Greg Standing, a partner in Wragge & Co LLP’s
finance, insolvency, recoveries and sales team, shares the latest
on Teasdale v HSBC Bank Plc
and Welcome Financial Services Ltd v Nine Regions Ltd
t/a Log Book Loans (LBL).
There have been updates on a couple of cases I
have reviewed for Motor Finance which finance companies will be
pleased to note.
Go deeper with GlobalData
In July 2010, I reviewed the case of Teasdale
v HSBC Bank Plc. This was one of a number of cases relating to
requests for copies of executed agreements pursuant to s78 of the
Consumer Credit Act 1974 (s78).
The claimants argued that s78 could only be
complied with by the lender providing a copy of the original signed
credit agreement and that the agreement was unenforceable if it was
not provided. Following the decision in Carey v HSBC Bank
Plc, the court confirmed that a creditor’s obligations under
s78 could be met by providing that information in the form of a
reconstituted agreement from other records.
Given the Carey decision, many cases
based on s78 requests were discontinued. Discontinuance generally
results in the claimant being responsible for the defendant’s legal
costs. In Teasdale, the claimant unsuccessfully sought its
legal costs.
The Court of Appeal’s decision in Brookes v
HSBC plc approved and confirmed the decision in
Teasdale. The court confirmed that where a claimant
discontinues a claim, there is a presumption that the defendant is
entitled to its legal costs. The burden is on the claimant to
displace that presumption.
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By GlobalDataThe fact the claimant might have gone on to win at
trial is not sufficient. Whether the decision to discontinue is
motivated by practical, pragmatic or financial reason, as opposed
to lack of merit, will not displace the presumption either.
Normally, a change of circumstances brought about by the
defendant’s unreasonable behaviour is required to provide good
reason for departing from the rule.
In January 2011, I referred to the High Court
decision in Welcome Financial Services Ltd v Nine Regions Ltd
t/a Log Book Loans (LBL). In that case, a purchaser acquired a
car under a hire purchase agreement with Welcome (who retained
title to the car).
Three days later, the purchaser, in breach of the
hire purchase agreement, entered into a bill of sale with LBL as
security for a loan. Under the bill of sale, title to the car was
assigned to LBL. LBL registered its interest with HPI before
Welcome did.
Default occurred. LBL repossessed and sold the
vehicle.
Welcome commenced proceedings claiming it was
entitled to the proceeds of sale as the car’s owner. The court held
that LBL was a long way from being a private purchaser. Therefore
it could not acquire title to a vehicle in preference to Welcome,
pursuant to the provisions of Part III of the Hire Purchase Act
1964.
In March 2011, LBL’s appeal was dismissed by
consent before judgment was handed down. The position therefore
remains as it was, that LBL is not a private purchaser.
In Brookes, the Court of Appeal has
robustly reaffirmed the general proposition that claimants who
discontinue proceedings will, ordinarily, be responsible for the
costs of those proceedings. This is good news for finance companies
where unmeritorious claims have been, or will be, discontinued.
