|
|
|
|
Julie
Elizabeth Dodds v Yorkshire Bank Finance Limited A Porsche car was the subject of a hire purchase
agreement between a Mr Baldwin (the hirer) and Yorkshire Bank Finance Limited
(the owners). Mr Baldwin's building business got into financial difficulties so
he approached a Mr Clark, who in turn approached the plaintiff, Miss Dodds, to
see if she could help in raising finance for the business. She succeeded in
raising £12,000 which was handed over to Mr Baldwin on the basis of an
agreement reached between the parties. It was agreed that Mr Clark would loan £15,000
to Mr Baldwin's business; a further agreement referred to Mr Clark as 'the
investor' and said that he had agreed to invest in the business the sum of £15,000
in two payments. The most important document was a receipt headed with Mr
Baldwin's name and address, and which stated :
"Received with thanks the sum of £13,000 cash from Miss J E Dodds,
this represents full payment for the purchase of my Porsche 944 motor vehicle,
registration A17 JHH. I confirm that there is no HP agreement on this
vehicle". When the last of the agreed sums reached Mr Baldwin's
business, the Porsche was handed over to Mr Clark. Shortly afterwards, the
agreement providing for repayment of Mr Clark's loan was breached. Mr Baldwin
also fell into arrears with the hire purchase agreement. Yorkshire Bank Finance
Limited terminated the agreement and, two days later, the car was repossessed by
agents for the finance company from outside Miss Dodds' house. Miss Dodds then
sued the finance company, relying one her status as an innocent private
purchaser under the Hire Purchase Act 1964. At the County Court hearing, the Judge concluded that the
complicated transaction involving Miss Dodds, Mr Clark and Mr Baldwin, did not
amount to a contract of sale. More particularly, he referred to the declaration
in the receipt that there was no HP agreement outstanding, and decided that,
even if the contract had been one of sale, she was a 'suspicious' purchaser, and
therefore could not have bought in good faith. Miss Dodds appealed. The first issue which the Court of Appeal examined was
whether there had been a 'disposition' of the vehicle (as defined in the 1964
Act) by Mr Baldwin to Miss Dodds. The Court considered that there were three
possibilities:
The County Court had followed option (c) by identifying
the transaction as a composite contract which contained within it a conditional
agreement of sale. (The Sale of Goods Act allows for a contract of sale to be
absolute or conditional.) The Court of Appeal concluded that the condition in the
contract of sale was fulfilled well before the date when the finance company
took possession of the vehicle and that, on the date when it took possession,
Miss Dodds was someone who had bought the car without notice of the hire
purchase agreement. The Court then considered whether the wording of the
receipt meant that Miss Dodds could not claim to be a purchaser in good faith.
They decided that the County Court's decision did not do justice to Miss Dodds'
position. They took the view that the words 'good faith', though
not defined in the 1964 Act, were to be interpreted in the same way as in
Section 61(3) of the Sale of Goods Act 1979 and Section 90 of the Bills of
Exchange Act, ie. that good faith is equated with honesty and bad faith with
dishonesty. Miss Dodds had said in evidence: "I did not expect the chap to
sign something if it was not right. When he signed it, I was not suspicious any
more". The County Court Judge had not doubted her sincerity, and the Appeal
Court concluded that it was not right for him to conclude therefore that she was
not a purchaser in good faith. The Court therefore allowed Miss Dodds' appeal and
awarded her agreed damages of £12,750, being the value of the car at the time
of repossession. |