JD Cleverly Ltd and Another v Family Finance Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Tomlinson,Lord Justice Pitchford,Lady Justice Arden |
| Judgment Date | 21 December 2010 |
| Neutral Citation | [2010] EWCA Civ 1477 |
| Date | 21 December 2010 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: B2/2010/0857 |
[2010] EWCA Civ 1477
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CARDIFF COUNTY COURT
His Honour Judge Chambers QC
Before: Lady Justice Arden
Lord Justice Pitchford
and
Lord Justice Tomlinson
Case No: B2/2010/0857
9CF01232
Dominic Chambers QC and John Virgo (instructed by Morgan Cole LLP) for the Appellants
Andrew Keyser QC and Anthony Vines (instructed by Anthony Jeremy & May) for the Respondent
Hearing date: 17 November 2010
Lord Justice Tomlinson:
The law reports are full of cases in which the question is which of two innocent parties must suffer for the activities of a rogue. This is another, albeit one in which one's sympathies for the innocent are somewhat tempered by consideration of the laxity of their business practices. No doubt it is in such conditions that rogues flourish.
The context is the motor trade. The rogue in question is Mr Brian Webb, who traded in cars through Gwent Fleet Management Ltd, to which I will refer hereafter as “Gwent”. His scam was remarkably simple. He would accept an order for a new motor vehicle from a purchaser and, typically, collect from the purchaser a deposit. He then in the name of Gwent placed an order for the vehicle with a dealer such as the First Appellants, who at relevant times traded as “Cardiff Audi”. Thus in the case taken as typical Mr Glyn Tebbutt of Brighton ordered from Gwent a new Audi A4 Avant early in July 2007. He was quoted a price of £24,300 and paid a deposit of £5,000 to Gwent. On 3 July 2007 Gwent placed an order for such a vehicle with Cardiff Audi. Mr Webb was a good customer of Cardiff Audi and of the other Appellant motor dealers. They allowed him thirty days’ credit. Before placing an order for a vehicle Gwent would telephone the motor dealers to ask for a quotation for a specific vehicle. The Appellants would work out a price and then give an oral or written quotation. The quotation in respect of Mr Tebbutt's car was oral. If Gwent accepted the quotation they would then send a written, signed purchase order to the Appellants. Typically the purchase order would refer to the price on the quotation as being the “ Price agreed”. In the case of Gwent's purchase order of 3 July 2007 for Mr Tebbutt's Audi A4 Avant the price did not appear. Against the rubric “ Price agreed” was typed “Please confirm”. The only entry on the purchase order connecting the unidentified Mr Tebbutt with the car was the “Delivery Address”– Brighton. The Appellants, or in this case Cardiff Audi, regarded the purchase order as committing Gwent to purchase the car. Cardiff Audi now therefore in turn ordered the vehicle from Audi, identifying their customer as Gwent.
On 12 July 2007 a vehicle was identified to satisfy the order and was allocated a chassis number. At or around the end of August 2007 Mr Tebbutt was asked by Gwent to pay the balance of the purchase price and he duly paid £19,300.
On or shortly before 17 September 2007 Cardiff Audi received the car from the Audi factory and allocated to it a Registration Number. They informed Gwent by telephone that the car was ready for delivery, asked them to confirm where the car was to be delivered and enquired to whom the car should be registered and who should be invoiced.
Gwent would obtain a certificate of insurance from the purchaser and pass it to the Appellants. The Appellants would then provide the details to the DVLA so that the car could be duly registered. All of this must have occurred in the case of Mr Tebbutt's car.
On 3 October 2007 the car was delivered to Mr Tebbutt at his home in Brighton by a representative of Cardiff Audi. In due course Mr Tebbutt received from Gwent an invoice dated 30 October 2007 in the sum of £24,300.
It was not unusual for the Appellants to deliver motor vehicles to end-users identified by Gwent before they had themselves received payment for the car. Indeed, that was the practical manifestation of Gwent being allowed thirty days’ credit.
In the event that Gwent advised the Appellants that their invoice should be sent to a finance company the Appellants would ask Gwent for the name of the finance company and for contact details. Their aim was to send out an invoice for the car on the same day that they effected delivery to the end-user. Usually this was achieved.
