Beneficial interest on goods under a HP Agreement.

[unclebulgaria67]

Oh I see.

 

It turns out that these goods can be sold at or at least they have been. But appart from that , as I was told by a well known expert on bailiff matters, " it the ACT says certain goods can be seized, then they can".

 

But the issue of disposal of goods is a good one for discussion

 

You have proved my point. There is no law that says they can take third party property knowingly and look to sell it. If they seize HP owned goods and the finance company does nothing,then they are left with goods they cannot sell. The creditors the EC are working for therefore would not see any money they were due and the EC is incurring costs they might never recover. It is not currently worth a EC regularly taking HP owned goods, as if the debtor does not pay up or the HP company does not play ball, they are most likely going to have to return the goods to the debtor.

[Peterbard]

I don't see how.

 

Bailiff take property every day that has third party interest contained in it. Proceeds of sale are apportioned after auction section 13fees regs, section fifty something of sched 12.

[Peterbard]

)If there is a co-owner of any of the goods, the enforcement agent must—

 

(a)first pay the co-owner a share of the proceeds of those goods proportionate to his interest;

 

(b)then deal with the rest of the proceeds under sub-paragraphs (1) to (5).

 

(7)Regulations may make provision for resolving disputes about what share is due under

[Peterbard]

Sorry the above section50(4)

[Bailiff Advice]

As I have said before, this is a subject that will at some stage need to be tested in a higher court and possibly even the Court of Appeal.

[Peterbard]

IAs I said I was looking at the distress for rent rules and HP goods are specifically mentioned as being exempt. Does make you wonder why such a clear statement t was not incorporated in the T CE.

[unclebulgaria67]

I still think that a certain Solicitor that acts for one EC is trying to be creative and that they are on dodgy ground.

 

Schedule 12 clause 10 says that the goods have to belong to the debtor.

 

HP goods are not co-owned. The HP company owns the goods until the finance agreement has been fully settled.

 

There is no beneficial interest unless the finance agreement is brought to an end and i don't think an EC can take control of a HP companies property with a view to selling, against the will of the finance company. There is no guarantee that a finance company would issue any default because of an EC using TCE and repossession may not happen. The goods remaining in the ownership of the finance company should prevent the EC selling them.

[Peterbard]

As said three lower court cases have found that there is a benificial Interst, if so section ten is irrelevant. If there is an Interst there is a co owner.

[Peterbard]

Finance companies do issue DN if goods are not kept by the hirer I have seen this many many times,even if goods are stolen.

[Peterbard]

I still think that a certain Solicitor that acts for one EC is trying to be creative and that they are on dodgy ground.

 

Schedule 12 clause 10 says that the goods have to belong to the debtor.

 

HP goods are not co-owned. The HP company owns the goods until the finance agreement has been fully settled.

 

There is no beneficial interest unless the finance agreement is brought to an end and i don't think an EC can take control of a HP companies property with a view to selling, against the will of the finance company. There is no guarantee that a finance company would issue any default because of an EC using TCE and repossession may not happen. The goods remaining in the ownership of the finance company should prevent the EC selling them.

 

I agree. They would need the permission of the finance company . The EA does have leverage, and as long as they recover the sums owed they may very well give it.

[unclebulgaria67]

As said three lower court cases have found that there is a benificial Interst, if so section ten is irrelevant. If there is an Interst there is a co owner.

 

Think we need transcripts from those cases to see what was actually discussed and the particular circumstances. Otherwise it just guessing and relying on what has been said by one party who is representing his clients interests.

 

I can't see that TCE was drafted to include HP goods, as there would have been more of an explanation added.

[Peterbard]

Think we need transcripts from those cases to see what was actually discussed and the particular circumstances. Otherwise it just guessing and relying on what has been said by one party who is representing his clients interests.

 

I can't see that TCE was drafted to include HP goods, as there would have been more of an explanation added.

 

As I said there or so posts back you could also say that if Hp goods are exempt the act would say so. It does with other exempttions.

[Peterbard]

Think we need transcripts from those cases to see what was actually discussed and the particular circumstances. Otherwise it just guessing and relying on what has been said by one party who is representing his clients interests.

 

I can't see that TCE was drafted to include HP goods, as there would have been more of an explanation added.

