstad Education Chester: Primary Teachers- Northwich Ar...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London