Beneficial interest on goods under a HP Agreement.

[JustAnotherPerson]

Can't remember if I posted this but another useful Denning quote from Bridge v Campbell Discount Co. 1962 on definition of hire purchase agreements:

 

If you were able to strip off the legal trappings in which it has been dressed and see it in its native simplicity, you would discover that Bridge agreed to buy a car from a dealer for £405 but he could only find £105 towards it. So he borrowed the other £300 from a finance house and got them to pay it to the dealer, and he gave the finance house a charge on the car as security for repayment. But if you tried to express the transaction in those simple terms, you would soon fall into troubles of all sorts under the Bills of Sale Acts, the Sale of Goods Act , and the Moneylenders Acts.

 

In order to avoid these legal obstacles, the finance house has to discard the role of a lender of money on security and it has to become an owner of goods who lets them out to hire ... So it buys the goods from the dealer and lets them out to hire to Bridge. Bridge has to discard the role of a man who has agreed to buy goods and he has to become a man who takes them on hire with only an option to purchase, see Helby v. Matthews ... So you arrive at the modern hire-purchase transaction whereby (1) the dealer sells the goods to a finance house for cash; and (2) the finance house lets them out on hire to a hirer in return for rentals which are so calculated as to ensure that the finance house is eventually repaid the cash with interest; and (3) when the finance house is repaid, the hirer has the option of purchasing the car for a nominal sum.

 

I think that answers your question on whether HP payments count towards the purchase.. and they do not. Rental payments for the period of 36 months for example, after that the debto can return it if they wish. Under your principles, the debtor does not have a choice despite the contract giving them one.

 

Section 9 is titled, Meaning of Credit e.g. the definition of credit under the CCA, not the definition of hire purchase so you need to stop combining the two together. 189 defines HP as bailed goods, yet section 9 as you say calls it a fixed sum loan, everyone has understood what section 9 means since its inception but not for bailiffs.. how convenient. If HP wasn't menitoned under section 9 then it wouldn't be regulated by the CCA, you are just clutching onto the fact it says fixed sum loan.

[Peterbard]

As for s.133, who is making the possession order application here? Debtor owes money to TP, TP obtains CCJ for debt owed & uses bailiffs to recover debt, then bailiff seizes the car. I don't see any application for a possession order in that chain of events, do you? Only the finance company can bring a possession order, but can't do that if the car has already been seized. TP can't bring an application because they are not party to the contract.

 

So how does s.133 come into play as I am confused?

 

Repossession order will. Be made by the finance company t

 

 

The section is a provision of the CCA. It appears whenever a car is repossessed ???

 

The car has been taken under control the debtor is still vested in possession , the car is seized under the provisions of the tce

 

When title is released to the debtor the ea will be able to sell without challenge

[JustAnotherPerson]

Not sure your logic flows there, regardless of any vested possession you might say, the car is in the hands of the bailiff. If the creditors wants a repossession order to deliver up the car how is the debtor going to do that? And then you are also making the assumption that the debtor has paid 1/3 of the total price. You are also forgetting the general rule that I've explained before, parties cannot benefit from their own breach so why would a court transfer title to the debtor if they are the breaching party?

 

That just wouldn't make sense to me, unless you have another reason why it is just and reasonable to do so? The whole purpose of the section enables the court to transfer title to the debtor and I can only see one reason why that might be the case, if the debtor has a cause of action against the creditor where they are seeking an enforcement order the judge may instead transfer title to the debtor. I can't see how X judge will agree that the debtor is in breach so will transfer title to them anyway and disregard the contractual provisions that says title is to remain with the creditor.

 

The alternative would be if the creditor is asking the court to transfer title to the debtor but there would be no point in that because there is usually a clause which allows for this. They can either terminate and transfer title or they can terminate and ask for the car to be returned.

[Peterbard]

Can't remember if I posted this but another useful Denning quote from Bridge v Campbell Discount Co. 1962 on definition of hire purchase agreements:

 

 

 

I think that answers your question on whether HP payments count towards the purchase.. and they do not. Rental payments for the period of 36 months for example, after that the debto can return it if they wish. Under your principles, the debtor does not have a choice despite the contract giving them one.

 

Section 9 is titled, Meaning of Credit e.g. the definition of credit under the CCA, not the definition of hire purchase so you need to stop combining the two together. 189 defines HP as bailed goods, yet section 9 as you say calls it a fixed sum loan, everyone has understood what section 9 means since its inception but not for bailiffs.. how convenient. If HP wasn't menitoned under section 9 then it wouldn't be regulated by the CCA, you are just clutching onto the fact it says fixed sum loan.

 

It certainly says so regarding unregulated agrements.. But sadly not very relevant t to this read the crowther report regarding the function of the act in this regard, then think about the special powers mentioned earlier..

