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    • There will be no issues with a course offer if the dates are as you say. The usual cut off is four months from the date of the offence. This is so as to give the driver the time to accept the offer and take the course before prosecution becomes "timed out" at six months.   However, if the NIPs really were the first to be issued and there are no issues with the address details then both have a cast iron defence to the speeding allegation. The first is dated 20 days after the alleged offence and the second 23 days after the alleged offence. The Road Traffic Offenders' Act makes it quite clear that if a NIP is not served within 14 days of the alleged offence then no prosecution can take place. But as I said, late first NIPs are very rare and both need to check all the details I have mentioned before they decline any out of court offers of a course or Fixed Penalty.    For information, courses are normally offered for speeds up to (Limit +10% + 9mph). Only one course of any type can be taken in three years (with the date of the offences being used to calculate that period) and courses are not offered in Scotland. However, if a driver is not offered a course for any reason when he would normally qualify (including late NIPs) he has no right of appeal to have one offered. If the matter goes to court the court has no power to order a course.
    • My grievance against my manager is on Wednesday at 12.00 noon. A union officer is representing me. The representative for my manager is a product manager. I was told today that she is the Daughter or a Step-Daughter of the manager. Is this a conflict of interest? Am I correct in saying that, because the manager is the subject, the hearing has to be carried out by a person higher than the manager such as a director? if so, the product manager is not entitled to carry out the hearing. I'm pretty certain that I read this in law books. My Brother is a licensed union chairman but has since left his previous employment.  He is certain that I am correct . Any help would be gratefully appreciated.   diecastdave
    • Ok cool many thanks!  Much appreciated...I will check everything out now and answer all those questions!
    • Sorry,  its regular outgoings of payments. It’s income related they’re on, not contribution based.  Mum and applicant were totally unaware of the rules in regards to deprivation of capital.   On income related ESA but claim housing benefit and council tax support.   He hasn’t came into a huge chunk of money. It’s been spent over a duration of four years. appointee’s livid, and worried that he’ll be homeless.  
    • Hi all           I spoke to the courts earlier today and they advised me that the points placed on my licence were removed in October 2019, and that a court date is set for November 26th. Guess what ??? I had not been given that info either. The courts were very helpful and explained to me that everything had been sent to my previous address (which I have not lived in or owned for 5 years) The car in question was registered in March 2016 and I have owned since new and has never been registered to my old address. I have proof of this down to the point of not taxing the car March 2017 as the car was zero tax I did not realise I still had to go online and tax it, the summons for that was sent to my current home address.  it is very strange that the police directed everything to my previous address. i then contacted the police on the number given by the courts and was told to forward proof I was out of country at time of offence for them to look at, the police officer was very understanding and quite helpful giving the information. I have to e mail her tomorrow and will give an update when I know more as this previous address thing is really confusing !!!  
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Beneficial interest on HP Agreements.

 

I have tried to simplify this definitions in order to keep them in context with the current discussion regarding, if a vehicles on HP can legally be taken under control.

 

The intention on this thread is not to discuss any success or failings of cases which have gone to court, it is just to examine terms which are unfamiliar to many on the Bailiff forum.

 

It will be necessary to introduce some more terms, which should assist understanding within context.

 

These are:

 

“Property on goods” and “possession in goods”.

 

Property in goods denotes ownership. A landlord has property in goods in a rental agreement for instance. This also applies to the creditor in a HP agreement.

 

“Possession in goods” applies to the hirer in the above case. This is where he takes possession of goods for a period of years on in perpetuity under a lease. This also applies to the hirer under a HP agreement where his legal possession is prescribed by the terms of the HP agreement

Interest in goods.

 

An interest in goods occurs when someone who is not their owner, has rights in regard to a part of their value.

There are numerous types of interest in goods, legal interest, equitable interest, beneficial interest, etc. All are covered by the above definition but they denote different ways the interest is held or recoverable.


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The intention on this thread is not to discuss any success or failings of cases which have gone to court, it is just to examine terms which are unfamiliar to many on the Bailiff forum.

 

.

