Belvoir Finance Company Ltd v Stapleton
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE SACHS,LORD JUSTICE MEGAW |
| Judgment Date | 27 July 1970 |
| Judgment citation (vLex) | [1970] EWCA Civ J0727-1 |
| Court | Court of Appeal (Civil Division) |
| Date | 27 July 1970 |
[1970] EWCA Civ J0727-1
The Master of the Rolls (Lord Denning)
Lord Justice Sachs and
Lord Justice Megaw
In The Supreme Court of Judicature
The Court of Appeal.
Appeal of defendant from judgment of Mr. Justice Swanwick on 26th November, 1969.
Mr. COLIN ROSS-MUNRO (instructed by Mr. K. Wyndham-Kaye) appeared on behalf of the Appellant Defendant.
Mr. KENNETH MYNETT, Q.C., and Mr. RICHARD INSALL (instructed by Messrs. Jaques & Co., agents for Messrs. Harvey Clarke & Adams of Leicester) appeared on behalf of the Respondent Plaintiffs.
The Belgravia Car Hire Co. had a fleet of cars which they let out on hire. They used to buy new cars on hire purchase terms, to use them for two years or so, and then re-selling them to purchasers, paying, of course, the "settlement figure" to the finance company. Later on the Belgravia Company became dishonest. They sold cars to purchasers and pocketed the proceeds. They did not tell the finance company anything about it. They did not pay the "settlement figure". They pretended to the finance company that they still had the cars. They paid the instalments for a little while so as to disarm suspicion. Later on the fraud was discovered. The Belgravia Company collapsed and was put into liquidation. The finance company could not recover anything from them. So they tried to recover from the people who had bought the cars. One of the purchasers was Harold G. Cole Ltd. They had quite innocently bought three of the cars from Belgravia and resold them. The finance company sued Harold G. Cole Ltd. and receovered £1,501. 9s.0d. from them. The case is reported under the name of the Belvoir Finance Co. Ltd. v. Harold G. Cole Ltd. (1969 1 W.L.R. 1877).
Now the finance company sue the salesman who sold some of the cars on behalf of Belgravia to the innocent purchaser. He is Mr. Stapleton, who was the assistance manager of Belgravia. We do not know whether he acted innocently or not. He did not give evidence. The finance company sued him for conversion. Seeing that he sold the cars, he is undoubtedly liable to the finance company, whether he was party to the fraud or not - save for a defence which we have to consider. He says that the finance company acquired the cars unlawfully and cannot recover owing to their own illegality.
The illegality arose because of the provision, then in force, relating to hire purchase, which required the hirer to make a down payment of 20% of the cash price. It was contained in the Hire Purchase and Credit Sales Agreements (Control) Order 1964, Article 1(1) and Schedule 2, Part I, paragraph 3(1).In order to get round, or get over, this requirement of the 20% cash down, the parties devised a scheme which is best described by taking the first of the cars in this case. In May of 1965 the Belgravia Company wanted to get a new car, a Ford Anglia. They rang Mr. Pike, who was a director of the Plaintiffs, Belvoir Finance Co., and asked him to get a Ford Anglia for them. Now Mr. Pike was also a director of some car dealers called Francis Motors. The dealers had in stock a Ford Anglia at a cash price of £580. 10s.0d. Belgravia were good customers. So Mr. Pike arranged with the dealers to give a discount amounting to £62. 10s.0d.; thus leving £518. 0s.0d. as the net price. The finance company paid the dealers the £518 for the car. Then the finance company let it out to Belgravia on hire purchase terms. The hire purchase agreement stated the cash price to be £580. 10s.0d. and the deposit paid £116. 10s.0d. But the deposit of £116. 10s.0d. was not truly paid in cash. It was credited as to £62. 10s.0d. by way of discount. Only £54 was paid in cash.
That scheme was clearly illegal. Whereas Belgravia should have paid £116 down in cash, they only paid £54. The Judge found that all three parties, the Belgravia Company, the finance company, and the dealers were implicated in the illegality. He said "it was part of the finance company's purpose in buying the Ford Anglia car from Francis Motors that the discount should be used to form part of the minimum deposit of 20% required by law in place of an actual payment. I find that that purpose, which I have already found to be illegal, was further known both to the finance company and to Francis Motors, and, of course, to Belgravia. I find that none of them realised what more careful enquiry would have revealed, that is to say, that it was illegal." But nevertheless the Judge found that they had knowledge of the facts. They were therefore guilty of conspiracy. They could not excuse themselves by saying that they did not know the law, and did not realise that such an act was a crime, see R. v. Churchill (1967 2 A.C.) at page 237. So the Judge found "that the contract of sale wasillegal and one that the Court would not enforce at the suit of either party."
So we have a definite finding, which is not challenged, that the contract of sale (by the dealers to the finance company) was illegal as well as the hire purchase agreement (by the finance company to Belgravia). The two other cases were somewhat similar.
What is the consequence of this illegality? Mr. Ross-Munro says that by reason of the illegality, the finance company cannot recover against the salesman, Mr. Stapleton, who sold the cars. He seeks to get over the earlier case of Belvoir Finance v. Cole (1969 1 W.L.R. 1877) (which he himself argued) because he says that he had not then thought of conspiracy, and that this makes all the difference, because it shows that the contract of sale to the finance company was illegal. He submits that, as the finance company cannot make out their case without relying on the illegality, they cannot recover in this action.
