Obtaining a Good Title

Hitchens v General Guarantee Corporation Ltd (CA TLR 13 March)

Under s27 of the Hire Purchase Act 1964, an innocent purchaser for value of a vehicle which ‘had been bailed under a hire purchase agreement’ obtained a good title and became the car’s owner. In 1995, Mrs Rowley agreed to purchase a Toyota Supra from a garage and arranged for the balance of the purchase price to be met under a lease purchase agreement with General Guarantee Group Ltd. She signed the agreement on 22 February 1995, but the company did not sign until 28 February. On 22 February the garage released the car to Mrs Rowley who sold it that day to a Mr Watts who immediately sold it to the claimant. The defendant company had given approval to the agreement by oral acceptance on 22 February and on the ordinary principles of contract that amounted to a binding agreement. It was not common sense for a dealer to have parted with the vehicle without first being assured that the finance company would meet the remaining payments. Therefore, ownership of the vehicle passed to the company and the vehicle itself was bailed by the dealer to Mrs Rowley on 22 February and therefore when Mr Hitchen acquired the vehicle he became the car’s owner. This case was even stronger than that in Carlisle Finance Ltd v Pallas ([1999] RTR 281), where the hire purchase agreement provided that property should not pass until a signature was obtained. In the present case, the agreement did not contain a term that acceptance could only be made in writing by signature. It was true that under the Consumer Credit Act 1974, a regulated agreement was not properly executed unless signed, but that did not mean an improperly executed agreement was invalid but could be enforced by order of the court.