In Chatfields-Martin Walter Ltd v Lombard North Central, the claimant (CMW) contracted to purchase a van owned by Lombard North Central Plc from Trade Vans Direct Limited (the hirer) hired to the hirer pursuant to a hire purchase agreement. The intention was for the hirer to pay out Lombard, thereby getting title and then sell the vehicle to CMW which would sell the vehicle to a third party.
CMW searched HPI and noting Lombard’s recorded interests in the vehicle, obtained a cheque from the hirer for the redemption sum under the agreement, and passed it to Lombard.
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After two weeks, a CMW employee contacted Lombard to confirm whether the cheque had cleared. He was told it hadn’t, but that it should within a few days.
A few days later, the employee did a further HPI search and noted that Lombard’s previous entries had been deleted. CMW, relying upon that clear search, sold the vehicle to the third party. But the cheque bounced and Lombard claimed its title and issued proceedings against CMW for conversion.
CMW defended the claim on the basis that by representing through HPI that it no longer had a financial interest in the vehicle, Lombard was prevented from asserting ownership to the vehicle as against CMW, in its claim for conversion.
The defence failed at first instance. The judge held the case was not distinguishable from the well-established House of Lords decision in Moorgate Mercantile Co Ltd v Twitchings, which decided that a failure to register at HPI gave no basis for a defence to a claim by the true owner for conversion. CMW appealed.
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By GlobalDataAppeal decision
In the High Court in Birmingham Judge Leggatt heard the appeal and accepted CMW’s argument that the case of Moorgate v Twitchings was distinguishable on the basis that whereas Moorgate did not register its interest with HPI at all, in this case, Lombard had registered interests in the vehicle, but subsequently deleted them which the court decided prevented Lombard claiming its title against. In making his decisions, Judge Leggatt said:
(a) that dealers using HPI would reasonably assume the information on the database was accurate;
(b) that Lombard was responsible for accuracy of the information it entered on (or took off) the database;
(c) that it is unrealistic to expect a person using the database to analyse the transaction history.
Comment
HPI is a non-statutory, voluntary service, which financiers can choose to use or not. This decision highlights that if a financier chooses to use the HPI database to register its interest in vehicles, then it is responsible for the information’s accurately and does so at its own risk. However, it raises the question whether it is safer for a financier not to use HPI at all, relying upon the landmark decision in Moorgate v Twitchings that failing to register at all is not a defence to claim of conversion, whereas registering and then incorrectly removing an entry is not a defence.
Joshua Howells, is a solicitor at Gately.
