WELCOME FINANCIAL SERVICES LTD V NINE REGIONS LTD

[2010] EWHC B3 (Mercantile), Queen's Bench Division, Mercantile Court, His Honour Judge Simon Brown QC, 22 April 2010

Sale of goods - Transfer of title - Goods subject to hire-purchase transferred under bill of sale - Whether title passed to transferee - Sale of Goods Act 1979, section 21 - Hire-Purchase Act 1964, section 27

The appellant finance company purchased a vehicle from BMC, and entered into a hire-purchase agreement with an individual, S. Under the agreement title to the vehicle was not to pass until all payments had been made and S was not permitted to sell the vehicle to any third party. Subsequently, in breach of the agreement, S assigned the vehicle to the respondent under a bill of sale, by way of security for a loan. S defaulted on her loan, and the vehicle was repossessed. It was subsequently sold at auction. Under section 21(1) of the Sale of Goods Act 1979, where goods are sold by a person who is not their owner, the buyer acquires no better title than the seller had. Under section 27 of the Hire-Purchase Act 1964, if a motor vehicle subject to a hire-purchase agreement is sold to a private purchaser who acquires it in good faith and without notice of a hire-purchase agreement, the purchaser obtains title. No protection is conferred on a "trade or finance purchaser", defined as a person carrying on a business consisting wholly or partially "(a) of purchasing motor vehicles for the purpose of offering or exposing them for sale, or (b) of providing finance by purchasing motor vehicles for the purpose of bailing or hiring them under hire-purchase agreements or agreeing to sell them under conditional sale agreements ..." The court ruled that this definition was designed to cover all business situations where vehicles act as security for finance, so that the respondents were not private purchasers even though they were not themselves hirers under a hire-purchase agreement.