Central Newbury Car Auctions Ltd v Unity Finance Ltd

JurisdictionEngland & Wales
JudgeLORD JUSTICE MORRIS
Judgment Date15 November 1956
Judgment citation (vLex)[1956] EWCA Civ J1115-2
CourtCourt of Appeal
Date15 November 1956
Central Newbury Car Auctions Limited
Plaintiffs
and
Unity Finance Limited
and
Charles Jordon Powell (sued as C.J. Powell (male))
Defendants
and
Mercury Motors (sued as a firm)
Third Party

[1956] EWCA Civ J1115-2

Before:

Lord Justice Denning

Lord Justice Hodson, and

Lord Justice Morris

In The Supreme Court of Judicature

Court of Appeal

On Appeal from the Newbury County Court

MR J.T. MOLONY, Q.C. and MR ERIC STOCKDALE (instructed by Messrs Gardner Leader & Co., Newbury) appeared on behalf of the Plaintiffs (Appellants).

MR HUGH TRENCHARD (for MR GEORGE BEAN) (instructed by Messrs F.S. Moore and price, Birkenhead) appeared on behalf of the Second Defendants.

1

LORD JUSTICE DEKNING: In July 1947 a new Morris car was registered with the Dorset County Council with the index number CFX 805 and a registration book was issued for it. In October 1948 the first change of ownership was registered. It remained thenceforward in the sane ownership until the 23rd January 1955 when the car was sold to one C. Ashley of 11 Beaulieu Road, Christchurch. It was then registered with the Hampshire County Council in the name of C. Ashley. The space in the log hook for "2nd change" was filled in with Mr Ashley's name and address with the date stamp "22nd January 1955" against the entry, stamped this time by the Hampshire County Council. Mr Ashley did not however trouble to sign his name in the space provided for the purpose. This appears to be a common failing as neither of the two previous owners had done so.

2

In September 1955 Mr Ashley appears to have put the oar into a sale by auction at Southampton when it was bought by a dealer for £278. The dealer was John Rolls, acting on behalf of the Central Newbury Car Auctions Limited. whom I will call the Newbury Auction Company. This Company took possession of the car and the Registration Book: but they did not register themselves as the owners. There is no need for a dealer to register a transfer to himself, so long as he is holding the car only for re-sale and is intending to use it only with trade plates. In that case he need not send in the Registration Book or fill in a "Change" space tut he ought to notify the Council that he holds the car. This is a considerable advantage to a dealer because it means that the Registration Book contains the names of fewer owners and is more valuable on that account. I think we should assume that the Newbury Auction Company as dealers notified the Council that they held the oar but they did not register any change of ownership to themselves. SoMR Ashley's name still remained in the book as if he was the latest owner. The Newbury Auction Company held the oar and the registration hook until the 4th November, 1955, when a distinguished-looking stranger arrived at their showroom, wanting to bay a car. He came in a Hillman Minx car and offered to leave it in part exchange. Mr Rolls showed him the Morris which he had in stock and it was eventually arranged that he should take the Morris on hire-purchase terms, and leave the Hillman in part exchange. He gave his name as cullis. In order to carry out the transaction, the Newbury Auction Company got Cullis to sign forms for hire purchase where by a finance company, South Western Securities limited., would buy the Morris car from the Newbury Auction Company for £337.10.0. and let it on hire-purchase to cullis. In calculating the instalments, a finance charge of 340.10.0., had to be added to the price of £337.10.0., making £378 in all, less £112.10.0. allowance for the Hillman in part exchange, giving a net amount of £265.1O.O. payable by Cullis by 24 monthly instalments. Cullis signed a "Proposal Form" in which he offered to enter into a hire purchase agreement with the Finance Company. In that form he gave his permanent address as 32, Orange Road, Swindon, Wilts, and his employer's name as Franklin, Cromwell 3treet, Swindon. In addition, the secretary of the Newbury Auction Company signed a "Dealers Statement" in nhich they agreed to sell the car to the Finance Company for £337.10.0, the property to pass as soon as the Finance Company accepted the proposal credit to be given for the £112.10.0, The dealer's statement also contained the words "We recommend the proposed hirer who has completed the proposal form as being a suitable and responsible person to enter into the proposed Hire-Purchaser Agreement… Delivery of the vehicle has not been made to the proposer and will not be made to the proposer except on your instructions. It is further agreed that this transaction shall be upon a pro forma basis only until younotify as of your acceptance." The reference to a "pro forma" basis is to be explained by the fact that, in addition to those two documents, two further documents ware signed in anticipation of the deal going through. One was a form of hire-purchase agreement signed by Cullis. The other was a form of receipt for the oar signed By Cullis. They would not be effective until the Finance Company accepted the proposal. To use the words of Mr Rolls himself "Forms are tentative pending the transaction going through. The Finance Company can refuse or accept."

