Willis (R H.) and Son v British Car Auctions Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ROSKILL,LORD JUSTICE BROWNE |
| Judgment Date | 13 January 1978 |
| Judgment citation (vLex) | [1978] EWCA Civ J0113-1 |
| Docket Number | Plaint No. 73 51383 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 January 1978 |
[1978] EWCA Civ J0113-1
The Mastser of the Rolls (Lord Denning)
Lord Justice Roskill and
Lord Justice Browne
In The Supreme Court of Judicature
Court of Appeal
On Appeal from the Aldershot & Farnham County Court
(His Honour Judge Sheldon)
MR. J. FULTHORPE (instructed by Messrs. Hepherd, Winstanley & Pugh, Solicitors, Southampton) appeared on behalf of the Plaintiffs (Respondents).
MR. D. FRIEDMAN (instructed by Messrs. Cripps, Harries, Willis & Carter, Solicitors, London, agents for Messrs. Clive Fisher & Co., Solicitors, Addlestone) appeared on behalf of the Defendants (Appellants).
THE MASTER OF THE ROLLS: There is a firm of motor car dealers in Southampton called R.H. Willis and Sons. They sell second-hand cars. In May 1973 Mr. Croucher, the licensee of a local public house, The City Arms at Nursling, wanted to buy one of their cars. It was a Ford Mustang eight years old. The cash price was £600. But he had not got that sum available. So the dealers allowed him to have it on hire purchase terms at the hire purchase price of £625. He paid £350 in cash or in part exchange: and agreed to pay the balance of £275 by monthly instalments over the next six months. He signed the hire purchase agreement in a familiar form. It contained this warning to Mr. Croucher: "The goods will not become your property until you have made all the payments. You must not sell them before then".
Mr. Croucher did not heed this warning. He was in financial difficulties with bankruptcy staring him in the face. He decided to raise some money by selling the car. He took it 50 miles away to Farnham in Surrey and nut it into the car auction there. It was run by British Car Auctions Ltd. He put on it the reserve price of £450 net. He told the auctioneer that it was his own car and that it was not subject to any outstanding hire purchase. He signed the entry form to that effect.
The auction was held subject to the auctioneers' usual "Conditions of Sale" which were plainly exhibited and also announced by the auctioneer. The car was entered as Lot No. 67 and put up for sale. It did not reach the reserve price of £450. The highest bid was £410. This was, however, not so very far short of the £450. So the auctioneers treated it as a "provisional bid": and followed their usual practice in regard to provisional bids. A clerk went down amongst the people and spoke to the man who had made the bid of £410. She said to him: "Will you stand on yourbid?" He said "Yes". He was a Mr. Worth of Hillingdon near London. The auctioneers knew him because he had an account with them. The clerk then called over the loud-speaker system saying: "Will the vendor and highest bidder of Lot No. 67 please come to the provisional bid office". That was an office specially set up to deal with such provisional bids. Mr. Worth went to the office. So did Mr. Croucher: or if not, the auctioneers spoke to him on the telephone. The auctioneers told Mr. Croucher that Mr. Worth had bid at £410: "Will you accept it?" Mr. Croucher said: "Yes, but only if you will reduce your commission". The auctioneers said: "Our usual commission is 5%. That is £20.50 on £410. But we will reduce it to £15 if you will accept the £410". Mr. Croucher said: "I am agreeable to sell the car on those terms".
The auctioneers then treated the sale as concluded subject to the conditions of sale exhibited in the sale room. They filled in the entry form describing the car as sold for £410 and their commission as £15. They made out an invoice for the car to Mr. Worth for £410 and in accordance with their conditions of sale added an "indemnity fee of £2 plus V.A.T at 10£". They debited Mr. Worth's account with that sum and gave him a purchase slip authorising him to take the car away. He did so.
