Following on from last
month’s article from John Perez examining the use of the vehicle
recovery scheme, Melanie Chell of Shoosmiths takes a further look
at commercial risk surrounding recoveries.
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The Finance
& Leasing Association’s vehicle recovery scheme, known as
Crushwatch, commenced on 1 May 2009.
The police will now notify a
finance house within 24 hours that one of their vehicles has been
seized. The vehicle will be held by the police and should not then
be returned to the customer for a period of seven days after
receiving notification from the finance company that they intend to
recover the vehicle.
This scheme gives lenders a
welcome new opportunity to recover ‘at risk’ vehicles, but a
lender’s desire to act fast and recover the vehicle should be
carefully considered where the goods are protected under section 90
of the Consumer Credit Act.
This section prevents
recovery from ‘the debtor’ without his consent or a court order.
Lenders found to be in breach of this provision will be forced to
repay to the customer all of the monies paid to date.
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By GlobalDataSection 90 does not merely
preclude repossession from the debtor, but also repossession from a
third party holding the goods as the debtor’s agent or bailee. The
case of Kassam vs Chartered Trust Plc [1999] CA confirmed
that in each case it is a question of who has dominion and control
over a protected asset rather than who is in actual
possession,
Since 1 May 2009 it is
possible to argue that, for seven days after seizure, the police
may be held to have control over the vehicle and not the
debtor.
As such, the risk of a
finance house being in breach of section 90 is greatly reduced if
recovery is made during this period, but is not completely
diminished.
There is not yet any case law
to confirm that recovery from the police in these circumstances is
not recovery from the ‘debtor’. Also, the protocol may not be
legally binding on all the world and could be held to be trumped by
a party with the immediate right to possess the vehicle.
It is a matter for each
lender to balance the commercial risk in each individual case. You
may wish to consider the level of payments made which would have to
be returned?
How likely is it this
customer would run such an argument and how ‘at risk’ is the
vehicle in question? Is it a luxury vehicle?
We are in new legal
territory. Proceed with caution and take advice if you are
unsure.
Melanie Chell is a
partner at Shoosmiths
