Hitchens v General Guarantee Corporation Ltd
Court of Appeal 20 February 20, 2001

It was open to a judge to infer on a balance of probabilities applying ordinary principles of contract that a hire purchase agreement made between an individual and a finance company for the purchase of a private vehicle had been validly accepted by the company by telephone; that the oral approval created a binding contract and that a signature later merely ratified that acceptance. Such an inference was especially likely where the agreement did not contain a term that acceptance could only be made in writing.

The Court of Appeal so stated when dismissing an appeal by General Guarantee Corporation Ltd against a decision of Mr Robin Purchas, QC, sitting as deputy Queen’s Bench Division judge, who held in proceedings by Anthony Hitchens for a declaration against the company that Mr Hitchens had acquired title of a Toyota Supra motor vehicle and was its legal owner.

In 1995, Mrs Jean Rowley decided to purchase a Toyota Supra from a garage and arranged for the balance of the purchase price to be met under a lease purchase agreement with General Guarantee Group Ltd. She signed the agreement on February 22, 1995 but the company did not sign until February 28.

On February 22 the garage released the car to Mrs Rowley who sold it that day to Mr Martin Watts who immediately sold it to Mr Hitchens. He registered the vehicle with a new number.

Mrs Rowley did not keep up the repayments and the company terminated the agreement. On February 26, 1997 the vehicle was repossessed by the company and Mr Hitchens brought proceedings to establish ownership.

LJ Mummery said that the question was whether the vehicle was “agreed to be sold” under a conditional sale agreement on February 22.

If so, the requirements of section 27 of the Hire Purchase Act 1964, as substituted by paragraph 22 of Schedule 4 to the Consumer Credit Act 1974 were met and Mr Hitchens was the car’s owner.

It was submitted that the deputy judge had departed from the conventional analysis in Financings Ltd v Stimson ((1962) 1 WLR 1184) and Mercantile Credit Co Ltd v Hamblin ((1965) 2 QB 242). But in his Lordship’s judgment, those submissions were difficult to sustain because the deputy judge had found an important fact that the company had given approval to the agreement by oral acceptance on 22 February On the authority of Carlisle Finance Ltd v Pallas ((1999) RTR 281, 296A-E) the deputy judge was entitled to hold on ordinary contract principles that there was a binding contract on February 22. That gave a consistent result.

It was not common sense for a dealer to have parted with the vehicle without first being assured that the finance company would meet the remaining payments. Therefore, ownership of the vehicle passed to the company and the vehicle was bailed by the dealer to Mrs Rowley on February 22 who remained personally liable under the agreement as was Mr Watts as undisclosed principal.

Thus when Mr Hitchens acquired the vehicle it “had been bailed under a hire purchase agreement” under section 27 of the 1964 Act and the sale took effect. The appeal would be dismissed.

LJ Rix said that the case was even stronger than Carlisle where the hire purchase agreement provided that property should not pass until a signature was obtained. In the present case, the agreement did not contain a term that acceptance could only be made in writing by signature. It was true under the 1974 Act that a regulated agreement was not properly executed unless signed, but that did not mean an improperly executed agreement was invalid but could be enforced by order of the court.