In a recent case, we were instructed by a firm of solicitors to assist their Defendant client who was being sued by Santander Bank.  We were instructed by the solicitors as their civil litigation consultants as the firm mainly dealt with immigration.

The circumstances behind the claim were that Santander had funded a hire purchase agreement for an Audi Q7 for a private customer.   This was a typical agreement whereby the customer would loan money from the bank to purchase the vehicle and then pay the money back my monthly instalments with interest.  Whilst paying the loan back, the vehicle would in fact belong to the bank until it was fully paid off.    If the loan does not get paid, or if there is a default, then in some circumstances, the bank can obtain a Court Order to take the vehicle into their possession (these are known as claims for ‘Return of Goods’).

As you may know, when a car is purchased using hire purchase, there is a database which records the information and buyers (more likely commercial buyers) will conduct a HPI (Hire Purchase Investigation) check to see if the vehicle is subject to a hire purchase agreement.   The importance of doing the check should be obvious.  If the check is not carried out and you purchase a vehicle that is subject to HPI, then there is a risk that the bank may take the car away.

In this case, the finance customer had decided to sell the Audi to our client privately via a Facebook sale.   Our client bought the car without doing any proper checks and without being told that the car was on a hire purchase agreement.   A few months later, Santander came knocking to recover the vehicle and naturally, our client refused to give the car to them.  Santander then brought proceedings to obtain a Court order for recovery of the vehicle, or payment of the loan, from our client.  This would have been a perfectly valid claim on the face of it.

However, there is a piece of legislation that protects purchasers of motor vehicles.  This is known as the Hire Purchase Act 1964, and in particular section 27.   It applies in situations exactly like this where the person purchased the vehicle in good faith and without notice of the hire purchase agreement.  If those two conditions apply (‘good faith’ and ‘without notice’), then the private sale between the finance customer and the new purchaser is legally binding and the new purchase is entitled to keep the vehicle.

This is exactly what happened in our case and our client was successful.  He did not have to return the vehicle nor did he have to pay anything.   In fact, we also obtained an order that Santander had to pay our client’s legal costs.

We have experience of dealing with ‘Return of Goods’ claims including representing both finance companies and consumers at Court hearings.

 

Any questions or support with the above please email us at: [email protected] or phone 0151 230 8931.