Jones v Churcher and Another
| Jurisdiction | England & Wales |
| Judgment Date | 18 March 2009 |
| Neutral Citation | [2009] EWHC 722 (QB) |
| Docket Number | Claim No. 6BS40544 |
| Court | Queen's Bench Division |
| Date | 18 March 2009 |
[2009] EWHC 722 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
BRISTOL DISTRICT REGISTRY
MERCANTILE COURT
His Honour Judge Havelock-Allan Q.C.
Claim No. 6BS40544
Introduction
The claim in this action is to recover a sum of £42,300 which was sent by CHAPS transfer from the claimant's account at Lloyds TSB to the first defendant's account at Abbey National on 8 th March 2006. The claimant says that, through an error made by his secretary in completing the CHAPS transfer form, the money was sent to the wrong person at the wrong bank. The money (save for a very small amount) has gone from the first defendant's account. The last of it was withdrawn on 15 th March 2006, and was handed over by the first defendant to a third party on 28 th March.
Both defendants contend that it would be inequitable to require them to make restitution. Abbey National's pleaded case did not admit that a mistake was made (although this stance changed in the course of the trial). Abbey puts the claimant to proof that the payment was not made for good consideration. If it was a mistaken payment, Abbey argues that its role in the transaction was one of ministerial receipt. It was powerless to return the funds without the consent of the first defendant, Kelly Churcher. Alternatively Abbey National relies upon a defence of change of position. Miss Churcher says that she was an innocent recipient of the money who was hoodwinked by a Mr James Sharkey into paying the money to him. Like Abbey National, she relies upon a defence of change of position.
Background
The claimant, Stephen Jones, is a car dealer trading under the name of The Chelsea Car Company from office premises in Battersea. At the time of the CHAPS transfer to Miss Churcher he employed two people, a mechanic, and a secretary, Miss Annabel Loveday.
Mr Jones sells new and used cars. A large proportion of his new car sales are imported Volkswagen models sourced from VW dealers in the UK and on the continent. He deals principally if not exclusively in Golf GT-TDI models, and since the cars have already been ordered from the manufacturer the range of extras is limited and so is the range of colours. Most of them are either black or silver.
From about 1999 until 2005 Mr Jones obtained most of his supplies from a VW franchisee in the Netherlands. The Dutch dealer lost his franchise in 2005 but before that happened had introduced Mr Jones to an Irish gentleman called Andrew Warnock, who was based in County Wicklow. Mr Warnock appeared to have contacts with other dealers through whom he could secure supplies of VW Golfs. Mr Jones began doing business with Mr Warnock. Between April 2003 and early 2005, he acquired around 80 new VW Golf cars through Mr Warnock from various dealers in the UK or Ireland.
The procedure was informal. Cars were usually supplied from the continent in transporter loads. A car transporter carries 8 vehicles. Mr Jones would not necessarily be the purchaser of all the vehicles on a single transporter. Mr Jones would be invoiced by the UK dealer for the cost of the cars: but on occasion he would pay the dealer before the invoice arrived. Payment was usually made by bank transfer using the CHAPS system. The cars were then delivered to the premises of The Chelsea Car Company in Battersea where Mr Jones' mechanic would do the pre-delivery checks.
Mr Sharkey came on the scene early in 2005. Mr Warnock put Mr Jones in touch with him and gave Mr Jones to understand that he and Mr Sharkey had worked together in the motor business. Mr Sharkey told Mr Jones that he lived in Dublin: but Mr Jones never had an address for Mr Sharkey. He only ever had a mobile phone number and a fax number (which was the same as the fax number for Mr Warnock). In fact Mr Jones' evidence is that he only met Mr Sharkey 3 or 4 times in the course of their association. Nevertheless it was a promising and fruitful association, until the events giving rise to the present action.
Mr Jones began acquiring his cars through Mr Sharkey rather than through Mr Warnock. Mr Sharkey's source of supply was a VW dealer in Dublin. However the invoicing was done through a company called Murway Automotive Sales & Leasing Ltd based in Walsall. Murway was introduced to Mr Jones by Mr Sharkey as being the company to which the Dublin dealer had agreed to supply new VW cars at import prices. It is fairly plain from its address that Murway's premises in Walsall were no more than an office. Mr Jones never visited Murway. His only direct contact with that company was with someone called Tamara, for whom he had a mobile phone number. He dealt with Mr Sharkey, who appeared to be acting as Murway's agent.
