His Honour Judge Anthony Thornton QC, sitting in the High Court, handed down judgment recently in Brewer v Mann, Fortis Lease UK Limited & Stanley Mann Racing Limited  EWHC 2444 looking at whether a motor dealer and finance company correctly described a vintage motor car as a “1930 Speed Six Bentley”. It is an extremely useful reminder to motor dealers and finance companies on issues that often arise during the sale of motor cars, particularly prestige Marques.
Mrs Brewer and her husband were vintage car enthusiasts with a particular interest in motor cars made by Bentley. After some consideration, Mrs Brewer decided she wanted to buy a rare Bentley Speed Six. Bentley Motor Cars had produced only 177 Speed Six cars between 1929 and 1930.
After seeing a motor dealer’s advert in Classic and Sports Car, which described the vehicle for sale as a “1930 Speed Six Bentley”, Mrs Brewer arranged an inspection. During the course of discussions, the motor trader again referred to the vehicle as a “1930 Speed Six Bentley”. After negotiations, Mrs Brewer paid a deposit of £35,000.00 to the motor trader and entered into a hire purchase agreement with Fortis Lease UK Limited (“Fortis”). It, in turn, bought the vehicle from the motor trader for £390,000.00 on 6 June 2007.
The motor trader’s invoice and the hire purchase agreement both described the vehicle as a “1930 Speed Six Bentley”. Just over a year after entering into the hire purchase agreement with Fortis, Mrs Brewer missed a few payments and decided she wanted to look at selling the vehicle with Fortis’ agreement so took the vehicle to an auctioneers to have it valued. In its inspection report, the auctioneers noted that the vehicle was not a “1930 Speed Six Bentley” but, in fact, had a 1927 standard 6 ½ litre engine that had been reconstructed on a small part of the vehicle’s original 1930 Speed Six chassis. Mrs Brewer contacted Fortis on 5 August 2008, telling it that she intended to bring a claim against the motor dealer, and asked Fortis to bear with her in the meantime. Fortis did not and, instead, sent a termination notice on 7 August 2008.
After Fortis purported to terminate the hire purchase agreement, it sold the vehicle back to the motor dealer for £425,000 (the same price, after adding the deposit, it had originally bought it for). Mrs Brewer issued proceedings for damages against the motor dealer, alleging a breach of a collateral warranty or promise, and against Fortis, alleging breach of an express or the implied term for description of the vehicle. Fortis counterclaimed for the outstanding balance due under the agreement and, during the course of the trial, issued a third party claim against the motor dealer for an indemnity or contribution.
The Court had to determine three main issues:
- Whether the motor dealer had warranted or promised (collateral to the hire purchase agreement) that the vehicle was a “1930 Speed Six Bentley”.
- Whether there was an express or implied term under the hire purchase agreement that the vehicle was a “1930 Speed Six Bentley”.
- If the answers to issues 1 or 2 were yes, what the phrase “1930 Speed Six Bentley” meant and whether the vehicle was incorrectly described meaning Mrs Brewer’s claims were successful.
After hearing evidence from the parties, the Court decided that:
- Mrs Brewer’s recollection of the pre-contract negotiations was accurate and the motor dealer had described the vehicle as a “1930 Speed Six Bentley”.
- The meaning of “1930 Speed Six Bentley” was a “1930 Speed Six car with a 1930 Speed Six engine and chassis”.
- The only part of the vehicle that had not been reconstructed and could properly be considered original was the front section of the chassis and its chassis number.
- The vehicle’s engine was not a Speed Six engine but was a 1927 standard 6 ½ litre engine that had been removed from another Bentley at some unknown time and added to the vehicle.
- There was no continuous documentary history for the vehicle, which was extremely important for vintage cars.
- Because the vehicle was not, in fact, a “1930 Speed Six car with a 1930 Speed Six engine and chassis”:
- the motor trader breached the terms of the collateral warranty; and
- Fortis breached the express description of the vehicle on the hire purchase agreement or its implied description by Section 9 of the Supply of Goods (Implied Terms) Act 1973.
- Mrs Brewer became aware of the breach of the hire purchase agreement on 5 August 2008 and had not lost her right to reject the vehicle at the point that Fortis attempted to terminate the agreement.
- Fortis could not rely upon the terms of the hire purchase agreement which said that Mrs Brewer had accepted the vehicle: such a clause was void as a result of Section 6(2) of the Unfair Contract Terms Act 1977.
- In light of the Court’s findings, Fortis’ counterclaim failed and it had to repay to Mrs Brewer her instalments.
- Fortis did, however, succeed on its claim for an indemnity from the motor dealer.
This is a very useful reminder to finance companies and motor traders of their obligations when selling or hiring motor vehicles, particularly prestige or high quality Marques. The Court plainly had a lot of sympathy with Mrs Brewer, who had agreed to borrow a lot of money to allow her to use and enjoy a 1930 Speed Six Bentley. She thought, and expected, that all of the vehicle would be a 1930 Speed Six Bentley but it was not. Whilst the motor trader and finance company valiantly tried to rely on a number of technical defences, none of them found any favour with the Court.
There are some lessons to be learnt:
- Motor dealers should ensure that any description of a motor car, even a relatively inexpensive one, is accurate and correctly sets out its history. If the vehicle has been restored or repaired, a well-advised motor trader should ensure any description is properly qualified and makes this clear to the customer. This is particularly important if the customer is a consumer.
- Finance companies should also ensure that descriptions applied on finance agreements, which often come from motor dealers, are accurate and correctly set out the vehicle’s history. Whilst it may be tempting for a finance company to rely upon the motor trader, and later seek to enforce an indemnity, it is not a total solution. In particular, there is no guarantee for any finance company that the motor trader will still be in business when it needs to knock on the door.