Moorgate Mercantile Company Ltd v Twitchings

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
Judgment Date18 Jun 1975
Judgment citation (vLex)[1975] EWCA Civ J0618-1

[1975] EWCA Civ J0618-1

In The Supreme Court of Judicature

Court of Appeal

Appeal by defendant from judgment of His Honour Judge Dow given on 22nd March 1974 at Clerkenwell County Court.


The Master of The Rolls (Lord Denning),

Lord Justice Browne and

Lord Justice Geoffrey Lane.

Moorgate Mercantile Company Ltd.
A. Twitchincs

Mr. A. RANKIN, Q. C., and Mr. P. TWIGG (instructed by Messrs. Alsop Stevens Batesons & Co.) appeared on behalf of the Appellant Defendant.

Mr. K. CAMERON (instructed by Messrs. D. H. P. Levy & Co.) appeared on behalf of the Respondent Plaintiffs.




We are here concerned with the role of the organisation called Hire-Purchase Information. Ever since the early days of hire purchase, finance companies have been the victims of fraud of a particular kind. After paying one or two instalments, the customer sells the article for cash to an innocent purchaser — without disclosing that it is subject to a hire-purchase agreement. The customer disappears leaving many instalments unpaid. The Finance Company, after much trouble, find the article and retake it if they can. Or they may sue the purchaser or any subsequent purchaser for conversion. We have had very many cases in this Court of frauds of that kind and with many variants raising all sorts of points. In recent times statutes have been passed which have done a great deal to protect an innocent purchaser when he is a private person: but a trade purchaser is still subject to all the rigours of the law of conversion, no matter how innocent he may have been.


In order to combat such frauds, the major finance companies have set up an organisation to provide information to dealers and auctioneers. It is called Hire-purchase Information Ltd. It operates in this way; Whenever a finance company lets out a car on hire purchase, it immediately sends particulars of the transaction to H. P. I. It sends them on a white card. The finance company keeps a copy for itself on a pink card. H. P. I. receive all the white cards from the various finance companies and keep them in one big file. Now suppose a seller comes to a dealer with a car for sale. The dealer wants to know if the car really belongs to the seller or if it belongs to a finance company who has let it on hire purchase. The dealer telephones H. P. I. and gives them theregistration number of the car. Let us suppose it is OTR 740G. A lady at H. P. I. goes to the file and looks for that number. The file is specially constructed so that she can quickly find the white card relating to that number. If there is a card for that number, it will contain particulars showing that the car is let on hire-purchase by a named finance company. She returns to the telephone and tells the dealer that the car is on hire purchase. If there is no card with that number, she tells the dealer that the car is not recorded as being on hire purchase. In confirmation, she makes out a slip with the information and posts it to the dealer. With that information the dealer can decide whether or not to buy the car from the seller. If he is told it is on hire purchase, he will, of course, refuse to buy it, unless the seller pays off the settlement figure, so as to give a good title. If he is told that no hire-purchase agreement is recorded, he will buy the car on the footing that the seller is himself the owner.


The system works exceedingly well, because all the major finance companies are members of H. P. I. and keep H. P. I. informed of all their hire-purchase agreements. They register them in their own interests. But the system is not completely fool-proof. There are a few minor finance companies who are not members of H. P. I. and do not register their hire-purchase agreements. If one of those minor companies has let a car on hire purchase, it will not appear on the records of H. P. I. These are, however, very few. About 98% of all hire-purchase agreement, are registered with H. P. I. There are some 4½ million motor vehicles registered with H. P. I. So many, indeed, that motor dealers habitually act on the information given by H. P. I. They regard the records of H. P. I. as good enough for all practical purposes. The result is that, if a cir is registered with H. P. I., it is virtually impossible for a hirer to sell it to a dealer in fraud of the finance company.


This is for the benefit of the finance company, so that they do not lose their title in the car. It is for the benefit of the dealers so that they do not buy a car and afterwards find that it belongs to a finance company.


