Kulkarni v Manor Credit (Davenham) Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Rix,Lord Justice Wilson,Sir Scott Baker |
| Judgment Date | 11 February 2010 |
| Neutral Citation | [2010] EWCA Civ 69 |
| Docket Number | Case No: B2/2009/1131 |
| Court | Court of Appeal (Civil Division) |
| Date | 11 February 2010 |
[2010] EWCA Civ 69
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COUNTY COURT AT CARDIFF
MR RECORDER P. HARTLEY-DAVIES
Before : Lord Justice Rix
Lord Justice Wilson
and
Sir Scott Baker
Case No: B2/2009/1131
8NP02415
Mr Christopher Purchas QC and Mr Nicklaus Thomas-Symonds (instructed by Hornby Baker Jones & Wood) for the Appellant
Mr James Ross (instructed by Walker Morris Solicitors) for the Respondent
Hearing dates : Tuesday 1 st December 2009
Lord Justice Rix :
The question in this appeal is whether the appellant, Dr Rohit Kulkarni, can bring himself within section 27 of the Hire Purchase Act 1964 (the “1964 Act”) which provides a rare exception to the general principle of English law that no one can transfer a better title than he possesses (nemo dat quod non habet). The judge at trial, Mr Recorder Hartley-Davies, to his clearly expressed regret, considered that Dr Kulkarni could not.
Dr Kulkarni, a consultant orthopaedic surgeon, wanted to purchase a new Mercedes CLK cabriolet motorcar. Unfortunately, he placed his order with a company which committed the fraud from which one of the two innocent parties to this appeal must suffer. That company was known as Gwent Fleet Management Limited, now in liquidation (“Gwent”). It has played no part in these proceedings. Dr Kulkarni ordered the car to certain specifications from Gwent at the end of February 2008. The sale contract is recorded in a confirmation of order dated 3 March 2008. The price agreed was £38,950 and had already been paid in full by that date, as the document records. Delivery was stated to be March 2008.
Gwent did not own such a car at the time, but claimed to be able to source it at a discounted price. On 11 March 2008 the respondents to this appeal, Manor Credit (Davenham) Limited (“Manor Credit”), a finance company, bought from Mercedes-Benz of Worcester a Mercedes CLK 280 meeting the agreed specifications. Mercedes-Benz's invoice refers to a tax point date and delivery date of 11 March 2008. The invoice is addressed to Manor Credit, but states that delivery is to be made to Gwent. The total price of the invoice is £40,225.63, due from Manor Credit. The invoice refers to the engine and chassis numbers of the vehicle and also to a registration number VK08 EVF, with a registration date of 10 March 2008.
On the same day as the invoice, 11 March 2008, Dr Kulkarni received by e-mail a cover note from his insurers or insurance broker (the cover note is not before the court) confirming motor insurance cover for the new car. That e-mailed cover note was sent to Gwent as well as to Dr Kulkarni. Dr Kulkarni had been telephoning Gwent about delivery and at some time obtained from Gwent the registration number of the Mercedes, which he wrote down on his copy of Gwent's confirmation of order. The judge records that Dr Kulkarni thought that the registration number was provided to him on 8 March but made no precise finding about that. For myself, I would infer that that was more likely to have occurred on 11 March itself, for Dr Kulkarni says in his witness statement that he arranged the cover on the same day as learning of the registration number; but it probably does not matter. The judge also made no finding as to the date from which the insurance was to run. Dr Kulkarni's witness statement said that he arranged insurance “to enable me to drive” the car. I would infer therefore that the insurance had been arranged to begin not immediately, but from the expected date of delivery of the car.
It is not entirely clear when this car came into the hands of Gwent and the judgment does not clarify that matter. However, on 13 March Manor Credit entered into a Master Assignment agreement with Gwent, pursuant to which it was agreed that Manor Credit would provide vehicles to Gwent on hire or hire purchase terms on the understanding that those vehicles would then be provided to Gwent's customers on sub-hire terms. On 14 March Manor Credit and Gwent entered into a hire purchase agreement for a period of three years in relation to the Mercedes VK08 EVF. That agreement stated the cash price as £40,225.63 and provided for a first payment of £5,000 payable on signing that day, followed by monthly instalments concluding on 14 March 2011.