 

Beneficial interest in the case of HP agreements relates to a financial entitlement due to the debtor once the agreement is terminated . This is determined by the value of the goods minus any costs and any charges due under the agrement before termination.

 

Next HP and how it works


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The problem is that this issue demands a knowledge of consumer credit(HP), property law as well as bailiff law. Whilst there is a profusion of knowledge here regarding bailiff law, the others are out of manys comfort zone.

 

Someone said that they research the meaning of the terms mentioned in my first post, and that even the solicitor or barrister would do the same. Well no it is not true, a solicitor would have had the benifit of formal training, they would have dispensed with all this probably in the first year or even before.

 

Personalty I still believe that there are a few arguments which are viable, we just need to understand the basics of what we are talking about so we can discuss them intelligently.

Edited by Andyorch
edited quotes

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hello

I an bemused, was reading this thread yesterday' and a good thread for a change,

but I am sure there were more posts in this thread yesterday?

 

Regards to all

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hello

I an bemused, was reading this thread yesterday' and a good thread for a change,

but I am sure there were more posts in this thread yesterday?

 

Regards to all

 

There certainly was Dave...but they were posted in view to having a go at other forums and their members and starting a further flame war...hence the need to cull as this will not be tolerated on the CAG

 

As per the OPs opening post...

 

"The intention on this thread is not to discuss any success or failings of cases which have gone to court, it is just to examine terms which are unfamiliar to many on the Bailiff forum."

 

Regards

 

Andyorch


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Anyway moving on.

 

It is true that Personal Contract Plan (PCP) agreements are immune from seizure by Bailiffs.

Without going into to much detail, the reason for this is because all payments repaid during the currency of the agreement will only settle natural depreciation of the vehicle, nothing that is paid in this period is paid off the vehicle value.

 

At the beginning of the plan the garage estimates the "Guaranteed Future Value" of the vehicle (the ammount the car will be worth when the agreement terminates)this represents the balloon payment which the debtor has to pay if they wish to purchase.

 

There will therefore be no interest in the goods during the repayment section of the agreement, in fact due to the none linear nature of depreciation, in reality there is always a slight ammount of negative equity.


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Thank you for explaining it Andyorch

I made some notes yesterday regarding some posts that were made and came back to re-read it and they were gone.

 

Regards to all

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Hello Dodgeball,

 

I've come to this thread through other means and if I may I would like to pick your brains on this beneficial interest. Am I right in thinking that by way of the option to purchase under a HP agreement that entitles the bailiff to seize the car - and if there was no option to purchase but let's say the fixed period of the agreement and monthly instalments remained the same this would mean that the bailiff cannot seize the goods?

 

Just a point also about the differences you suggest between a HP and PCP agreement, aren't they one and the same thing i.e. the terms are the same and the option to purchase are included in both agreements but the only difference is the way the payments are calculated. Could it not be said that the depreciation is also a part of the value of the car? Under a HP you are paying off both the total value and its depreciation so the balloon payment at the end when you exercise the option to purchase will be much smaller than the balloon payment under a PCP.

 

Looking at it another way, two cars are both valued at £10,000. Under a PCP you only pay of its depreciation value which is £4,500 leaving the balloon payment of £5,500 if the option to purchase is exercised. Under a HP you are likely to pay more on a monthly basis which both depreciation and the value of the car so the balloon payment at the end may be £2,000. Whichever way you look at it you have still contributed towards the total value of the car which was worth £10,000 and that's where I get confused as to how you can say that PCP's are exempt but HP's are not. They are almost identical in terms except for the fact that the monthly instalments are different.

 

Also, I agree that a beneficial ownership has a right to enjoyment i.e. income or share of proceeds, this appears to conflict with the position under HP agreements because if a debtor breached the terms of the agreement and the finance co. terminated then they would lose all rights in the car. That is inconsistent with someone who has a beneficial interest/ownership under equity law.

 

One final point too is that in your first post you refer to possession in goods, that is also a type of interest which is distinguishable from beneficial interest. Possessory interest arises where someone has possession and use of something but nothing more, and that's exactly what a HP agreement does.