In the case of Mr Tebbutt's car Gwent asked Cardiff Audi to invoice the Respondent, Family Finance Limited, for the car. The nature of the business carried on by Family Finance is the provision of loans and the financing of consumer goods by means of hire purchase agreements.
On an unknown date Cardiff Audi generated a “New Vehicle Invoice” in respect of the Audi A4 Avant which either had been or was to be delivered to Mr Tebbutt, identifying it by its precise vehicle type, engine number, chassis number, Registration Number and Registration date, which was said to be 28 September 2007. The “delivery date” and the “tax point” were also each stated to be 28 September 2007. Under the rubric “Invoice to” appeared the name and address of Family Finance Limited. Under the rubric “Deliver to” appeared the name and address of Gwent. At the foot of the Invoice the “Net Total” was said to be “Due from” Family Finance Limited. The “Invoice Total” was £26,986.50, inclusive of VAT. There being no “Part Payment Received”, the “Net Total due” was the same. There are Terms and Conditions on the reverse of the invoice to which I must refer hereafter.
On an unknown date the invoice which I have just described was sent by Cardiff Audi to Gwent. This was done at the express request of Mr Webb. It was the understanding of Cardiff Audi that Mr Webb would send the invoice on to his contact at Family Finance. This was the usual pattern in transactions in which Gwent, the Appellants and Family Finance were involved.
Often in the course of transactions such as this one Mr Webb would change his instructions as to the identity of the finance house which was to be invoiced. Often the Appellants having issued an invoice to one finance house would be requested by Mr Webb to re-issue the invoice to another finance house.
There was at the trial undisputed evidence given by the Appellants to the effect that it is not unusual in the motor trade for a customer such as Gwent to ask the dealer to issue an invoice to a finance company. There was similarly evidence to the effect that it is not unusual in the motor trade for vehicles to be registered to an individual after they have been invoiced to a finance company. According to Mr Philip Morgans, Corporate Sales Manager of Cardiff Audi, “this would be appropriate in hire purchase arrangements and personal contract plan arrangements (a type of conditional sale agreement)”.
The Appellants were at all times completely unaware of the nature of the arrangements made between Gwent and Family Finance. If it could reasonably be inferred that there were in place financing arrangements, the Appellants were not aware of the basis upon which that finance was being provided. The only direct contact between the Appellants and Family Finance was in the event that the Appellants were not immediately paid. Usually Family Finance paid the Appellants shortly after the receipt of the invoice and always they paid by cheque. In the event of that not happening promptly the Appellants might have occasion to chase for payment.
According to Mr Ross Phillips, Managing Director of Family Finance Limited, in late May, early June 2007 Family Finance “was approached by John Webb of Gwent Fleet Management … with a request to provide hire purchase facilities for his company to enable it to acquire vehicles which they let out under consumer hire agreements or contract hire agreements in the course of its business. After some discussion it was agreed that we would grant credit facilities on a deal by deal basis, taking into account the amount of deposit which was being paid and the price being paid for the vehicle.”
On 26 October 2007 Mr Lyndon Evans, a director of Family Finance, visited the premises of Gwent where he met Mr Webb. He took with him a prepared Hire Purchase Agreement, a pro-forma in which details had been inserted. The details inserted included the Registration Number, engine number, chassis number, date of first registration and brief model details, body-type, colour and cubic capacity of the vehicle which had in fact been delivered to Mr Tebbutt on 3 October 2007. The Hire Purchase Agreement was signed on behalf of the Owners identified therein as Family Finance by R Hopkins, whose signature was dated that day. Prior to this visit Mr Webb had told Mr Evans that he wished his company to enter into a hire purchase agreement of three years duration with respect to this vehicle. It is to be inferred that prior to 26 October 2007 Mr Webb had passed to Family Finance the Cardiff Audi invoice to which I have referred in paragraph 10 above, since in addition to the details of the vehicle there was also inserted into the pro-forma agreement the cash price of £26,986.50 including VAT of £3,967.14 as appears on that invoice. The “Financial Details and Payments” box on the pro-forma was completed by provision for a deposit, designated (a), which was £4,986.50, and hire purchase charge, a documentation fee and an option to purchase fee, which together with the balance of the cash price were designated (b), the latter total of £25,757.32 to be payable in...
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