VFS FINANCIAL SERVICES (UK) Ltd v (1) EURO AUCTIONS (UK) Ltd (2) HENNELLYS UTILTIES Ltd (3) EURO AUCTIONS GmbH (4) HENNELLYS Ltd
| Jurisdiction | England & Wales |
| Judge | HIS HONOUR JUDGE RICHARD SEYMOUR Q.C. |
| Judgment Date | 27 June 2007 |
| Neutral Citation | [2007] EWHC 1492 (QB) |
| Docket Number | Case No: HQ06X00689 |
| Date | 27 June 2007 |
| Court | Queen's Bench Division |
[2007] EWHC 1492 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN's BENCH DIVISION
His Honour Judge Richard Seymour Q.C.
(Sitting as a Judge of the High Court)
Case No: HQ06X00689
Hugh Jackson (instructed by Wright Hassall LLP) for the Claimant
Peter Griffiths (instructed by Edwin Coe LLP) for the First and Third Defendants
Shantanu Majumdar (instructed by Merriman White) for the Fourth Defendant
The Second Defendant did not appear and was not represented
Hearing dates: 22, 23, 24, 25 May and 12 June 2007
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
The claimant, VFS Financial Services (UK) Ltd. (“VFS”), carries on business as a finance company. It is closely associated with the Swedish vehicle manufacturer Volvo. It seems that in origin the initials VFS indicated Volvo Financial Services.
The Volvo company manufactures, amongst other things, items of construction plant. Such items include large articulated dump trucks. In 2004 part of the range of construction plant manufactured and sold by Volvo comprised articulated dump trucks designated by the model A30D. In this judgment I shall refer to that model of dump truck as a “Truck”.
The second defendant in this action, Hennelly's Utilities Ltd. (“Utilities”), formerly carried on business as a rail, construction and utilities contractor. For the purpose of its business Utilities had need of construction plant, including articulated dump trucks.
In about April 2004 Utilities was interested in acquiring three brand new Trucks. The sale price at the time of a new Truck, if purchased from Volvo Construction Equipment Ltd. in England, was £129,000, net of Value Added Tax. However, Utilities was interested in acquiring the three Trucks which it wanted on hire purchase terms. Consequently, contact was made between Utilities and VFS. VFS was prepared to enter into a hire purchase agreement with Utilities in relation to three Trucks on terms that a total amount of £508,242.99 was paid by Utilities to it over a period of four years. Of that sum, £48,375 was payable as a deposit and £67,725 was payable as Value Added Tax. After the initial payments, the balance was payable by 46 monthly instalments of £8,141.11. The total sum which VFS wanted to be paid if it entered into a hire purchase agreement with Utilities included an option to purchase fee, inclusive of Value Added Tax, of £264.38.
By this stage three specific Trucks had been identified as those which Utilities wished to acquire. The respective serial numbers of these Trucks were 12196 (“the First Truck”), 12200 (“the Second Truck”) and 12202 (“the Third Truck”). In this judgment I shall refer to the three Trucks collectively as “the Utilities Trucks”.
In due course Utilities entered into a hire purchase agreement dated 27 May 2004 (“the Hire Purchase Agreement”) with VFS on the financial terms required by VFS, which I have already set out. The Hire Purchase Agreement included a number of other provisions which are material to the issues in this action.
The first of those other provisions was contained in paragraph 7 of the Standard Terms and Conditions – Hire Purchase Agreement at that time used by VFS (“the Standard Terms”). The material parts of paragraph 7 were these:—
“ENDING THE AGREEMENT EARLY
(a) We may terminate the hiring of the Goods under this Agreement if:-
(i) You do not pay any Payment or other amount under the Agreement on time or keep to the terms of or perform your obligations under this Agreement; or
(ii) …
(iii) Being a company, you permit a winding up petition to be presented against you or pass a resolution for your winding up or if you have a petition for an administration order presented; or
…
(viii) You cease, or threaten to cease to carry on all or a material part of your business;
…
(b) In any of the above events, you will no longer have possession of the Goods with our consent. You will have to pay us the sums set out below.
(c) Following termination of the hiring of the Goods or this Agreement, under sub-paragraph (b) above, you must immediately pay to us:-
(i) all arrears of Payments and other amounts you owe us together with any interest plus
(ii) any costs that we incur in finding and recovering possession of the Goods and putting the Goods in good repair and condition, fair wear and tear occasioned in the use of the Goods in accordance with this Agreement excepted; plus
(iii) our loss under the Agreement as set out in the section following these Standard Terms and Conditions relating to your Agreement type.