 

Obviously in my opinion HP agreements are exempt from being seized and the above is just some of the reasons why. HP agreements are a contract for hire in which there is an option to purchase (or to return) at the sole discretion of the hirer at the end of the hire period. If there was no option to purchase it would simply be a hire agreement for a fixed period which then must be returned. The hirer is paying for the use of the car over a fixed period of time and to then say he is in fact acquiring a beneficial interest would alter the terms of the agreement from a hire with a purchase option to an sale agreement. not only would that change the fundamental terms of the agreement but also the intention of the parties.

 

P.s you might have noticed me elsewhere but this forum seems to be the best place to discuss these matters so I hope I can get some reasoned responses. I do have a fuller explanation on this and happy to share but didn't want to bog this down too much

Edited by JustAnotherPerson

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Yes if course I know you, nice to see you on a sensible forum :) I really just want to get people using the correct terminology on here, that is why I have tried to steer clear of over explaining things, although i will of course if someone asks a question or shows an interest.

I would have liked to give my opinion of regulation and PCPs for instance but it would be off topic.


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I'll try to answer some of the points you made in the quote..

 

How an you have an interest in goods in this sense if you posses them anyway?

Interest in goods is something a person( not the owner) has in another persons property.

 

As you have said there is numerous types of interest, legal, beneficial etc. and possessory interest is one such other type. A possessory interest extends to the use of something but nothing more. So for example sticking to the theme of this thread, the rental of a car is a possessory interest as you do not own legally or benficially but have possession and use of it, nothing more. Another example would be where you have a tenant living in a house. The tenant's interest will extend as far as using the house in return for rent but there is no legal or beneficial interest - it's just the possession of something.

 

 

No the consumer credit act was amended, i think by the eu 2010 regulations and since 2011 the last payment can be used as the option to purchase. Provided that it was mentioned within the agreement. It used to be that this fee was required in order to satisfy the sale agrement/contract. It is still used in contracts which do not have the contractual clause. A contract needs to have a consideration payable to both parties of course, so a small sum was used to fill condition in regards to the creditor, not uncommon, I think there was a football team sold recently for £1.

 

I'm presuming you mean the CC (Agreement) Regs 2010 on this and the prescribed terms? If that's the case, I personally don't think that justifies a beneficial interest.

 

It is in my description and there are many more if you search which will tell you the same thing, try Martin Lewis r the expert forum.. The difference is that there is no repayment of the cars value on a PCP so there is no interestt in the goods. The value of the car, the initial value - depreciation is the same value as the balloon payment because noticing has been paid off it. On a hp agrement the sum owed the TAP, is paid as per the repayments of a normal credit agrement.

 

Just coming back to this point, under a HP agreement you could also say that the the monthly instalments are also based on the depreciation of the car. Yes the value of the car was X at the beginning of the agreement but over time and use that value will depreciate which could be said to be reflected in the monthly payments and the final payment is considered what the car is worth at the end of it. A PCP of course will have a minimum value because it is based on strict conditions such as certain mileage at the end of the agreement. I suppose you could argue round in circles about the similarities but ultimately its whatever a judge thinks on the day.

 

But it would be interesting to see someone overcome an argument concerning the loss of interest if there is a breach of the agreement. A beneficial owner would never lose their right in something whereas under a HP agreement there is the possibility - in fact there's also a possibility to terminate the hiring but still be obliged to keep up the repayments. If there was a true beneficial interest then the the hirer would have a right to prevent this and enforce their rights as to its use. In that sense, it would not be possible to terminate the agreement because of his right of enjoyment.

 

What about the issue of privity of contract? Sure the bailiff has a right to seize and sell the TCE but does that extend a right to determine the HP contract on behalf of the debtor in favour of the creditor where there is an express provision in the contract that says anyone who is not party to a contract does not have any rights?

