Log Book Loans Ltd & Nine Regions Ltd GC 1048 2011
| Jurisdiction | UK Non-devolved |
| Judge | Three-Judge Panel / Tribunal of Commissioners |
| Judgment Date | 13 July 2011 |
| Neutral Citation | 2011 UKUT 280 AAC |
| Subject Matter | Consumer credit |
| Respondent | OFT |
| Court | Upper Tribunal (Administrative Appeals Chamber) |
| Docket Number | GC 1048 2011 |
| Appellant | Log Book Loans Ltd & Nine Regions Ltd |
[2012] AACR 12
(Log Book Loans Ltd v Office of Fair Trading
[2011] UKUT 280 (AAC))
Judge Howell QC GC/1048/2011
Judge Levenson
Judge Turnbull
13 July 2011
Consumer credit licensing – validity of bill of sale as security for loan – whether void if borrower’s signature witnessed by employee of the lending company who arranges the transaction on behalf of the lender
The appellant companies lent money on the security of second hand cars. The security document was in the form of a bill of sale intended to comply with the Bills of Sale (1878) Amendment Act 1882 (the1882 Act). Section 10 of that Act provides that the execution of a bill of sale by the grantor (ie borrower) “shall be attested by one or more credible witnesses, not being a party or parties thereto”. By section 8 a bill which is not duly attested is void. The appellants were entitled to carry on their business pending an appeal to the First-tier Tribunal against the withdrawal of their consumer credit licence by the Office of Fair Trading (OFT). The appellants’ standard practice was that the borrower’s signature of the bill of sale was witnessed by the employee (referred to as “underwriter”) of the appellants who had arranged the entire transaction with the borrower, and was the only representative of the lending company with whom the borrower dealt. The First-tier Tribunal gave a decision on five preliminary issues which had been framed in relation to the appeal, one of which was whether the manner of attestation rendered the bills void. The appellants contended that their practice was in accordance with the well established law that “although a party cannot attest a bill of sale, his agent or manager may do so”: Peace v Brookes [1895] 2 QB 451. However the First-tier Tribunal held that bills were void because the underwriter’s attestation must be attributed to the lending company under the principles of corporate attribution expounded in Meridian Global Funds Management Asia Limited v Securities Commission [1995] 2 AC 500. The First-tier Tribunal directions for the hearing of the preliminary issues had incorporated an agreed direction that there should be no appeal against the decision of those issues until after the decision of the substantive appeal. However, the appellants contended that an unforeseen consequence of the decision on the attestation issue was that they became unable to seize and sell at auction the cars which they had taken as security, causing them substantial financial loss, and they therefore sought permission to appeal at that stage, contrary to the agreed direction, with a view to the appeal being heard and decided as a matter of urgency. The OFT opposed the application. An Upper Tribunal judge directed a rolled up hearing of the permission application and the appeal, which was heard by a three-judge panel.
Held, unanimously giving permission and, by a majority, allowing the appeal, that:
- while the appeal direction was plainly an important matter to take into account in deciding how to exercise the Upper Tribunal’s discretion, there were special and unusual features of the case sufficient to render it in the interests of justice to give permission to appeal: the appeal on the point raised a seriously arguable point of law, and the point was material to the substantive case and was a matter of considerable financial importance to the appellants (paragraphs 18 to 24)
- the clear balance of advantage, in the particular circumstances of the case and as the best way of furthering rather than frustrating the overriding objective of getting the substantive proceedings determined justly, expeditiously and with finality, lay in granting permission and determining the appeal on the attestation issue (paragraph 25)
- a company cannot in any meaningful sense witness the execution of a document, as attestation involves the witness being physically present and observing the execution, with a view to subsequently giving evidence as to the execution if necessary. The reasoning in Peace v Brookes (and not merely the outcome) is inconsistent with both a contention that section 10 requires that attestation by a party’s agent be attributed to that party and a contention that section 10 prohibits attestation not only by a party but also by an agent (paragraph 78 to 84);
- applying the analysis in Meridian, the question is ultimately one of interpretation or construction of the relevant substantive rule. If a correct interpretation or construction of section 10 of the 1882 Act disclosed a sufficient intention that, for the purposes of the requirement that attestation must not be by a party to the bill of sale, there were circumstances in which attestation by an individual should be attributed to a grantee of the bill of sale which is a company, it would be possible, indeed necessary, to give effect to that intention, even in cases where wrongful conduct by a company is not in issue (paragraphs 85 to 90);
- section 10 renders the bill of sale void even as between the original parties to it, thus depriving the grantee of his security, and that is a drastic result, which should not follow unless it were sufficiently clear that it was intended by Parliament: Hill v Kirkwood (1880) 28 WR 358, CA, followed. The notion that an individual’s attestation could be attributed to a company, however closely connected with it that individual may be, is an unnatural and surprising one and not something which one would expect to have been in the contemplation of Parliament unless a clear intention to that effect is displayed (paragraph 92(1) and (2));
- the natural and obvious way of achieving the result that a person acting for a corporate party could not validly attest would not have been by way of an (implied) “special rule of attribution” that the individual’s attestation should be attributed to the company, but simply by expressly providing that the attesting witness could not be either a party or a person acting for that party in the transaction, but Parliament, apparently deliberately, did not so provide. If such a prohibition had been considered appropriate in the case of a corporate grantee, it would also have been considered appropriate in the case of an individual grantee or a partnership, but Peace v Brookes is clear, binding and soundly reasoned authority that there is no such prohibition (paragraph 92(5));
- the provision in section 10 that the attesting witness cannot be a party simply has no application to companies and there was no reason to conclude that Parliament cannot have intended that result, as even a requirement for attestation by an entirely independent witness would provide only limited protection to a grantor (paragraph 92(6));
- (per Judge Levenson, dissenting) a wide variety of acts by those acting for a company can be attributed to a company, and there was no reason why, in the context of witnessing commercial documents, such acts could not include this type of attestation. That would not prevent the natural person who witnessed the bill of behalf of the company from giving evidence that he or she had done so, and it is simply irrelevant what one natural person can or cannot do on behalf of a another natural person, because a company is not a natural person. The decision in Peace was not binding in the present case, as the issue of attribution did not arise in that case (paragraphs 96 to 97).
DECISION OF THE UPPER TRIBUNAL
(ADMINISTRATIVE APPEALS CHAMBER)
We unanimously give permission to appeal to the Upper Tribunal against that part of a decision of a First-tier Tribunal, made on 21 December 2010, which dealt with what has been called “the Attestation Issue”. By a majority (Judges Howell and Turnbull, Judge Levenson dissenting) we allow the appeal, set aside the First-tier Tribunal’s decision in respect of the Attestation Issue and re-make the First-tier Tribunal’s decision by answering that issue in the negative: that is, a bill of sale is not rendered void by the circumstances posited.
REASONS
JUDGE HOWELL QC AND JUDGE TURNBULL:
A. Introduction and background
1. On 22 and 23 June 2011 we held a “rolled-up” hearing of the application for permission to appeal and of the appeal itself, should permission be granted. Mr Michael Green QC, instructed by Wismayers, appeared on behalf of the appellants, and Mr Richard Snowden QC, instructed by the Solicitor to the Office of Fair Trading (the OFT) appeared on behalf of the OFT.
2. At the end of the hearing the parties consented under rule 22(2) of the Tribunal Procedure (Upper Tribunal) Rules 2008 (SI 2008/2698) (the 2008 Rules) to our proceeding to decide the appeal itself without further submissions, should we give permission.
3. The Attestation Issue is one of five preliminary issues which were determined by the First-tier Tribunal in relation to the...
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