 

The helby ruling referred to is widely avoided as it is considered to represent an unworkable procedure,a legal a fiction as said by the above report. This is what Denning was refering to.. In his cases he tried to avoid this result as it was unfair, lower courts still do, now we have regulation which similarily seeks to avoids the problem,this is an Interesting area, but this is difficult enough to comprehend for many and not reaventt as said .start a new thread in finance.

[Peterbard]

Interested in some links regarding section 9 shouldn't be difficult if everyone agrees with you.

 

As said if you say that the payments were to hire, then these too are regulated so why would the craftsman of the act bother with some kind d of subterfuge as you suggest.

[JustAnotherPerson]

Consumer hire agreements do not allow clauses for the hirer to purchase the goods. A hire-purchase however, allows the hirer to purchase the goods at the end of the hire period, simple enough for you?

 

If the agreement was a contract of sale as you keep saying then why is it not called a conditional sale? Surely the definition below fits to your argument does it not?

 

"Conditional Sale means an agreement for the sale of goods or land under which the purchase price or part of it is payable by instalments, and the property in the goods or land is to remain in the seller (notwithstanding that the buyer is to be in possession of the goods or land) until such conditions as to the payment of instalments or otherwise as may be specified in the agreement are fulfilled;"

 

That's because a HP is goods which are bailed for a period of time, as set out in the CCA. Again, two different types of agreements, one a contract of conditional sale, and the other of hire.

[JustAnotherPerson]

 

Reference above is Halsbury's Laws (for those that don't know link here), I think that is pretty much what Denning said back in '62, but Halsbury's can't possibly be right though, its an unworkable procedure

There is also reference to the word bailment yet again

[unclebulgaria67]

It seems to me that you can go around in circles on this subject creating one of the longest threads.

 

When a HP owned vehicle is taken under control to enforce a debt, it cannot be known whether there is an interest that could be released, if the vehicle was sold. It is just fishing, in the hope that the objective will be achieved i.e to obtain money. The enforcement officer must hope that the debtor comes up with the money and they are not faced with a decision. In most cases, where money is not elicited, i suspect the vehicle is released from control. In a few cases they might decide to take the vehicle and see what happens. One Enforcement Company might look at whether they can sell a vehicle and contact the HP company to find out more information. But i don't think this is general practice in the industry, as JBW say they won't look at vehicles proved to be on HP.

 

A vehicle on HP is owned by the finance company until the last payment is made and the vehicle ownership is transfered. Outside of a court order, i don't see how an Enforcement Company can sell property owned by a finance company to try to get at any interest that might be available to a debtor. A finance company could refuse to allow their property to be sold and there is no interest available.

[brassnecked]

Amen UB

[Peterbard]

The problem is this leakie. It is not just about the sale it is also about clamping and taking away.

 

section 66(8) of the TCE says this

 

(8)Sub-paragraph (5)(b) does not apply where the enforcement agent acted in the reasonable belief—

(a)that he was not breaching a provision of this Schedule, or

 

He has only to have reasonable belief Now two or three failed cases which say the bailiff is justified in taking goods, is enough for him to take goods,. in that he can say he believes the various judges decisions. This is why the point needs to be clarified

[Peterbard]

Consumer hire agreements do not allow clauses for the hirer to purchase the goods. A hire-purchase however, allows the hirer to purchase the goods at the end of the hire period, simple enough for you?

 

If the agreement was a contract of sale as you keep saying then why is it not called a conditional sale? Surely the definition below fits to your argument does it not?

 

"Conditional Sale means an agreement for the sale of goods or land under which the purchase price or part of it is payable by instalments, and the property in the goods or land is to remain in the seller (notwithstanding that the buyer is to be in possession of the goods or land) until such conditions as to the payment of instalments or otherwise as may be specified in the agreement are fulfilled;"

 

That's because a HP is goods which are bailed for a period of time, as set out in the CCA. Again, two different types of agreements, one a contract of conditional sale, and the other of hire.

 

I will answer this one last time and then you are on your own. The agreement that goes with the HP is a contract of sale because it is needed in order to make the sale, is that simple enough for you. If the title for the car passes the debtor is entitled to a record of sums paid under the various headings of purchase, price , interest , etc.

 

Are you saying that there is another agreement relating to conditional sales agreemeents, not sure I agree, and i have seen many many agreements.

 

You do know the difference i take it ? Basically a CS agreement confines the debtor to purchase on the termination of agrement and in the HP the transfer of title is optional.

Other than that and financially there is no difference, both vehicles are held by the company until completion , both charge interest and charges and both have an agreement which for the purposes of the CCA are regarded as a fixed sum loan.