 

Some further food for thought too: Let's say if for example there is a beneficial interest in the goods, how can the bailiff determine what that interest is? Based on the principles of equity law, the hirer's interest would be dependent on how much he has contributed e.g. the monthly payments. The only way a bailiff would know is if he had obtained statements from the hirer or the debtor or the finance co. which of course would be confidential information. If the hirer contributed 5% of the payments under the contract and that amounted to less than £500, does that prevent the bailiff from seizing the goods and selling them under the TCE if the money owed is a sizeable sum, over £10k lets say?

 

Edit: Jsut to add, he beneficial interest argument contradicts what the law says under the CCA if it is a regulated agreement. A HP agreement is a bailment of goods and without getting into detail, under a bailment you can't have any ownership and that would include beneficial ownership otherwise it is not deemed to be a bailment. Bailments are one of possession only and not any kind of interest including a beneficial interest and the option to purchase would not overrule this position

Edited by JustAnotherPerson

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briefly. Nb I meant the EU amendment under the European credit Initiative.

 

The question is the term beneficial interest I am aware of possession interest but that is not relavant to the thread.

 

You will be aware that a HP agreement repays the TAP as a normal credit agrement does, this means form the very first payment an ammount will be paid off the goods.

 

The reduced repayment on a PCP depend on payment only being made off the depreciation.

http://www.arnoldclark.com/newsroom/006-pcp-pch-or-hp-car-finance-explained

 

"For you, this simply means that the money you're actually borrowing and repaying is the difference between what the car is worth now, and what it will be worth at the end of your contract (the depreciation). You'll pay this difference off in monthly instalments."

 

http://www.moneysavingexpert.com/car-finance/personal-contract-purchase

 

"The amount you borrow. The amount you'll have to borrow is based on how much the finance company predicts the car will lose in value over the term of the deal (usually 24 or 36 months) minus the deposit you've put down. You’ll pay this amount off during the deal, plus interest. So you’re not paying off the full value of the car. Typical APRs are 4%-7%."

 

There are lots more but the real point is, if the ammount due to purchase the car equals the initial cost of the car minus depreciation, where is there room to have repayed anything off the car previously ?

In any case, the ammount of the car the debtor owns will be zero because it is all accounted for.

 

Of course a beneficial inters can exist where someone has title to goods.

 

(b)references to goods of the debtor do not include references to trust property in which either the debtor or a co-owner has an interest not vested in possession.

 

This means that even though goods which will benifit (a beneficial interest)the debtor exist , if they are not in possession of the debtor they cannot be seized .


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The question I thought was beneficial interest in HP agreements, and my opinion is that there is only a possessory interest in HP agreements so there is some relevance to it.

 

I understand your differences of HP and PCP but under a HP the person is not actually paying off the full value of the car just like a PCP agreement.

 

Just for clarity, I agree one person can have a beneficial interest and another can have a legal interest, or one person can have both which is absolute. Equity follows the law and the starting point is where there is sole legal ownership then there is sole beneficial ownership. The terms of the HP agreement usually confirm that the person does not have an ownership of the car despite being in possession of it. Another equitable maxim is that equity will look to substance and not the form, meaning that it look at the intention of the parties and in the terms of the agreement the intention is clear cut. Ownership in any sense does not vest in the hirer until he elects to exercise his option. The Supreme Court last year also said that when construing a written contract, the courts should not interfere where the words are clear and unambiguous.

 

I'm sure you are also aware that equity supplements common law but it does not override it i.e. statute law (except where the statute law is used as an instrument of fraud then equity may intervene). So the starting point would be to consult the CCA. Under the CCA a HP is defined as a bailment of goods (known as hired in Scotland) with a condition attached to it, normally the option to purchase. Going back to my previous point, a bailment is a hire for goods and cannot confer ownership, with ownership meaning in its ordinary sense either a legal or beneficial ownership. I think regardless of how you dress it up, beneficial interest is an equitable interest and equity cannot precede statute law.