It is not only dealers and auctioneers who are benefited by H. P. I. The information is available also to the police, and to the general public through the A. A., the R. A. C., and Citizens Advice Bureau — free of charge. It is a public service. It is financed by subscriptions by the finance companies and by fees charged for each transaction to be recorded by finance companies, and for each inquiry made by dealers and auctioneers. H. P. I. do, however, cover themselves. Every dealer signs an application form and receives a book of vouchers containing this term:


"It is a condition precedent to this book of vouchers being issued and information being from time to time passed by H. P. Information Ltd. to the registered holder thereof, that H. P. Information Ltd. is to be under no legal liability to that holder or any third party in respect of the inaccuracy or incompleteness of any information so passed, whether such inaccuracy or incompleteness be the result of neglect or default on the part of H. P. Information Ltd. or the person or company effecting the relevant registration with H. P. Information Ltd."


They also issue a brochure in which they say:


"H. P. Information Ltd. does not accept liability for any action arising out of any information".




Now for the facts of this case. In July 1971, a Mr. McLorg bought a Ford Lotus Cortina from a dealer in Crouch End. He did nothave the cash to pay for it. So he got it on hire-purchase terms. It was done through a finance company — Moorgate Mercantile Co. Ltd. — in the usual way. The dealer sold the cay to the Finance Company, and they let it to Mr. McLorg on hire-purchase. The finance company did not see the car. They only did paper work. In the result, however, the finance company, the Moorgate Mercantile Co. Ltd., became the owners of the car. They paid the dealer for it and let it out to Mr. McLorg. The hire-purchase agreement was in writing, dated 26th July 1971. The car was described as a Ford Lotus Cortina registered number O. T. R.740 G. Mr. McLorg paid cash of £320 and the balance of £605 was payable by 24 monthly instalments of £25.24 a month.


Moorgate Mercantile Co. Ltd. were members of Hire-Purchase Information. So they immediately took steps to register the car with H. P. I., notifying them that the car belonged to them and was subject to a hire-purchase agreement. In order to register it, a lady on the staff of Moorgate Mercantile prepared a white card containing these Particulars:


Make of Vehicle: Ford Lotus Cortina


Registered Number: O. T. R. 740 G.


Chassis Number: Ba 21 HK 41430


H/P Company's Transaction Reference Number: 04-40140


Date of Agreement: 26th July, 1971


Period: 24 Months


Name of Hire-purchase Co. Moorgate Mercantile Co. Ltd.


These particulars were transmitted by a piece of carbon paper on to a pink card underneath.


The lady of Moorgate Mercantile then put these cards into a postal tray. They were taken (with others) to the postal department of Moorgate Mercantile. One of the postal clerks ought then to haveput all the white cards into an envelope for posting to H. P. I.: and to put all the pink cards together to be taken to the Moorgate Company's own collection department.


If everything had been done properly, the white card should have been posted and reached H. P. I. the next day. H. P. I. would then have filed it in their special filing system so as to enable a car to be checked quickly by its registration number. Thus a person could soon look up OTR by going to the "O's, then the "O. T.'s, and then the "O. T. R.'s. But everything was not done properly. Some mistake was made somewhere along the line. The white card never got into the file at H. P. I.


Returning now to Mr. McLorg, he took away the cir on 26th July, 1971, but he did not pay any of the instalments for August, September or October. Then, on 22nd November 1971, he went to a garage at Southgate which was run by a dealer — a Mr. Alfred Twitchings — with his son Keith. Mr. McLorg took the Ford Cortina OTR 740 G to the garage, and said he wanted to sell it. He saw the son, who asked Mr. McLorg is he owed any money to any hire-purchase company. Mr. McLorg said "No. I bought it through a newspaper advertisement". Keith said that he would have to make further enquiries and he asked Mr. McLorg to return later that day.


Keith then telephoned to H. P. I. and asked whether there was any hire-purchase agreement registered or recorded with H. P. I. relating to this car OTR 740 G. The clerk at H. P. I. went and looked up the records and then come back and told Keith: "We have no hire-purchase agreement recorded with us". The clerk then sent a slip by post to Mr. Twitchings with those words: "According to the information contained in our records the vehicle mentioned overleaf (OTR 740 G) is not recorded as the subject of a hire-purchase agreement or of aCredit-sale agreement.


For Hire Purchase Information Ltd.


22nd November, 1971".


On getting this information, Keith Twitchings believed Mr. McLorg was the owner of the car and that it was not encumbered by any hire-purchase agreement. So he agreed to buy it and paid Mr. McLorg £525 for it. Soon afterwards he re-sold it to...

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