Thus as of 14 March 2008, Manor Credit was the owner of the car, having paid Mercedes-Benz, as I would infer, on that day, and Gwent merely its lessee. Gwent at no time owned the car, which was sold by Mercedes-Benz directly to Manor Credit.
In that state of affairs, Gwent delivered the car to Dr Kulkarni at his home at 8.30 pm on Friday 14 March. At that time it had affixed to it its registration plates, but it is not known precisely when those plates were put on. It might have been inferred from the terms of the Mercedes-Benz invoice that the plates were already attached to the car on delivery to Gwent, but the judge did not find that that was so. On the contrary, he went out of his way to make a finding that the car was in a deliverable state under the contract of sale to Dr Kulkarni “without having a number plate affixed to it”.
At latest at the time of that delivery to Dr Kulkarni Gwent would have sold or purported to have sold the car to Dr Kulkarni by apparently transferring property in it to him. In fact it did not then own the car and so (subject at any rate to the operation of section 27 of the 1964 Act) was at that time at latest in breach of its implied promise under its contract with Dr Kulkarni that at the time of sale it had a right to sell the car (section 12(1) of the Sale of Goods Act 1979). That implied promise was a condition of the contract (section 12(3)). I shall refer to that Act as the SGA 1979.
I say “at that time at latest” because, if under its contract of sale with Dr Kulkarni the time for the passing of property had come at some earlier stage in these events, for instance at the time when Dr Kulkarni learned of the registration number of the car on, as I infer, 11 March, then the sale might have been effected at that time, and if so Gwent would already have been in breach of its section 12(1) obligation at that time. This is because section 2 of the 1979 Act distinguishes between a sale and a mere agreement to sell. An agreement to sell is a contract of sale under which the transfer of the property in the goods is to take place at a future time or subject to some condition later to be fulfilled. Such an agreement matures into a “sale” when that time elapses or that condition is fulfilled. Thus a “contract of sale” may amount to either a sale or an agreement to sell: it is a sale where under the contract the property is transferred there and then; otherwise the contract of sale is called an agreement to sell. Section 12(1) only requires a seller to have the right to sell “in the case of a sale”: in the case of a mere agreement to sell he promises only that he will have such a right “at the time when the property is to pass”. That reflects a completely standard way of the world. Sellers and buyers are for ever agreeing to sell and buy what sellers at the time of agreement do not then own, for the goods in question have to be fabricated or sourced and acquired before the time when property is to pass.
The judge, however, found that the property in the car had been intended to pass to Dr Kulkarni not at the time of delivery but at the earlier time when he assented to its appropriation to the contract on learning of the registration number and insuring it, at latest on 11 March. He considered that this question was settled by the application of a prima facie rule for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer, viz the rule found as rule 5(1) in section 18 of the SGA 1979. That rule, which applies, unless a different intention appears, where (as in this case) there is a contract for the sale of unascertained or future goods by description, states (inter alia) that property passes when goods of the contractual description, in a deliverable state, are unconditionally appropriated to the contract by the seller with the assent, express or implied, of the buyer. The judge (at para 17 of his judgment) put it as follows:
“Once the identity of the vehicle had been obtained by obtaining a number plate, or rather a registration number of the vehicle, because that must refer to a specific vehicle, then those goods are unconditionally appropriated to the contract, and it is done by the seller with the implied assent of the buyer. At the very latest the buyer assents to that by insuring the vehicle on 11 th March…Once that vehicle had been identified in that way, once the claimant had insured that specific vehicle, the goods were no longer unascertained goods; they were ascertained goods and they were in a deliverable state.”
What is the importance of trying to establish the exact moment when property was intended to pass under Dr Kulkarni's contract with Gwent? The significance lies in the terms of the Hire Purchase Act 1964 (the “1964 Act”), on which Dr Kulkarni relies to provide him with title to the car in order to resist what would otherwise be Manor Credit's better rights as its owner. In due course, when Gwent's fraud had come to the attention of Manor Credit, it repossessed the Mercedes from Dr Kulkarni's home on 6 July 2008. It later sold it for £24,000. However, Dr Kulkarni claims against Manor Credit in conversion, relying on a...
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