 

Two quotes from a House of Lords case sums up a hire purchase agreement

 

but for the provision that if the hirer punctually paid the 10s. 6d. a month for thirty-six months, the piano should be his property, it could not be doubted that it was a mere agreement for its hire, and I cannot see how the fact that this provision was added made it any the less a contract of hiring until that condition had been fulfilled … The agreement is, in its terms, just as applicable to such a case as to one where the hirer had resolved to continue the payments for the three years, and it must be construed upon a consideration of the obligations which its terms create, and not upon a mere speculation as to what was contemplated, or what would probably be done under it

 

it was the intention of the parties - an intention expressed on the face of the contract itself - that no one of those monthly payments until the very last in the series was reached, nor all of them put together without the last, should confer upon the customer any proprietary right in the piano or any interest in the nature of a lien or any interest of any sort or kind beyond the right to keep the instrument and use it for a month to come … On the part of the customer it was a contract of hiring only until the time came for making the last payment … It is not for the Court to put a forced or strained construction on a written document or to import a meaning which the parties never dreamed of because it may not wholly approve of transactions of the sort

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(b)references to goods of the debtor do not include references to trust property in which either the debtor or a co-owner has an interest not vested in possession.

 

Just on this point, I think there may be a bit of mis-understanding. Vested in possession (a term used in land/trusts law) means an immediate right to enjoyment, the opposite being vested in interest which is an interest at a later date. So when you read that section it says to me that the goods are not deemed to be the debtors unless he/she has an immediate right to enjoyment. Because HP agreements are not an immediate right but more of a contingent right i.e. once the option to purchase has been exercised, then this would support the idea that HP agreements are excluded from seizure.

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I'll try to answer some of the points you made in the quote..

 

 

Some further food for thought too: Let's say if for example there is a beneficial interest in the goods, how can the bailiff determine what that interest is? Based on the principles of equity law, the hirer's interest would be dependent on how much he has contributed e.g. the monthly payments. The only way a bailiff would know is if he had obtained statements from the hirer or the debtor or the finance co. which of course would be confidential information.

 

In the first instance, if the debtor considers that his vehicle should not be taken into control, then a Part 85 (CPR) claim must be submitted and this is precisely the route that I suggested to a debtor at the end of last week. In support of the application, it was necessary to provide a simple mathematic calculation to establish whether or not there was any 'equity'.

 

This simple test, established that there could be a figure of approx £1,700. Not surprisingly, the local authority (via the enforcement agency) responded to dispute the figure (we were adrift by around £500) and in doing so....they provided an up to date statement from the finance company (Santander) !!!

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I appreciate the point you have made Bailiff but it sounds like you are talking about the equity value of the car and not the beneficial interest. The hirer would not own the equity value but only the amount in which he has contributed. A beneficial interest under the principles of equity law does not concern itself with the equity value of something, but how much of an interest a person ought to have based on the person's contribution.

 

Prime examples are family homes, where both parties contribute to the purchase price but not equally e.g. one pays £20k and the other pays £70k and so the person paying £20k is going to get a lesser % interest than the person who pays more. This can be applied in the same instance of HP agreements in that the beneficial interest is only as far as the contribution made to towards the total amount payable, not the equity value of the car.

 

The structure would therefore be as follows:

 

Finance Co = Legal & Beneficial owner

Hirer = Beneficial owner

 

Under equity rules, the bailiff would have to sell the car but would only be entitled to the contribution of the total mount payable and not the equity value of the car. Other than the % contribution made by the hirer, the rest of the proceeds would have to go to the finance co. and then some more if the proceeds does not cover the outstanding balance under the agreement.

 

My understanding is that if you argue as you say the equity value, the structure would be different as the finance co. would instead be a bare legal owner with no interest other than legal title and hold the car on trust for the hirer who is the beneficiary, but that cannot be the case because it would likely amount to a conditional sale agreement.

 

In my view, the only right a bailif may have under financed car agreements would be a conditional sale, thats because under a conditional sale agreement there is a legal obligation to purchase the car instead of an option.

Edited by JustAnotherPerson

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I appreciate the point you have made Bailiff but it sounds like you are talking about the equity value of the car and not the beneficial interest. The hirer would not own the equity value but only the amount in which he has contributed. A beneficial interest under the principles of equity law does not concern itself with the equity value of something, but how much of an interest a person ought to have based on the person's contribution.