 

I don't think there is any disagreement regarding what was said.

[JustAnotherPerson]

The issue with your definition of beneficial interest Dodgeball is that it is flawed and only works in certain circumstances. Compare the following two scenarios:

 

SCENARIO A

Debtor enters into HP agreement for £10,000, debtor owes TP sums and uses bailiffs to recover the sums. Bailiff seizes car which has a positive equity of £500 and a win for the bailiff.

 

SCENARIO B

A & B agree to buy a car to use together. B gives A £4,000 towards the purchase price which is £10,000 and A then purchases the car. B gets into debt related issues which results in the bailiff seizing the car and the car then sells for £12,000. Applying your definition the equity value of the car is £2,000 (being the difference between the initial value and its current value) and despite B initially advancing £4,000 he is down by £2,000 and can only claim the equity value.

 

The above definition does not work because it can only be applied in certain circumstances for it to work but in others it will not. However, the correct approach (which the courts have devised) to quantification would be that the debtor's beneficial interest is a % of the value of the goods based on his direct contributions:

 

SCENARIO A

Car is worth £10,000 and debtor has already paid £5,000 of the total price which is 50%. Car is now worth £10,500 so the debtors interest would then be £5,250 e.g. 50% of the total current value.

 

SCENARIO B

In this scenario, B has contributed 40% of the purchase price. B's interest overall would therefore be £4,800 based on the car being worth £12,000.

 

You will see that the correct approach doesn't benefit bailiffs because the debtor's interest is is much lower and will likely leave a debt owing to the finance company, so I understand why bailiffs are arguing that the BI is the equity value but it just doesn't work across the board. It would mean the courts would have to come up with several definitions of BI for the purposes of the TCE and I doubt very much that is what parliament intended.

[unclebulgaria67]

I don't think there is any disagreement regarding what was said.

 

As the person who has reported the information has only emailed someone who posts to CAG and does not wish to be indentified, then you are taking their word for it, that everything they report is 100% accurate and the full picture.

 

I somehow don't think we will get the full details, which might suggest that perhaps the real position is not what has been reported. If an EC has had a very useful county court decision in their favour, you would think that a transcript would have been obtained by now and details would have started to appear.

 

I can see that a Judge might have commented about someone with a HP financed vehicle having interest, particularly if they paid a deposit, but what i am not sure about is the whole legal process e.g legal position of the finance company, terminating finance contract due to losing possession when contract was paid to date, other legal arguments over storage costs etc. There is much more to these cases than beneficial interest.

 

Given the unsure legal position regarding HP financed goods, i cannot see EC's regularly taking these goods, because they would want to avoid the hassle and risk that comes with them.

[Peterbard]

Jap the equity value of the car at termination value of the car as you put it, is equal to the minus whatever is left to pay on the HP agreement.(nothing to do with the cars initial value).

 

Also you have the value of the car increasing in time, cars on hp dont do that JAP.

 

Car worth £10, 2K deposit, finance 8k. Car value initially 10k owed on agreement 12k(8K plus charges inters etc.).

Car depreciates over the next months/years, money paid off depreciates ammount owed on agreement.

If depreciation on car is less thatn the reduction in repayment value of the car /contract ratio will favor the value of the car, a point will be reached where the car is worth more than what is remaining on the agreement.

Agreement terminated, car sold, balance settled, remainder beneficial inters.

[Peterbard]

As the person who has reported the information has only emailed someone who posts to CAG and does not wish to be indentified, then you are taking their word for it, that everything they report is 100% accurate and the full picture.

 

I somehow don't think we will get the full details, which might suggest that perhaps the real position is not what has been reported. If an EC has had a very useful county court decision in their favour, you would think that a transcript would have been obtained by now and details would have started to appear.

 

I can see that a Judge might have commented about someone with a HP financed vehicle having interest, particularly if they paid a deposit, but what i am not sure about is the whole legal process e.g legal position of the finance company, terminating finance contract due to losing possession when contract was paid to date, other legal arguments over storage costs etc. There is much more to these cases than beneficial interest.

 

Given the unsure legal position regarding HP financed goods, i cannot see EC's regularly taking these goods, because they would want to avoid the hassle and risk that comes with them.

 

You are completely wrong on all assertions here, sorry.

