Law firm HBJ Gateley Wareing has achieved a further positive result
for an asset finance house in the ongoing legal action following
the Gwent Fleet Management series of frauds, with an outcome that
avoided proceedings being launched against an innocent third-party
consumer (see Motor Finance, October 2008 for more on
Gwent).
HBJ Gateley Wareing , acting for car finance giant
ING Lease (UK) Ltd, has settled a case which involved both a
consumer and a third-party dealership, Trainer BMW of Swansea, in
which the latter paid out a significant proportion of the value of
the asset in dispute.
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In the case in question, a Mini Cooper, which the
consumer believed had been purchased from Gwent, was delivered by
Trainer well before the dealership had received the purchase price
from ING, which in turn believed it was purchasing a vehicle for
hire purchase to Gwent.
ING argued that, as a result, title had already
passed to the consumer, and as such there had been a total failure
of consideration on the part of the dealer.
Furthermore, the original sales invoice from
Trainer to Gwent had been doctored, with the name of the company to
whom the invoice was made out manually amended to state ING rather
than Gwent. Consequently, ING argued the sale contract was void and
it had paid by mistake.
The case was eventually settled, with Trainer
paying a proportion of the value of the vehicle to ING. The case
was closed without any admission of liability on the part of
Trainer.
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By GlobalDataThe finding is a significant development on the
judgment delivered earlier this year, in which Weatherbys Finance
Ltd received an out-of-court settlement from WK Plasterers, a
third-party SME which had unknowingly been sold a vehicle purchased
fraudulently by Gwent.
Melanie Chell, a partner at HBJ Gateley Wareing,
said: “Finance houses should seek advice before writing off their
Gwent cases, as in many cases there may be potential recovery from
third-party dealers, rather than from consumers themselves.”
She explained such outcomes were possible in cases
where consumer parties have claim to the title of disputed
vehicles, pursuant to one of the exceptions to the legal principle
of nemo dat, which states that a party such as Gwent may not sell
on an asset to which it does not own title.
These exceptions, in which consumers may claim good
title, usually rely upon Sections 21 (1) (the consumer may be able
to get title if he can show the dealer held Gwent out as having
authority to sell, eg by delivering the vehicle before receiving
payment) and 25 (1) of the Sale of Goods Act, and the precedent set
by the 1985 case of Four Point Garage v Carter (which
protects the consumer where he has bought from Gwent, which was a
buyer of the vehicle in possession with consent of the seller).
HBJ Gateley Wareing is involved in settling a
similar case for ING, also involving Trainer, and is understood to
be acting for several other finance houses , in cases involving
vehicles supplied by Trainer