 

I used the word 'equity' to simplify the situation. It is now common knowledge that it is the 'beneficial interest' that needs to be established.

 

What I was trying to also highlight is that enforcement companies DO approach finance companies (as was the case that I assisted with last week). Thankfully, the local authority accepted the Part 85 claim and the vehicle was released yesterday and a payment arrangement put in place.

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Ok I think we are off topic and have been for a while so just to re establich what it is we are talking about.

 

The bailiff are seizing goads to which the debtor has a beneficial interest. There really is no need to go into other kinds of interest i mentioned on my first post that there were other kinds and that was enough.

 

Beneficial interest is produced when the goods held by the debtor have a value which exceeds that due to the creditor.

 

Beneficial interest cannot occur in PCP agreements, because the ammount you pay in installment is calculated to just cover the depreciation on the car, in other words the value of the vehicle will at all times be the same as the ammount owed to the creditor. The balloon payment consists of the full value of the car and this is taken at the end of the contract.


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Can I be brutally honest here. In April 2014, a significant amendment was made to the regulations where the previous word 'interest' was replaced with the words 'beneficial interest'. The Treasury Solicitor had his reasons for imposing this change. Additionally, the government made significant changes to items that are considered 'exempt'. If it was the case that Parliament considered that goods on 'hire purchase' should be exempt then they would have imposed such a clause in the regulations. They did not do so.

 

There have now been at least three court failures on the subject of beneficial interest and what is important is that in each case the debtors were using a flawed argument as an excuse not to pay the debt (and bailiff fees).

 

If anyone is temped to issue proceedings using the 'beneficial interest' argument then what they should do is to pay the debt (and bailiff fees) and then issue a simple small claims writ in the county court. In that way, the debtor will retain the use of their car and storage fees will not accrue.

 

What can be simpler.

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There have now been at least three court failures on the subject of beneficial interest and what is important is that in each case the debtors were using a flawed argument as an excuse not to pay the debt (and bailiff fees).

 

The 'ten minute' edit facility won again. In relation to the above, I should mention that in two of the three cases it is known that the debtor had not paid the debt and bailiffs fees.

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Beneficial interest is produced when the goods held by the debtor have a value which exceeds that due to the creditor.

 

Can I ask then, where have you got that definition from? So far as I have read there is no definition but as you say interest has been narrowly defined to be only beneficial interest.

 

 

In the eyes of the law, a beneficial interest is an interest in the economic benefit of property which I have said previously to be a right to something such as income, rent or share of proceeds.

A short history on beneficial interest

Beneficial interest derives under the law of trusts and there are 3 types of trusts: express trust, implied trust and resulting trust - i'll skip an express trust and resulting trust (wrongfully deprived of property) as its not relevant for this purpose.

 

Implied trusts arise where Person A has induced Person B to act to their detriment. The criteria for this is two things:

1. common intention

2. some form of detriment

 

A common intention can be express or inferred. Since there is no express intention under HP agreements the other option is an inference and the courts have held that it may be inferred if there has been a substantial contribution to the purchase price.

 

The detriment element can be joined with an inferred intention in that where there is a contribution made then the courts will usually accept this as detriment. When the court finds that a implied trust arises, the person will have a beneficial interest. In the case where legal ownership is in one name only e.g. the finance co., then that person will be entitled to a share of the ownership or proceeds according to the contributions made.

 

So going back to your definition at the beginning of the post, that sort of beneficial interest would only arise if the person has full ownership from the start. You can't have he equity value without full ownership. However if there has been contributions towards the purchase price as you say a debtor does, then the debtor can only get a beneficial interest as far as his contributions. The finance co. would continue to have an interest and each time the person makes a contribution their interest rises and the finance co.'s decreases. If a person has only contributed 10% of the TAP then his share in the proceeds would be 10% not the 'equity' value of the car as that would exceed the amount he has contributed to the TAP. Therefore, the person's actual share is likely to be lower than the bailiff expects (the bailiff will have to hand back the finance co's share + pay off any outstanding amount under the agreement once that share has been deducted).