[JustAnotherPerson]

Of course cars don't appreciate unless they are rare collectors items, they almost always depreciate. Because of the interest charges added to HP agreements the car is almost never worth more than what is owed and the car will depreciate faster than the amounts being paid off.

 

I have never seen a car depreciate slower than the amount owed, simply because the car would be required to be kept in top condition and that doesn't happen generally. You also have to take into account those who have poor credit and therefore the total price is much higher than what its actually worth. For those reasons, the car would have to have a positive equity value to stand any chance of it being able to pay off the agreement with some money left over.

 

The only instance I guess that the car might depreciate slower than the payments is 0% interest is added subject to the make and model of the car.

 

But anyway, your definition of BI would have to apply to not just HP agreements but all other cases when bailiffs seize goods where a debtor has a BI and that's the issue because you have tailored the definition of BI to apply to HP agreements only but not taken into account circumstances where there is no HP agreement.

[Peterbard]

Jap in your point B. The other owner of the car would be a co owner, they would have to be paid out of proceeds if they were not liable for the enforcment, that payment would be factored into the calculation regarding seizing the car(if the action raised enough to pay the creditor(bailiffs/ creditor) if after this it proves unworkable the car would not be taken'

 

It is only the same as any other situation where goods are not taken because after sale there would be insufficient proceeds.

[JustAnotherPerson]

Jap in your point B. The other owner of the car would be a co owner, they would have to be paid out of proceeds if they were not liable for the enforcment, that payment would be factored into the calculation regarding seizing the car(if the action raised enough to pay the creditor(bailiffs/ creditor) if after this it proves unworkable the car would not be taken'

 

It is only the same as any other situation where goods are not taken because after sale there would be insufficient proceeds.

 

Scenario B is a contract of sale and you claim that HP is a contract of sale so surely the debtor in a HP agreement is a co-owner too because hes contributed to the purchase price has he not? If so, why is the BI different specifically for HP but not in other instances of contracts of sale?

[Peterbard]

Of course cars don't appreciate unless they are rare collectors items, they almost always depreciate. Because of the interest charges added to HP agreements the car is almost never worth more than what is owed and the car will depreciate faster than the amounts being paid off.

 

I have never seen a car depreciate slower than the amount owed, simply because the car would be required to be kept in top condition and that doesn't happen generally. You also have to take into account those who have poor credit and therefore the total price is much higher than what its actually worth. For those reasons, the car would have to have a positive equity value to stand any chance of it being able to pay off the agreement with some money left over.

 

But anyway, your definition of BI would have to apply to not just HP agreements but all other cases when bailiffs seize goods where a debtor has a BI and that's the issue because you have tailored the definition of BI to apply to HP agreements only but not taken into account circumstances where there is no HP agreement.

 

No you are wrong, firstly appreciating value items would not be bought on HP.

 

secondly cars values do not depreciate faster than the amounts due on a contract, if this were true the car would never be paid off, the aim is to make both decrease at the same rate so at the end of the agrement the car has little value.

 

However this is without taking the deposit into account, if a car is worth 20K and only 10k is financed there is equity right from day one, and 10k on credit will reduce far more quickly than the value of the car, so the ammount of equity will increase as the agreement goes on.

 

Not sure what you mean in your next paragraph, we are talking about the conditions under the TCE and HP agreements. I have not tailored anything the courts have pointed out things within the agreement which they believe to represent a beneficial interest. This is not just my opinion ?

[Peterbard]

HP is not a contract of sale, and where did you say that B was about a contract of sale, have i missed it.

 

I may have said HP agreements contain a contract of sale, this is true.

[Peterbard]

Really the mathematics involved are rudimentary, there is an ammount owed on the contract(the agreement) which is being paid off by the installments, then there is the value of the car, when the value of the car exceeds the sum remaining to be paid on the agreement there is a beneficial inters , the difference between the two. Very simple indeed.

 

The interesting part is the method in which the vehicle is sold, and the actions which must be taken during the enforcment process and after seizure.

[JustAnotherPerson]

Interesting that you say HP agreements contain a contract of sale. If part of the HP agreement is a contract of sale, what is the rest of the agreement?

[Peterbard]

A box contains a penny.

 

So you are asking, if the box contains a penny what is the rest of the box, this is gibberish.