for payment of repairs and storage charges from repairers in
possession of its customers’ vehicles. Claims are also commonly
made by the police, local authorities and private parking
enforcement operators for towing and storage charges. But can
finance companies ever be liable to pay such charges? It depends on
the circumstances and who is imposing them.
Claims by repairers
Frequently customers deposit vehicles with repairers and are
unable or unwilling to discharge the repairer’s invoice. The
repairer, of course, will refuse to release the vehicle until
payment is received, and often the storage charges accumulate
whilst the dispute over the charges continues. When the vehicle is
subject to a hire purchase, conditional sale or lease agreement,
the customer may well have ceased payments under the agreement and
many no longer have an immediate right of possession. In this
situation, the finance company, as owner, may wish to enforce its
rights of repossession, but does it have to pay the charges before
the vehicle can be released to it?
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The finance company can never be forced to pay; however, if it
wants to recover the vehicle it may have to consider making a
contribution towards the amount claimed. If the vehicle has been
repaired its value has been enhanced. It is settled law that if the
finance company (as owner) wants to recover possession of its
goods, it will have to pay repair charges – on the basis that it
has received a benefit from the repairer’s work. Otherwise, the
owner obtains a windfall at the repairer’s expense. The owner will
have to make an assessment of the repair charges sought against the
value of the vehicle before deciding whether to pay.
The same is not true of storage charges – these are a matter of
contract between the customer and the repairer, and have no bearing
on the value of the vehicle. The repairer cannot insist on payment
of storage charges from the owner and the owner ought to be able to
recover its vehicle without having to pay any storage charges.
Seizure by the police or local authority
The police or local authority may seize a vehicle for parking,
congestion charges, failure to display road fund licence and
similar offences, when using their powers under s99 of the Road
Traffic Regulation Act 1984 or the Refuse Disposal (Amenity) Act
1978. Towing and storage charges can be incurred as well as the
original penalty charge. Statute dictates who is liable to pay
these charges, according to s102 of the Road Traffic Regulation Act
1984.
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By GlobalDataIn short, an owner who is not involved in the offence in
question is not liable. However, if the owner wants to recover the
vehicle he has to pay the charges first. This has been affirmed by
the Court of Appeal in Surrey Breakdown Limited v Knight
[1]. So whilst the owner cannot be made to pay,
he cannot recover the vehicle if he does not. If the owner does
decide to pay, regulations set out the prescribed sums the storer
can charge for towing and storage – the storer cannot decide upon
the level of charges itself.
Furthermore, if the police remove the vehicle for forensic
purposes they do so under the Police and Criminal Evidence Act
1984, and there is no provision to levy a charge for removal of the
vehicle or for the storage or disposal of the vehicle.
If charges are paid by the owner, most finance agreements
provide for the owner to debit the sums to the customer’s
agreement.
Seizure by private parking enforcement
operators
It is important to note that the above provisions apply only to
seizures by the police or local authority. Therefore, an owner is
not liable to pay towing and/or storage charges where the vehicle
has been seized because of a private parking infringement.
Moreover, a private parking enforcement operator cannot insist on
payment of these charges before releasing the vehicle to the owner.
The charges are a matter of contract between the operator and the
person committing the offence (i.e. the customer).
In these situations the finance company may consider releasing
title to the vehicle to the private parking enforcement operator in
order for it to recover its losses, should it be found that the
vehicle has no value to the finance company. If the vehicle is of
value, then the owner may insist on its return without any payment
being made to the storer.
In practice, finance companies are primarily concerned with
reducing their exposure to large claims resulting from drawn-out
disputes and late notification of charges from vehicles in storage
over a number of months, together with the cost of administration
of dealing with such claims. In order to minimise the risk of large
claims, it is important that finance companies with an interest in
recovering the vehicle are notified in a timely fashion by the
repairers, police, local authorities and private operators of such
claims. This is turn reduces storage charges and cuts
administration, as well as minimising vehicle value
depreciation.
In many cases it is worth considering making a goodwill payment
to a storer in order to secure a prompt release of the vehicle,
notwithstanding the strict legal position. In business, it is
important to note that a pragmatic approach to problems is often
more successful than an idealistic one and judging each claim
expeditiously, and on its own merits, should prove the most
practical and cost-effective method.
The author is an associate at Salans’ Bromley
Office