[unclebulgaria67]

TCE relates to goods owned by the debtor. If they are told a vehicle is owned by a HP company and this is confirmed, then i am not sure there is any reasonable belief that they can sell the vehicle to release any interest of the debtor. Firstly without a court order or the HP company saying that they will terminate the finance and allow a vehicle to be sold, there is no interest likely to be released. Secondly even if there was a court order or finance company agreement to sell a vehicle, the amount of interest available would not be known exactly e.g storage fees, sale fees, sale value. If the Enforcement company and finance company have no accurate estimate of the financial position on sale, there is a risk to both parties,

 

If the intention of including beneficial interest was to allow the taking of HP financed vehicles, the government treasury minister would have included relevant clauses and there would have been explanatory notes. Since there was nothing included, then i find it difficult to believe that government had any such intention.

[JustAnotherPerson]

Interesting to see how you've skipped over my reference on Halbury's, I'll assume that you think it is wrong I don't get what you mean about HP and an agreement that goes with it.. makes no sense to me but each to their own.

 

Are you saying that there is another agreement relating to conditional sales agreemeents, not sure I agree, and i have seen many many agreements.

 

What does this mean, I dont understand what you are saying?

 

I've just read para. 66 you mention, whilst the bailiff might not be liable for damages under the Schedule, that does not prevent the debtor from bringing a clause under another cause of action.

[Peterbard]

Not sure your logic flows there, regardless of any vested possession you might say, the car is in the hands of the bailiff. If the creditors wants a repossession order to deliver up the car how is the debtor going to do that? And then you are also making the assumption that the debtor has paid 1/3 of the total price. You are also forgetting the general rule that I've explained before, parties cannot benefit from their own breach so why would a court transfer title to the debtor if they are the breaching party?

 

My logic flows very well thank you. The debtor isn't going to pursue a possession order JAP why would he do that the finance company will want to regain possession. If the debtor has less than one third of the price he would be unlikely to have any interest in the vehicle dont you think ? So yes I am ignoring that. How r if they recover the car is between them and the bailiff, but the goods and title would rest with the debtor so the car is capable of being sold in that situation, should title be transferred to him.(section 133) in any case the car cannot be repossessed until an enforcment order is issued, on a regulated agreement.

As i have explained before to you. this is a contractual matter, the law does not give a fig about the punishment of the debtor, it just wants recovery for damages.

 

That just wouldn't make sense to me, unless you have another reason why it is just and reasonable to do so? The whole purpose of the section enables the court to transfer title to the debtor and I can only see one reason why that might be the case, if the debtor has a cause of action against the creditor where they are seeking an enforcement order the judge may instead transfer title to the debtor. I can't see how X judge will agree that the debtor is in breach so will transfer title to them anyway and disregard the contractual provisions that says title is to remain with the creditor.

 

You must decide why it is that it doesn't make sense and act accordingly. If the debtor had a cause of actin he would take an actin hense the name and there would be no mention of the measure being down to the courts description.,

 

 

 

 

 

The alternative would be if the creditor is asking the court to transfer title to the debtor but there would be no point in that because there is usually a clause which allows for this. They can either terminate and transfer title or they can terminate and ask for the car to be returned.

 

No the other option is that the car has value over that of the contract and the courts award the title back to the debtor because it is the best way to limit the profit of the creditor.

 

Again the section also illustrates, if you take the time to red it, that the hire payments as you call them are in fact payments towards the purchase of the car.

 

Lets call that the end of term speech shall we : just comment which moves the thread on will be replied to by me , thank you very much.

[Peterbard]

Interesting to see how you've skipped over my reference on Halbury's, I'll assume that you think it is wrong I don't get what you mean about HP and an agreement that goes with it.. makes no sense to me but each to their own.

 

 

 

What does this mean, I dont understand what you are saying?

 

I've just read para. 66 you mention, whilst the bailiff might not be liable for damages under the Schedule, that does not prevent the debtor from bringing a clause under another cause of action.

 

No not skipped anything just fed up of repeating myself, this is unworkable as it is based on the form of the contract and not its function. Remember me saying that ?

 

The debtor can do what he likes but we are talking about his rights to take control of goods.

Now really ehough

[JustAnotherPerson]

Yes I do remember you saying that, which is quite funny because I also remember you saying that equity has no part in this yet you have just cited one of the equitable maxims, substance over form. No need to reply to that though, I already know what you will say.. equity plays no part.