 

So that's the story on how beneficial interest comes about and you might think this is all irrelevant but it is not. Unless you have come up with another meaning or completely subject on beneficial interest, this is how the courts perceive it.

 

There have now been at least three court failures on the subject of beneficial interest and what is important is that in each case the debtors were using a flawed argument as an excuse not to pay the debt (and bailiff fees).

 

Yes I do agree with you, it's not an easy area and without a proper understanding of the law so there are undoubtedly people are going to lose. If this sort of argument was raised, the problem I see the bailiff showing is the common intention. This is because the intention is that the car is on hire for a fixed period of time and there is no intention to show any ownership unless the person exercise the option to purchase. Even if you get beyond that the next argument is that the monthly payments are for hire only and the person has not contributed to the purchase price (being the option to purchase).

 

Beneficial interest cannot occur in PCP agreements, because the ammount you pay in installment is calculated to just cover the depreciation on the car, in other words the value of the vehicle will at all times be the same as the ammount owed to the creditor. The balloon payment consists of the full value of the car and this is taken at the end of the contract.

 

But the depreciation value is still a part of the total value of the car isn't it? The car is worth X but now its worth Y based on the terms of the agreement and it still amounts to some form of contribution. It just means PCP agreements might be over a shorter period of time in order to reach that guaranteed value.

Edited by JustAnotherPerson

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But the depreciation value is still a part of the total value of the car isn't it? The car is worth X but now its worth Y based on the terms of the agreement and it still amounts to some form of contribution. It just means PCP agreements might be over a shorter period of time in order to reach that guaranteed value.

 

No there is no contribution to the value of the vehicle, because the repayments are only calculated on the ammount owed due to depreciation. A HP agrement is calculated using the full value of the vehicle.

 

This from Mr Lewis

Value of car £18,000

 

To buy the car you pay...

Deposit: £2,000

Loan: £8,000 (£10,000-£2,000) plus interest

Balloon payment: £8,000

Total: £18,000 plus interest


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Looking at your post, and risking remaining off topic.

 

The interest described here is on goods owned by the creditor, that is why it is an interest and is not equity, as you rightly say to have an equity you have to own the goods.


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However if there has been contributions towards the purchase price as you say a debtor does, then the debtor can only get a beneficial interest as far as his contributions. The finance co. would continue to have an interest and each time the person makes a contribution their interest rises and the finance co.'s decreases. If a person has only contributed 10% of the TAP then his share in the proceeds would be 10% not the 'equity' value of the car as that would exceed the amount he has contributed to the TAP. Therefore, the person's actual share is likely to be lower than the bailiff expects (the bailiff will have to hand back the finance co's share + pay off any outstanding amount under the agreement once that share has been deducted).

 

.

Firstly as i am sure you know the TAP includes interest for credit and fees , so the 10% would not be a benifit to the interest in goods because these would come off the debtors payment.

 

You are right however in that the creditors interest(equity) in goods would depreciate as the debtors interest increased. Unfortunately there is the added complication of depreciation, in that the value of the goods is depreciating, so the value of the trade in element would be less that the value of the goods on the agrement, which of course remains the same.

 

Incidentally I avoid the words proceeds because it confuses matters , due to its affiliation with bailiff enforcement.


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So I think we could be getting somewhere then. The creditor owns the goods and has legal ownership as you say.

 

Then the beneficial ownership fall under what I said in my last post regarding implied trusts. The finance co. Remains legal owner and still a beneficial owner because the TAP inc. the option to purchase has not been paid off, each time a monthly instalment is made the finance co.'s beneficial interest is reduced. If the bailiff can somehow show a beneficial interest existed, then the % of the beneficial ownership is based on the contributions made towards the TAP. The question is how can the bailiff determine how much the debtors interest is unless he is privy to the contract? In addition to that, if the parties common intention is that the debtor does not own any part of the car until it's paid off and is likely to be expressly stated under the terms of the agreement, why should a court interfere with that position? It's not the debtor complaining that he has an interest but the bailiff, who is acting on behalf of the third party.

