JD CLEVERLY LTD V FAMILY FINANCE LTD

[2010] EWCA Civ 1477, Lady Justice Arden, Lord Justice Pitchford and Lord Justice Tomlinson, Court of Appeal, 21 December 2010

Sale of goods - Passing of title - Whether contracts of sale entered into between the parties

Gwent Motors operated a scam under which it accepted an order and took a deposit from a purchaser, and then placed an order with a dealer (the claimant), who would allow 30 days' credit to Gwent Motors. The claimant would then order a vehicle from the supplier and, once the vehicle had been identified, the purchaser would be called upon to pay the full price to Gwent Motors. The vehicle would then be delivered to the purchaser by the claimant, and Gwent would tell the claimant to invoice the defendant finance company, which had provided hire-purchase facilities to Gwent on the understanding that Gwent would be obtaining vehicles to hire them to customers. There were 38 contacts of this type. The fraud was uncovered, and the question was the incidence of title to the vehicles. The Court of Appeal held that there were no contracts of sale between the finance company and the claimant and that the agreement between them was simply to discharge Gwent's indebtedness to the claimant. This was not a case in which the claimant sold the vehicles to the finance company and the finance company hired them to Gwent under hire-purchase agreements.