Ostensible Ownership and Motor Vehicle Financing in England: A Dilemma for Legal Reform?

Published date01 April 1994
Date01 April 1994
DOIhttps://doi.org/10.1108/eb025648
Pages211-221
AuthorIwan Davies
Subject MatterAccounting & finance
Ostensible Ownership and Motor Vehicle
Financing in England: A Dilemma for Legal
Reform?
Iwan Davies
Iwan Davies LLM (Cantab) LLM PhD
(Wales)
is a Senior Lecturer in Commercial Law at
the Cardiff Law School, University of
Wales. He has written and lectured
widely in the field of commercial law with
special emphasis upon retention of title.
He is currently a consultant to the
Finance and Leasing Association on
perfection of ownership mechanisms in
personalty.
ABSTRACT
This paper focuses upon the common law
and developed legislative position to the
ostensible ownership problem whereby a
non-owner in possession of a motor vehicle
purports to pass a good title in favour of an
innocent purchaser. It is argued that the
traditional conflict of principle between the
nemo dat doctrine and the civilian posses-
sion vaut titre approach cannot provide a
satisfactory ex post solution to the osten-
sible ownership problems that arise in the
motor vehicle and more general asset
finance context. What is advocated is an ex
ante solution, namely, a notification
mechanism which could resolve the current
legal dilemma of determining where the loss
should
fall.
In recent years there have been signifi-
cant innovations in the financing bail-
ment mechanisms available for motor
vehicles in that they have tended to-
wards the funding of the depreciation
rather than the ultimate acquisition of
the ownership of the vehicle in ques-
tion.1 These financing techniques have
highlighted an enduring dilemma in the
law or personal property which is that of
ostensible ownership, the separation of
possession of the goods with that of the
right of
ownership.2
Motor vehicles have
inherent characteristics which accentu-
ate the ostensible ownership problem in
so far as it expresses itself in the legal
conflict of interest between the owner
and the purchaser. First, they are highly
mobile, easy to transport and, from a
thief's perspective, easy to steal; secondly,
vehicles are relatively accessible in the
sense that they can be left unattended
for many hours on public streets; thirdly,
there is an established market for
secondhand cars; fourthly, motor
vehicles are often the most valuable
chattels in normal everyday use by ordi-
nary members of the public and are the
object of theft or fraud.
The recent DTI Consultation Paper
on
Transer
of
Title3
has recommended the
extension of the entrustment principle
211

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