(iv) an amount calculated to ensure that we maintain the same after tax rate of return from the purchase of the Goods and its hiring under this Agreement as we would have obtained but for the early termination or repudiation of the Agreement.”
Apart from the Standard Terms there was also incorporated into the Hire Purchase Agreement the Hire Purchase Fixed Rate Terms and Conditions (“the Fixed Rate Terms”) used by VFS at the date of the Hire Purchase Agreement. The Fixed Rate Terms included these provisions:—
“A OPTION TO BUY
If you comply with all the terms of the Agreement and have paid all amounts due, you will have the right to buy the Goods for the Option to Purchase Fee. Until you buy the Goods, we remain the owners and you will not do anything, which might lead anyone to believe that you are the owner.
B OUR LOSS UNDER THE AGREEMENT
If the Agreement ends early, you must pay our losses. You agree that our losses will be equal to all amounts which you agreed to pay from the date the Agreement actually ends to the date on which the Agreement would have ended if it had not ended earlier plus:
(a) all arrears of Payments and other amounts you owe us together with any interest; plus
(b) an amount calculated to ensure that we maintain the same after tax rate of return from the purchase of the Goods and their hiring under this Agreement as we would have obtained but for the early termination or repudiation of the Agreement; less
(c) the net sale proceeds arising from the sale of the Goods, (if we are unable to sell the Goods we will deduct the Goods value, as determined by an independent assessor which we will nominate), less;
(d) a refund of finance charges as we consider appropriate.”
By paragraph 11(c) of the Standard Terms it was provided, so far as is presently material, that:—
“We have the right to transfer the benefit of the Agreement and/or ownership of the Goods to someone else but you may not.”
For present purposes the relevant part of paragraph 11(d) of the Standard Terms was to this effect:—
“If we write to you we will write to your last known address. It is assumed that the other party receives any letter sent by first class post 48 hours after posting.”
It appears that, after the making of the Hire Purchase Agreement, Utilities obtained physical possession of the Utilities Trucks and operated them for the purposes of its business. Evidence was put before me at the trial which indicated that Utilities was, for a period in May and June 2005, in arrears with the payments due under the Hire Purchase Agreement, but that is not material to any issue which I have to decide.
On 16 December 2005 a company was incorporated in England and Wales with the company number 5655983 and the name Longcharm Ltd. That company changed its name by special resolution to Hennellys Ltd., the fourth defendant, and a Certificate of Incorporation on Change of Name was issued in respect of that change by the Registrar of Companies on 25 January 2006.
Utilities ceased to carry on its business, it would seem, on or about 17 January 2006, upon which date it was placed in administration by order of the Companies Court on the petition of the directors of Utilities. Mr. Paul Ellison and Mr. Gareth Roberts (to whom I shall refer in this judgment collectively as “the Administrators”) were appointed administrators of Utilities.
By paragraph 7(a)(viii) of the Standard Terms the effect of Utilities ceasing to carry on business was that it was no longer in possession of the Utilities Trucks with the consent of VFS. However, although at that stage VFS also had the right to terminate the Hire Purchase Agreement, the Hire Purchase Agreement in fact continued in existence until VFS elected to exercise that right.
An agreement (“the Sale Agreement”) dated 20 January 2006 was made between (1) Utilities, acting by the Administrators, (2) the Administrators and (3) Longcharm Ltd. by which, in clause 2.1, Utilities, described in the Sale Agreement as “the Vendor”, agreed to sell to Longcharm Ltd., described in the Sale Agreement as “the Purchaser”, “such right title and interest as the Vendor may have in the Business and the Assets” of Utilities. The expression “the Assets” was defined in clause 1.1 of the Sale Agreement as including “the Contracts”, and that latter expression was there defined as meaning “all contracts entered into by the Vendor”. Consequently by the Sale Agreement Utilities agreed to sell to Longcharm Ltd. such right title and interest as it had in the Hire Purchase Agreement.
However, the assets sold by the Sale Agreement did not expressly include the Utilities Trucks as such, separate from the benefit of the Hire Purchase Agreement. By clause 2.3.7 of the Sale Agreement there was expressly excluded from the sale what were described as “the Third Party...
To continue reading
Request your trial