The import price of a new VW Golf GT-TDI in 2005 and early 2006 was about £14,300 inclusive of VAT. This was a significant discount on the showroom price of an authorised UK dealer. Mr Sharkey told Mr Jones in 2005 that he could supply through Murway as many as 100 cars. Mr Jones did not commit The Chelsea Car Company to so large a number: but he placed a number of orders with Murway which were successfully delivered. Cars were usually ordered for specific customers. Mr Jones took a deposit from the customer and then told Mr Sharkey what car he wanted to order. Murway required payment before delivery. An invoice would be sent by Murway to The Chelsea Car Company giving the car chassis number, the basic price and VAT. Payment was made by CHAPS transfer from the account of The Chelsea Car Company at Lloyd's TSB to Murway's bank account. Payment was usually made after, but sometimes before, the invoice from Murway was received. Murway had an arrangement with a firm called Harron Transport to collect the cars from Dublin and deliver them on a car transporter to Battersea.
It was Mr Sharkey who gave Mr Jones details of the bank account to which payment to Murway should be made. Until October 2005 it was an account with Barclays. Then it was switched to an account with NatWest. Payments addressed to Murway were made to both accounts without a problem and the cars were duly delivered. Then, in February 2006, Mr Sharkey told Mr Jones that Murway was experiencing banking difficulties and he provided Mr Jones with details of a different bank account. From the moment that change was made, the cars stopped coming.
Mr Jones placed several orders for single vehicles in February 2006. The first order, which was for a VW Golf 2.0 TDI Sportsline car, related to a vehicle which, by chance, had already arrived at Battersea as part of an earlier consignment. The cost was £14,300. When the order was relayed to Mr Sharkey, he sent a text message to Mr Jones asking for payment to be made to an account number 94270991 at Abbey National, The Bridge, Walsall in the name of K. Churcher. This was Miss Churcher's personal bank account, details of which Mr Sharkey had obtained in circumstances I will mention presently. Mr Jones had not yet received an invoice from Murway, but he already had the car: so he made the payment to the Abbey National account by CHAPS transfer on 21 st February. Later he concocted a dummy invoice from Murway to reflect this transaction. It was done in order to satisfy HMRC, who, in October 2006, interviewed Mr Jones in the course of investigating the VAT transactions of The Chelsea Car Company. Mr Jones was subjected to a good deal of cross-examination about the VAT implications of his business, some of it no doubt prompted by the discovery of dummy invoices or "office copy" invoices in his files. I need not concern myself with this aspect of the matter for two reasons. The first is that there is no evidence that Mr Jones or The Chelsea Car Company ever suffered any penalties from HMRC for VAT irregularities. The second is that in general I found Mr Jones to be a truthful witness and nothing untoward in the record-keeping of his business has a direct bearing on the circumstances in which he came to make the erroneous payment which is the subject matter of these proceedings. In any case a genuine invoice from Murway in respect of this particular vehicle was received sometime after 21 st February, although in common with all Murway's other invoices it contained no instructions for payment and therefore gave no clue where the money had gone.
Within days of this order, Mr Jones told Mr Sharkey that he wanted another 5 VW Golfs from Murway. Mr Sharkey replied that, owing to continuing banking difficulties being experienced by Murway, payment for the cars should be made to an account number 06165821 with the Bank of Scotland in the name of Lophius Trading Ltd. Mr Jones assumed that Lophius was in some way connected with Murway. He did not query the instruction and made the payment by CHAPS on 24 th February. The sum paid was £70,500. This was another instance of payment being made before an invoice was received from Murway. Given the unusual payment instructions, one can see with the benefit of hindsight that this should have made Mr Jones cautious about parting with his money without knowing more about Lophius—especially since on this occasion the cars were not yet in his possession: but Mr Jones was not suspicious and was content to make the payment. The sum paid was £1,000 less than the eventually invoiced price of £71,500 inclusive of VAT because Mr Jones agreed to pay £1,000 to Harron Transport for the vehicles to be delivered. Mr Jones' evidence was that he had recently agreed to start paying Harron Transport direct because he was told that Harron Transport had...
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