Mutual Finance Ltd v Davidson
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ORMEROD |
| Judgment Date | 27 November 1962 |
| Judgment citation (vLex) | [1962] EWCA Civ J1127-1 |
| Court | Court of Appeal |
| Date | 27 November 1962 |
[1962] EWCA Civ J1127-1
In The Supreme Court of Judicature
Court of Appeal
Lord Justice Ormerod,
Lord Justice Donovan, and
Lord Justice Pearson
Mr J. G. BURRELL, Q. C. and MR R. G. HAMILTON (instructed by Messrs Field, Roscoe & Co., agents for Messrs Knowles & Wardurton, Widnes) appeared as Counsel on behalf of the Appellant (First Defendant).
J. V. DAVIES (instructed by Messrs Kennedys)appeared as Counsel on behalf of the Respondent(plaintiff).
This appeal must be dismissed. It is an appeal by the First Defendant, Philip Robin Davidson, from adecision of His Honour Judge Leigh given at the St. Helens and Widnes County Court on the 23rd July of this year. The matters in issue arise under a hire-purchase agreement.
The facts of the case are that a hire-purchase agreement was made between the Plaintiffs and the First Defendant on the 1st May 1959- It is interesting to look at that hire-purchase agreement. For my part I am not satisfied that the arithmetic has ever been fully and completely explained to the Court by one party or the other, nor do I think it was fully explained to the learned County Court Judge. But it is probably unnecessary for us to consider figures to that extent in this case. According to the hire-purchase agreement, the cash price of the goods is shown as £303, the hiring charge - which presumably is the interest - is shown as £44. 12s. Od., making a total hire of £347. 12s. Od. Then a sum is shown deducted, described as the "initial payment payable and paid before Agreement signed", £80. That is deducted from the £347. 12s. Od., leaving a "balance of hire", which has been altered and initialled by the parties, which appears to be £267. 12s. Od., payable by 24 monthly instalments of £11.3s. Od. commencing on the 1st June, 1959. Below that the total hire-purchase price of the goods is shown as a sum of £348. 12s. Od. As I say, some of those figures are difficult to reconcile, but it is probably unimportant.
The First Defendant entered into the hire-purchase agreement with the Plaintiffs, and, in a comparatively short time, was in arrear with the payments under it, with the result that, in August, 1960, the Plaintiffs repossessed the car. Is The claim now made is for the arrears and for damages for breach of the terms of the hire-purchase agreement. The defence is a claim for damages and a counterclaim for loss sustained by the First Defendant due to the repossession of the car by the Plaintiffs. The whole issue really is whether in August, 1960, in the circumstances of this case, the Plaintiffs were entitled to repossess the car as they did.
The law is set out in section 1 of the Hire-Purchase Act, 1938, as amended by the Hire-Purchase Act, 1954. If the total hire-purchase price is £300 or more, then the Hirepurchase Acts do not apply, and there is nothing to prevent the hire-purchase company from repossessing the goods comprised in the hire-purchase agreement, should the occasion arise. If, on the other hand, the hire-purchase price is below the sum of £300, then the hire-purchase company cannot repossess or exercise their rights under the hire-purchase agreement if instalments amounting to one-third of the hire-purchase price have been paid, without an application to the Court. In this case the hire-purchase company repossessed the vehicle without any application to the Court, and the whole question is whether the Hire-Purchase Act, 1938, as amended, applied.
The learned Judge has found - and this is a finding of fact - that the actual purchase price of the car itself is £250. The deposit which was stated to be paid on the hirepurchase agreement was £80. The learned Judge found as a fact that the Plaintiffs were wrong about that, and that he should accept the evidence of the Defendants, which was that a deposit of £55 only had been paid. There therefore is a discrepancy of £25, withwhich Mr Davies has sought to deal in his argument. That is a matter as to which I must say something at a later stage. But the real point at issue is that the dealer undertook to negotiate for the Defendant the insurance of the car. It was then arranged that the price of that insurance should be added to the hire-purchase price to be paid by the First Defendant in the instalments which he had contracted to pay. We do know in fact that the insurance premium paid by the dealer for the first twelve months, which was paid in August, 1959, was £38. 15s. Od., and it may very well be that a smaller sum than that was taken into account incalculating the figures payable under the hire-purchaseagreement. It would appear to be a sum of about £33, but that is unimportant because, whether the sum was £33 or £38, if that can properly be added to the hire-purchase prioe, then the sum of £250, together with the hire-purchase charges would amount to more than £300, and the HireHire-Purchase Act would not apply.