[brassnecked]

TCE relates to goods owned by the debtor. If they are told a vehicle is owned by a HP company and this is confirmed, then i am not sure there is any reasonable belief that they can sell the vehicle to release any interest of the debtor. Firstly without a court order or the HP company saying that they will terminate the finance and allow a vehicle to be sold, there is no interest likely to be released. Secondly even if there was a court order or finance company agreement to sell a vehicle, the amount of interest available would not be known exactly e.g storage fees, sale fees, sale value. If the Enforcement company and finance company have no accurate estimate of the financial position on sale, there is a risk to both parties,

 

If the intention of including beneficial interest was to allow the taking of HP financed vehicles, the government treasury minister would have included relevant clauses and there would have been explanatory notes. Since there was nothing included, then i find it difficult to believe that government had any such intention.

Government didn't but a naffed off County Court Judge annoyed with a debtor trying to use an injunction did, even though it is not Precedent the bailiffs siezed (sic) on the judgment as a way to have goods on finance away and sold (wonder if the bailiff would try to take that overpriced Baird TV from Brighthouse away as ist isn't only cars on HP that might be there for the bailiff to try and take.) and we are where we are

[brassnecked]

Yes I do remember you saying that, which is quite funny because I also remember you saying that equity has no part in this yet you have just cited one of the equitable maxims, substance over form. No need to reply to that though, I already know what you will say.. equity plays no part.

The judge in the CC injunction case that opened this can of worms needs a severe tolchocking. It seems to imho contradict Contract law and equity and give a bailiff carte blanche to take whatever they want no questions asked, square it with the finance co later.

[Peterbard]

I said I am not discussing equity here because the action x of the bailiff are prescribed in law, as incidentally have all other judgements passed so far. So it seems like an unnecessary complicatiin.

[Peterbard]

Anyway back to section 133. This section shows that all amounts paid by the hirer in thee duration of the agreement are credited against the contractual.debt.

It also shows that the judge can transfer title to the debtor if it is just to do so.

 

So we have a bailiff take a car because he has decided that there is a benificial interest using the formula in post one.

 

The finance company issue a section 87 default notice to the debtor and after the statutory period terminate the agreement.

 

They then apply to the court for a repossession order. Just to be clear during this period the car is with the bailiff gathering storage charges.

[brassnecked]

 

They then apply to the court for a repossession order. Just to be clear during this period the car is with the bailiff gathering storage charges.

The Storage Charges added into the debt could make any beneficial Interest far less than the the total debt then?

[Peterbard]

The judge in receipt of the request from the finance company, looks at the details of the account and sees that the contract is almost paid off, he then sees that the car has a significant value.

 

He sees that under contract law the finance company is only entitled to its !losses and he knows that on a contract those losses are the remainder of the sums due under the agreement.

 

He then decides to use the powers provided to him via this section to instead transfer title to the hirer and have the arrears re calculated. The alternative would be to allow the finance company pay a profit which far exceeded that prescribed in the contract.

[unclebulgaria67]

Why would a Judge allow repossession to proceed if the finance contract was paid up to date and there was no significant breach of the contract ?

 

Just because an Enforcement Officer has decided in their wisdom to take control of a vehicle does not mean any significant breach of the finance contact i.e retaining possession. The debtor has fulfilled the finance contract and things like unpaid PCN's are not part of the finance contract terms e.g no condition that all due motoring fines, penalties and debts are paid to avoid Enforcement Officers taking tne vehicle.

 

There is no reason for a finance company to issue any default notice and seek repossession. There is no reason why they would incur any costs, when they are not owed any debt. It would probably be less costly and less hassle just to claim ownership of any vehicle that had been taken control of. Only if the finance contract had not been paid would it be worth going down the repossession route.

 

I am looking at this from the HP finance companies position. Why would they want to get involved, unless they had their own contract issues ? If suddenly all Enforcement companies were taking HP vehicles and other goods, i doubt they would be very happy as they would face problems as a result. Therefore i cannot see them being too helpful, as this will see them go down a route of increased costs and risks they would want to avoid.

[Peterbard]

Anyway

Continuing this scenario. The hirer ends up with goods and title and an outstanding sum on the ,HP contract.

 

The bailif ends up with goods under control and the debtor with title. The usual scenario.

So what about he finance company who is left with an account tn arrears ?

[unclebulgaria67]

Anyway

Continuing this scenario. The hirer ends up with goods and title and an outstanding sum on the ,HP contract.

 

The bailif ends up with goods under control and the debtor with title. The usual scenario.

So what about he finance company who is left with an account tn arrears ?

 

Dodge

 

That is the question that needs answering.

 

You are the Chief finance officer of x finance company and an enforcement company has decided to take control of your companies goods with a view to selling them. You are responsible to your companies investors to make sure that you minimise financial risk while being legally compliant.

 

Your client ( the debtor) has met all of their contractural payments and your company does not have a problem.

 

As CFO you are required to take steps to protect your companies assets ? What are you going to do ?