3

Now comes the significant thing which has given rise to all the trouble. The Newbury Auction Company, having got those forma signed and the Hillman oar in their possession, did not wait to see if the Finance Company accepted the proposal. They straightway let Cullis have the Morris oar and the registration book applicable to it. He drove off with the car and the log-book and they never saw him again. The Newbury Auction Company sent the documents off by post that night to the Finance Company. The very next morning the Finance Company telephoned to say that they thought Cullis was bogus. The address he gave in Swindon was fictitious. There was no such address. They refused, of course, to accept the proposal. The Newbury Auction Company tried to get in touch with the employers but they were also fictitious. The Newbury Auction Company then told the polios. They also made inquiries about the Hillman Minx oar which Cullis had left with them; and they discovered that it was not his to sell. It was on hire-purchase. They paid £100 to the lender so as to get it clear for themselves. The Judge finds that Chilis was a swindler and that the statements made by him were a tissue of lies.

4

Three days later, on 7th November 1955, a man driving the Morris car called at the Mercury Garage at Birkenhead, many miles from Newbury. He was probably Cullis but he didnot give that name. He gave the name of Ashley which was, it will he remembered, the name shown in the Registration book as the latest owner. He had signed "C. Ashley" in his own handwriting in the apace provided for the purpose. He produced the Registration book and explained than ha wanted to sell the car. The manager of the Mercury Garage tested the car. He also took steps to see if the car was on hire-purchase. There is a convenient machinery set up by the trade for ascertaining this. The Finance Companies have established a Hire-purchase Institute where they Reap a register of every car which is on hire-purchase. Whenever a dealer wants to know if a car is on hire-purchase, he only has to telephone his finance company and they will tell him almost at once. In this case, the manager of the Mercury Garage ascertained within an hour that there was no hire-purchase on the Morris. He took the man's word that he was Ashley (the latest owner in the Registration book) and agreed to buy the car for £200. He took delivery of the car and the log-book, and he gave the man a crossed cheque for £200 in favour of C. Ashley and got a receipt from him for the money. The man returned later, however, with a plausible request asking the manager to open the cheque. The manager had noticed that the signature "C. Ashley" on the receipt was the same as the last signature on the log-book. He thought that verified his identity. The man had also a vanload of furniture outside and said he was moving into the district, which engendered confidence. So the manager opened the cheque. He cancelled the crossing and the man got £200 from the Bank. He has not been seen since. Mercury Motors afterwards sold the Morris car to Unity Finance Limited. who let it on hire-purchase terms to Mr Powell.

5

When the Newbury Auction Company found out what had happened to the Morris car, they claimed that it still belonged to than end that they were entitled to have it back. When it was not returned, they brought an action against the UnityFinance Company and My Powell fey damages for conversion of it; and those Defendants have brought in Mercury Motors as third parties. The value of the Morris has been agreed at £240.

6

The Judge found that the Newbury Auction danpaay had been guilty of culpable negligence in letting Cullis have the Morris car and the log-book. He said: "The Plaintiffs trusted cullis implicitly and were the victims of an impudent confidence trick, bat the Plaintiffs ware however most casual and negligent in their conduct of the business… (their director) was casual in the extreme and gave no thought to the possibility of the Finance Company rejecting the proposal… It is difficult to imagine such a reckless proceeding… It is difficult to imagine a worse example of culpable neglect in a commercial transaction than that of delivering a car with the Registration Book." He thought that their conduct was such as to estop them from asserting that the Morris car still belonged to them. He therefore gave judgment for the Defendants. I should point out, however, that the Judge thought that Mercury Motors were not as prudent as they might have been. He said that it would have been prudent for the manager to persist in giving a crossed cheque or at least in postponing the transaction for a day or two, but he acted in good faith and had no suspicion of fraud.

7

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4 books & journal articles
  • Table of Cases
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    • Irwin Books The Law of Property
    • 5 August 2021
    ...75 ER 472, 1 Plowden 310 ................................................ 38 Central Newbury Car Auctions Ltd v Unity Finance Ltd, [1957] 1 QB 371 (CA) .............................................................................................. 237 Chase Manhattan Bank NA v Israel-British......
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    • 1 May 2001
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    ...imports the existence of a duty on the 8 Costello v Derbyshire Constabulary , [2001] EWCA Civ 381, [2001] 1 WLR 1437 at para 31. 9 [1957] 1 QB 371 at 394 (CA). See also Farquharson Brothers & Co v King & Co , [1902] AC 325 at 335–36 (HL) [ Farquharson Brothers ]. 10 (1884) 26 Ch D 482 (CA) ......
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