Next day the auctioneers checked with Hire Purchase Information (H.P.I.) so as to see if any of the finance companies had advanced any money on the car. H.P.I. said they had no entry against it. So the auctioneers regarded Mr. Croucher as having a good title to the car. They paid him the £410, less £15 commission and 50 pence service charge and £1.55 to check H.P.I., making £392.95.
A few days later Mr. Croucher was made bankrupt. He had not paid the instalments due on the car. So R.H. Willis, the car dealers, sought to have recourse against someone or other. Thepurchaser had disappeared, so we are told: and so had the car. So they came down on the auctioneers. They said that the auctioneers were liable in conversion and they claimed from the auctioneers the £275 outstanding instalments on the car. R.H. Willis issued their plaint in the county court on 5th November, 1975. The case was adjourned for a long time awaiting the decision of the House of lords in Moorgate Mercantile v. Twitchings (1977) Appeal Cases 890. It was then restored for hearing on this one point: Were the auctioneers liable in conversion? The county court judge held that they were. The auctioneers appeal to this Court. They want to know how they stand in regard to "provisional bids" which are now an established feature of their trade.
The question that arises is the usual one: Which of the two innocent persons is to suffer? Is the loss to fall on the motor car dealers? They have been deprived of the £275 due to them on the car. Or on the auctioneers? They sold it believing that Mr. Croucher was the true owner. In answering that question in cases such as this, the common law has always acted on the maxim Nemo dat quod non habet. It has protected the property rights of the true owner. It has enforced them strictly as against anyone who deals with the goods inconsistently with the dominion of the true owner. Even though the true owner may have been very negligent and the defendant may have acted in complete innocence, nevertheless the common law held him liable in conversion. Both the "innocent acquirer" and the "innocent handler" have been hit hard. That state of the law has often been criticised. It has been proposed that the law should protect a person who buys goods or handles them in good faith without notice of any adverse title, at any rate where the claimant by his own negligence or otherwise has largely contributed to the outcome. Such proposals havehowever been effectively blocked by the decisions of the House of Lords in the last century of Hollins v. Fowler (1875) Law Reports 7 House of Lords 757, and in this century of Moorgate Mercantile v. Twitchings (1977) Appeal Cases 890, to which I may add the decision of this Court in Central Newbury v. Unity Finance (1957) 1 Queen's Bench 371.
In some instances the strictness of the law has been mitigated by statute, as for instance, by the protection given to private purchasers by the Hire Purchase Acts. But in other cases the only way in which the innocent acquirers or handlers have been able to protect themselves is by insurance. They insure themselves against their potential liability. This is the usual method nowadays. When men of business or professional men find themselves hit by the law with new and increasing liabilities, they take steps to insure themselves, so that the loss may not fall on one alone, but be spread among many. It is a factor of which we must take account. See Post Office v. Norwich Union (1967) 2 Queen's Bench at page 375; Morris v. Ford Motor Company (1973) 1 Queen's Bench at page 801.
Sales under the hammer
The position of auctioneers is typical. It is now, I think, well established that if an auctioneer sells goods by knocking down his hammer at an auction and thereafter delivers them to the purchaser - then although he is only an agent - then if the vendor has no title to the goods, both the auctioneer and the purchaser are liable in conversion to the true owner, no matter how innocent the auctioneer may have been in handling the goods or the purchaser in acquiring them; see Barker v. Furlong (1891) 2 Chancery at page 181 by Mr. Justice Romer and Consolidated Co. v. Curtis & Son (1892) 1 Queen's Bench 495. This state of the lawhas been considered by the Law Reform Committee in its 12th Report (1966) Command 2958 as to innocent acquirers; and in its 18th Report (1971) Command 4774 as to innocent handlers. But Parliament has made no change in it: no doubt it would have done so in the Torts (Interference with Goods) Act 1977 if it had thought fit to do so.
Provisional Bids
Such is the position with sales "under the hammer". What about sales which follow a "provisional bid"? I see no difference in principle. In each case the auctioneer is an intermediary who brings the two parties together and gets them to agree upon the price. They are bound by the...
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