Nicola Hoskins assesses when the threat of incarceration may be the only motivation left.
The story always starts in a familiar way. Finance is taken on a car under a mechanism such as HP by which ownership remains with the lender. Payments are not maintained and the arrangement goes into default. The hiring arrangement ends, the car needs returning and all outstanding payments settled. Given its depreciation, it is imperative the car is collected and swiftly sold, so that the loss can be quantified and attempts made to recover it.
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All too often, the process highlights the chasm which lies between the availability of legal remedies in theory and how they bear out in reality. Indeed, the practical issues which arise are often the sticking points, even though the law is relatively straightforward.
The first consideration is whether the car is protected, i.e. whether a third or more of the total payments have been made, making a court order necessary at the outset. The sanction for getting this wrong is penal in its severity and has been recounted on these pages many times.
The most satisfactory practical option is to attempt to recover by consent – to persuade the hirer to cooperate – as this will result in a swifter, and cheaper, exit strategy. Such negotiations could be conducted in person, by an agent, and could include a settlement proposal in the form of agreeing to cap a shortfall at a certain level. Any consent obtained would have to be informed – crucially so where the car has become protected – and confirmed unequivocally in writing. It is often suggested where the debtor hands over the keys, or is cooperative in the collection of the vehicle, these factors alone will not be enough to establish consent.
Liens in relation to parking or other charges may exist, and these may present further obstacles to recovery. Negotiation with the third party involved should always be attempted, with a view to agreeing a settlement motivated by the commercial realities in the swift recovery of the car, rather than admitting any liability.
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By GlobalDataBut often more problematic is the issue around where the car is kept. If it is stored on private land then a court order will be required, whether it has become protected or not. Even then, it can be the case that the order is not effective because of the difficulties in physically extricating the vehicle. If it is in a barn, surrounded by machinery, what then?
When all attempts have failed, a court order with teeth might be the last, and only, resort. When presented with evidence that there is no other viable option, the court may be persuaded to add a penal notice to the order warning of that most draconian of consequences – committal to prison – for failure to comply. Like all legal remedies, it may suffer from practical limitations, but the vocabulary at least has been known to reach the parts that other orders cannot. It is hard to feign indifference to a loss of liberty.
Nicola Hoskins is a solicitor at Optima Legal
