This was the decision of the court in relation to a claim to ownership of a vehicle let to a debtor under a hire purchase agreement.

In Welcome Financial Services Ltd v Nine Regions Lit t/a Log Book Loans (LBL), LBL entered into a bill of sale with Miss Scott as security for a loan of £1,286. Under the bill of sale, Miss Scott sold the car to LBL but kept possession of it. LBL could sell the car if Miss Scott defaulted on the loan. LBL registered its interest in the car with HPI Ltd. Miss Scott had acquired the car under a hire purchase agreement with Welcome three days before entering into the bill of sale with LBL. Welcome did not register its interest with HPI Ltd until three days after LBL had done so. Miss Scott defaulted under the loan agreement with LBL who then terminated the agreement, recovered possession and sold the car for £3,241.

Welcome issued proceedings claiming it was entitled to the proceeds of sale as the vehicle's owner, not LBL. At first instance, the court held that LBL was the owner as it acquired title under the private purchaser provisions of Part III of the Hire Purchase Act 1964 (HPA). Welcome appealed.

The court held that LBL were a long way from being a private purchaser and came within the definition of trade or finance purchaser under s29(2) HPA, as part of its business involved selling cars. Welcome therefore retained title and were entitled to the proceeds of sale. We understand LBL have been given leave to appeal to the Court of Appeal in February 2011.

Things to consider

LBL's clear search at HPI Ltd gave it no defence to a claim for wrongful interference. The fact that an owner may fail, or delay, in registering its interest at HPI Ltd does not mean the owner loses title.