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Can I ask then, where have you got that definition from? So far as I have read there is no definition but as you say interest has been narrowly defined to be only beneficial interest.

 

 

In the eyes of the law, a beneficial interest is an interest in the economic benefit of property which I have said previously to be a right to something such as income, rent or share of proceeds.

A short history on beneficial interest

Beneficial interest derives under the law of trusts and there are 3 types of trusts: express trust, implied trust and resulting trust - i'll skip an express trust and resulting trust (wrongfully deprived of property) as its not relevant for this purpose.

 

Implied trusts arise where Person A has induced Person B to act to their detriment. The criteria for this is two things:

1. common intention

2. some form of detriment

 

A common intention can be express or inferred. Since there is no express intention under HP agreements the other option is an inference and the courts have held that it may be inferred if there has been a substantial contribution to the purchase price.

 

The detriment element can be joined with an inferred intention in that where there is a contribution made then the courts will usually accept this as detriment. When the court finds that a implied trust arises, the person will have a beneficial interest. In the case where legal ownership is in one name only e.g. the finance co., then that person will be entitled to a share of the ownership or proceeds according to the contributions made.

 

So going back to your definition at the beginning of the post, that sort of beneficial interest would only arise if the person has full ownership from the start. You can't have he equity value without full ownership. However if there has been contributions towards the purchase price as you say a debtor does, then the debtor can only get a beneficial interest as far as his contributions. The finance co. would continue to have an interest and each time the person makes a contribution their interest rises and the finance co.'s decreases. If a person has only contributed 10% of the TAP then his share in the proceeds would be 10% not the 'equity' value of the car as that would exceed the amount he has contributed to the TAP. Therefore, the person's actual share is likely to be lower than the bailiff expects (the bailiff will have to hand back the finance co's share + pay off any outstanding amount under the agreement once that share has been deducted).

 

So that's the story on how beneficial interest comes about and you might think this is all irrelevant but it is not. Unless you have come up with another meaning or completely subject on beneficial interest, this is how the courts perceive it.

 

 

 

Yes I do agree with you, it's not an easy area and without a proper understanding of the law so there are undoubtedly people are going to lose. If this sort of argument was raised, the problem I see the bailiff showing is the common intention. This is because the intention is that the car is on hire for a fixed period of time and there is no intention to show any ownership unless the person exercise the option to purchase. Even if you get beyond that the next argument is that the monthly payments are for hire only and the person has not contributed to the purchase price (being the option to purchase).

 

 

 

But the depreciation value is still a part of the total value of the car isn't it? The car is worth X but now its worth Y based on the terms of the agreement and it still amounts to some form of contribution. It just means PCP agreements might be over a shorter period of time in order to reach that guaranteed value.

 

So I think we could be getting somewhere then. The creditor owns the goods and has legal ownership as you say.

 

Then the beneficial ownership fall under what I said in my last post regarding implied trusts. The finance co. Remains legal owner and still a beneficial owner because the TAP inc. the option to purchase has not been paid off, each time a monthly instalment is made the finance co.'s beneficial interest is reduced. If the bailiff can somehow show a beneficial interest existed, then the % of the beneficial ownership is based on the contributions made towards the TAP. The question is how can the bailiff determine how much the debtors interest is unless he is privy to the contract? In addition to that, if the parties common intention is that the debtor does not own any part of the car until it's paid off and is likely to be expressly stated under the terms of the agreement, why should a court interfere with that position? It's not the debtor complaining that he has an interest but the bailiff, who is acting on behalf of the third party.

 

Well yes, although we are talking about the debtors payments, TAP only relates to the to ammount payable under the agrement, cost of goods, interest , fees etc. The TAP is the sum of all of these.

The repayments made will go towards this, so only a proportion of it will go to reducing the sum owed on the car.(this is on a conventional HP agreement).

 

The answer to how the bailiff knows is simple. He rings up the Creditor and asks how much is still reaming to be paid on the car, then he looks up the value of the vehicle in his guide. The difference between the two is the debtors beneficial interest on the vehicle.


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