I had occasion to look into all the cases on this subject when I gave the opinion of the Privy Council in Singh v. Ali (1960 A.C. 167), and I see no reason to alter one word of it. I then said that "when two persons agree together in a conspiracy to effect a fraudulent or illegal purpose — and one of them transfers property to the other in pursuance of the conspiracy — then, so soon as the contract is executed and the fraudulent or illegal purpose is achieved, the property (be it absolute or special) which has been transferred by the one to the other remains vested in the transferee notwithstanding its illegal origin."
Mr. Ross-Munro did not dispute the proposition in general, but he submitted that it should be confined to cases where the transferee actually took possession of the property. Such was the case in Taylor v. Chester 1869) L.R. 4 Q.B. 309, where the half-note was actually delivered to the brothel-keeper by way of pledge, so she had a special property in it. So also in Singh v. Ali (1960 A.C. 167), the lorry was actually delivered to the plaintiff. Mr. Ross-Munro said that the only case in the books where the transferee did not take actual possession was Bowmakers Ltd. v. Barnet Instruments Ltd. (1945 K.B. 65): and that, he said, was wrongly decided. He pointed out that Mr. Gallop had there conceded the point (see page 70). So it was not argued and is not binding on this Court.
Mr. Ross-Munro laid great stress on the fact that here the finance company had never taken delivery of the car. It had gone straight from the dealers to Belgravia. He submitted that, where a transferee had never taken possession of the thing, he could not rely on the proposition: "As against a wrongdoer, possession is title": because he never had possession. So the finance company had to rely on the agreement of sale to them in order to give them title or a right to possession. But the agreement was illegal. And the Courts would not allow them to rely on it. It was settled beyond controversy, he said, that the Court would not lend its aid to anyone who had to rely on an illegal contract. He cited Simpson v. Bloss (1816) 7 Taunton 246, for the purpose.
I do not accept this distinction taken by Mr. Ross-Munro. I think that the proposition stated in Singh v. Ali applies even where the transferee has not taken possession of the property, so long as the title to it has passed. If this were not so, it would mean that anyone could take the property with impunity: because there would be no one who could show a title to it. Take this very case. The dealers, who sold the car to the finance company, cannot claim it back from anyone. They have received their price and are out of the picture. Belgravia, who re-sold the car illegally to a purchaser, cannot claim it from him or anyone else: for they have received the price too. The only persons who can claim it are the finance company who paid for it and have not been re-paid. Although they obtainedthe car under a contract which was illegal, nevertheless inasmuch as the contract was executed and the property passed, the car belonged to the finance company and they can claim it. This was the view of Lord Justice Winn in Kingsley v. Sterling Industrial Securities Ltd. (1967 2 Q.B. at page 783), and I agree with it. Bowmakers was rightly decided, even though this point was not argued.
Once the title is in the finance company, the rest is clear. Belgravia were bailies of the car. By re-selling it, they did an act inconsistent with the bailment. They converted it to their own use. So they and their salesman are liable in conversion. He may or may not have been party to the fraud: but no matter. He is liable in conversion.
There remains the...
To continue reading
Request your trial
-
Chubb Cash Ltd v John Crilley & Son
...by two decisions of this court, namely the Wickham Holding case, to which I have just referred, and the later decision in Belvoir Finance -v-Stapleton (1971) 1 QB, 210. In both of those cases the measure of damages permitted was held to be the actual loss to the plaintiffs which, on the fac......
- Daniel s/o D William v Luhat Wan and Others and Luhat Wan v Social and Welfare Services Lotteries Board and Others
-
Leason and Others v the Attorney-General
...them even if this is derived from an illegal contract: see e.g., Bowmakers Ltd. v. Barnet Instruments Ltd. [1945] K.B. 65, Belvoir Finance Co. Ltd. v. Stapleton [1971] 1 Q.B. 210 and Singh v. Ali [1960] A.C. 167. 123 The first New Zealand case to adopt this line of authority was R v Coll......
-
Hazell v Hammersmith and Fulham London Borough Council and Others
...contract may be effective to transfer the property in goods or an interest under a lease ( Singh v. Ali [1960] A.C. 167; Belvoir Finance Co. Ltd. v. Stapleton [1971] 1 Q.B. 210; Feret v. Hill [1854] 15 C.B. 207). The law has thus eschewed a rigid, doctrinaire principle that all transactio......
-
Illegality
...unenforceable. 303 See, for example, Pimvicska v Pimvicska (1974), 50 DLR (3d) 569 (Alta SC). 304 Belvoir Finance Co Ltd v Stapleton , [1971] 1 QB 210 (CA). 305 [1960] AC 167 (PC). 306 [1964] AC 142 (PC). 307 Shopsky and Shopsky v Danyliuk (1959), 23 DLR (2d) 501 (Alta SC). THE L AW OF CONT......
-
The Transfer of Moveables in Scotland and England
...was settled by the Judicial Committee of the Privy Council in Singh v Ali.4545[1960] AC 167. See also Belvoir Finance Co Ltd v Stapleton [1971] 1 QB 210; Glastnos Shipping Ltd and Continental Chartering & Brokerage Ltd Hong Kong Branch v Panasian Shipping Corporation [1991] 1 Lloyd's Rep 48......