The learned Judge has come to the conclusion that the sum allotted for insurance was properly part of the hirepurchase price, and that in those circumstances the Plaintiffs were entitled to a sum of money for arrears and damages. There is no issue on the amount of the damages. But the question we have to decide is whether the insurance premium should be part of the hire-purchase price or whether it is something which has been attached to the hire-purchase price, which would in fact bring that price above £300.
Mr Burrell argues that the definition of "hirepurchase price" in the Hire-Purchase Act relates to goods, that the definition of "goods" relates back to section 62 of the Sale of Goods Act of 1893, and that an insurance premium cannot be regarded as "goods". If an insurance premium cannot be regarded as goods, it cannot be included as part of the hire-purchase price. That, I think, is shortly the way in which Mr Burrell puts it., And he says, the proper way to approach the case is to determine, first of all, what were the goods which the Pirst Defendant agreed to buy, and what was the price at which he agreed to buy them. That has been found by the learned Judge to be a motor-car at the price of £250. If anything is added on to that, such as insurance, then it is something additional, and the real transaction is that the dealer is undertaking to insure a car which has been bought by the Second Defendant, the insurance premiums to be attached so that that may be paid by instalments, and so that the Plaintiffs, the finance company, will advance the money for the payment of the insurance policy. That, I think, isa fair way of putting Mr Burrell's argument.
The case, as I see it, resolves itself into the question which has been posed to Counsel in the course of the argument. If the arrangement between the dealer and the Defendant was that the dealer would sell to the Deiendant a car in respect of which an insurance policy had been taken out on behalf of the Defendant, and it had been agreed that the sum paid in respect of that insurance premium should be added to the purchase price of the car, then, in those circumstances, it seems to me that the premium would become a part of the hirepurchase price. To put it in other words - and possibly put it more shortly - the price of the car would be increased by the amount of the premium which had to be paid by the dealer. If, on the other hand, the arrangement was simply that the Defendant would buy a car from the dealer at an agreed price, and then the dealer agreed to negotiate insurance and add that to the hire-purchase price, the insurance premium would not form part of the hire-purchase price.
The question which we have to consider - and I think it is a difficult question - is: what was the actual transaction which took place here? It is necessary to look brieflat such parts of the evidence as related to this part of the transaction. We have, first of all, in the evidence for the Plaintiffs, a gentleman of the name of Mr McKenzie, the Managing Director of the firm of Woolton Motors, who carried out the transaction. He said; "I signed it" - "it" being the proposal form or the hire-purchase agreement - "as a witness and filled in the various facts and figures. Cash price then shown. There was something about insurance. The £303 included £33 for insurance. Nothing else except vehicle and insurance". He then went on to say that the"£80 initial payment was made". That appears not to have been accepted, because the learned Judge accepted the First Defendant'sevidence that the initial payment was £55, £50 by cheque and £5 in cash. In cross-examination Mr-McKenzie said: "I possibly told him the £303 included insurance. More than probable that £303 represented car plus insurance". He said there was no mention of insurance in the document that he read in cross-examination. Then he said; "I would not hesitate to add insurance on to cash price. I would tell the Finance Company. I do not know how or when I told the Finance Company. I might possibly write or phone. There is nothing on document to suggest insurance. I think it most unlikely that I told him cash price £250". The learned Judge found that in fact he did. He found that in fact they had agreed the cash price of £250. Then, on page 3 of the evidence, a gentleman whose name I cannot read on the photostat copy said that he was a Collecting Manager of the Mutual Finance Company whose general practice was to add insurance on to the cash price of the car, and that the hire-purchase charges would be on the total amount advanced by the Mutual Finance Company irrespective of whether it included insurance or not. He went on later to say that it would only be he - that is the Local IJanager - or the chief clerk who would know if the insurance was included, but the general practice was to include insurance. The Defendant himself in his evidence said: "When I...
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