Payment protection insurance (PPI) mis-selling claims still
regularly come before the courts, some involving motor finance
transactions where the dealer was responsible for selling PPI to
the hirer.
One such case is Murray v Black Horse Limited
and Brownhills Motorhomes (Newark) Ltd (2012) in the county court.
Murray acquired a motorhome on hire purchase from Black Horse.
Brownhills was the motorhome dealer, which conducted all the
dealings with Murray, including those in relation to a PPI policy,
the premium for which was included in the finance provided by Black
Horse. Murray had no dealings with Black Horse.
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Murray subsequently alleged that the PPI had
been mis-sold to him. He had not wanted nor needed it and it had
not been mentioned or discussed at the time he took out the
loan.
Murray brought a claim against Black Horse and
Brownhills, alleging that Brownhills had been Black Horse’s agent
for the purpose of selling the PPI policy. As a result, Black Horse
was bound by the pre-contract representations made by Brownhills in
relation to the PPI. He also alleged an unfair relationship under
s140 of the Consumer Credit Act 1974.
Relying upon the House of Lords decision in
Branwhite v Worcester Works Finance Ltd (1969), the court found
there was no evidence of Brownhills acting as Black Horse’s agent.
Merely having blank documents from Black Horse and completing them
for the customer was not enough to make Brownhills Black Horse’s
agent. The loan agreement itself also specifically stated that
there was no agency.
Neither was Black Horse bound by any
pre-contract representations by Brownhills, or antecedent
negotiations as they are referred to in s56 of the Consumer Credit
Act 1974, which provides that:
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“56 (1)… any negotiations with
the debtor…
(b) conducted by a credit-broker
in relation to goods sold… by the credit-broker to the creditor
before forming the subject-matter of a debtor-creditor-supplier
agreement…, or
(c) conducted by the supplier in
relation to a transaction financed… by a debtor-creditor-supplier
agreement…,
(2)… shall be deemed to be
conducted by the negotiator in the capacity of agent of the
creditor as well as in his actual capacity.”
The PPI supplier was Scottish Widows and as
Murray had no negotiations with Scottish Widows, s56(1)(c) did not
apply. Black Horse had not acquired the PPI so s56(1)(b) did not
apply.
As there was no agency and nothing sold to
Murray by Black Horse, there was no unfair relationship under s140.
Although the box on Murray’s application form confirming that PPI
was required had not been ticked, that was not sufficient to put
Black Horse on notice that PPI was not required.
The claim against Black Horse was dismissed.
Judgment was entered against Brownhills in the sum of the PPI
premium, plus interest and costs.
Comment
PPI mis-selling claims are often wrongly
directed at both the dealer and the finance company. Where there is
no agency situation and no ‘supply’ by the finance company, the
customer’s redress is with the dealer.
Greg Standing is a partner in Wragge &
Co’s motor finance litigation team
