JD Cleverly Ltd & Anor v Family Finance Ltd

The law reports are full of cases in which the question is which of two innocent parties must suffer for the activities of a rogue. This is another, albeit one in which one’s sympathies for the innocent are somewhat tempered by consideration of the laxity of their business practices. No doubt it is in such conditions that rogues flourish.

The context is the motor trade. The rogue in question is Mr Brian Webb, who traded in cars through Gwent Fleet Management Ltd, to which I will refer hereafter as “Gwent”. His scam was remarkably simple. He would accept an order for a new motor vehicle from a purchaser and, typically, collect from the purchaser a deposit. He then in the name of Gwent placed an order for the vehicle with a dealer such as the First Appellants, who at relevant times traded as “Cardiff Audi”. Thus in the case taken as typical Mr Glyn Tebbutt of Brighton ordered from Gwent a new Audi A4 Avant early in July 2007. He was quoted a price of £24,300 and paid a deposit of £5,000 to Gwent. On 3 July 2007 Gwent placed an order for such a vehicle with Cardiff Audi. Mr Webb was a good customer of Cardiff Audi and of the other Appellant motor dealers. They allowed him thirty days’ credit. Before placing an order for a vehicle Gwent would telephone the motor dealers to ask for a quotation for a specific vehicle. The Appellants would work out a price and then give an oral or written quotation. The quotation in respect of Mr Tebbutt’s car was oral. If Gwent accepted the quotation they would then send a written, signed purchase order to the Appellants. Typically the purchase order would refer to the price on the quotation as being the “Price agreed”. In the case of Gwent’s purchase order of 3 July 2007 for Mr Tebbutt’s Audi A4 Avant the price did not appear. Against the rubric “Price agreed” was typed “Please confirm”. The only entry on the purchase order connecting the unidentified Mr Tebbutt with the car was the “Delivery Address” – Brighton. The Appellants, or in this case Cardiff Audi, regarded the purchase order as committing Gwent to purchase the car. Cardiff Audi now therefore in turn ordered the vehicle from Audi, identifying their customer as Gwent.

On 12 July 2007 a vehicle was identified to satisfy the order and was allocated a chassis number. At or around the end of August 2007 Mr Tebbutt was asked by Gwent to pay the balance of the purchase price and he duly paid £19,300.

On or shortly before 17 September 2007 Cardiff Audi received the car from the Audi factory and allocated to it a Registration Number. They informed Gwent by telephone that the car was ready for delivery, asked them to confirm where the car was to be delivered and enquired to whom the car should be registered and who should be invoiced.

Gwent would obtain a certificate of insurance from the purchaser and pass it to the Appellants. The Appellants would then provide the details to the DVLA so that the car could be duly registered. All of this must have occurred in the case of Mr Tebbutt’s car.

On 3 October 2007 the car was delivered to Mr Tebbutt at his home in Brighton by a representative of Cardiff Audi. In due course Mr Tebbutt received from Gwent an invoice dated 30 October 2007 in the sum of £24,300.

It was not unusual for the Appellants to deliver motor vehicles to end-users identified by Gwent before they had themselves received payment for the car. Indeed, that was the practical manifestation of Gwent being allowed thirty days’ credit.

In the event that Gwent advised the Appellants that their invoice should be sent to a finance company the Appellants would ask Gwent for the name of the finance company and for contact details. Their aim was to send out an invoice for the car on the same day that they effected delivery to the end-user. Usually this was achieved.

In the case of Mr Tebbutt’s car Gwent asked Cardiff Audi to invoice the Respondent, Family Finance Limited, for the car. The nature of the business carried on by Family Finance is the provision of loans and the financing of consumer goods by means of hire purchase agreements.

On an unknown date Cardiff Audi generated a “New Vehicle Invoice” in respect of the Audi A4 Avant which either had been or was to be delivered to Mr Tebbutt, identifying it by its precise vehicle type, engine number, chassis number, Registration Number and Registration date, which was said to be 28 September 2007. The “delivery date” and the “tax point” were also each stated to be 28 September 2007. Under the rubric “Invoice to” appeared the name and address of Family Finance Limited. Under the rubric “Deliver to” appeared the name and address of Gwent. At the foot of the Invoice the “Net Total” was said to be “Due from” Family Finance Limited. The “Invoice Total” was £26,986.50, inclusive of VAT. There being no “Part Payment Received”, the “Net Total due” was the same. There are Terms and Conditions on the reverse of the invoice to which I must refer hereafter.

On an unknown date the invoice which I have just described was sent by Cardiff Audi to Gwent. This was done at the express request of Mr Webb. It was the understanding of Cardiff Audi that Mr Webb would send the invoice on to his contact at Family Finance. This was the usual pattern in transactions in which Gwent, the Appellants and Family Finance were involved.

Often in the course of transactions such as this one Mr Webb would change his instructions as to the identity of the finance house which was to be invoiced. Often the Appellants having issued an invoice to one finance house would be requested by Mr Webb to re-issue the invoice to another finance house.

There was at the trial undisputed evidence given by the Appellants to the effect that it is not unusual in the motor trade for a customer such as Gwent to ask the dealer to issue an invoice to a finance company. There was similarly evidence to the effect that it is not unusual in the motor trade for vehicles to be registered to an individual after they have been invoiced to a finance company. According to Mr Philip Morgans, Corporate Sales Manager of Cardiff Audi, “this would be appropriate in hire purchase arrangements and personal contract plan arrangements (a type of conditional sale agreement)”.

The Appellants were at all times completely unaware of the nature of the arrangements made between Gwent and Family Finance. If it could reasonably be inferred that there were in place financing arrangements, the Appellants were not aware of the basis upon which that finance was being provided. The only direct contact between the Appellants and Family Finance was in the event that the Appellants were not immediately paid. Usually Family Finance paid the Appellants shortly after the receipt of the invoice and always they paid by cheque. In the event of that not happening promptly the Appellants might have occasion to chase for payment.

According to Mr Ross Phillips, Managing Director of Family Finance Limited, in late May, early June 2007 Family Finance “was approached by John Webb of Gwent Fleet Management . . . with a request to provide hire purchase facilities for his company to enable it to acquire vehicles which they let out under consumer hire agreements or contract hire agreements in the course of its business. After some discussion it was agreed that we would grant credit facilities on a deal by deal basis, taking into account the amount of deposit which was being paid and the price being paid for the vehicle.”

On 26 October 2007 Mr Lyndon Evans, a director of Family Finance, visited the premises of Gwent where he met Mr Webb. He took with him a prepared Hire Purchase Agreement, a pro-forma in which details had been inserted. The details inserted included the Registration Number, engine number, chassis number, date of first registration and brief model details, body-type, colour and cubic capacity of the vehicle which had in fact been delivered to Mr Tebbutt on 3 October 2007. The Hire Purchase Agreement was signed on behalf of the Owners identified therein as Family Finance by R Hopkins, whose signature was dated that day. Prior to this visit Mr Webb had told Mr Evans that he wished his company to enter into a hire purchase agreement of three years duration with respect to this vehicle. It is to be inferred that prior to 26 October 2007 Mr Webb had passed to Family Finance the Cardiff Audi invoice to which I have referred in paragraph 10 above, since in addition to the details of the vehicle there was also inserted into the pro-forma agreement the cash price of £26,986.50 including VAT of £3,967.14 as appears on that invoice. The “Financial Details and Payments” box on the pro-forma was completed by provision for a deposit, designated (a), which was £4,986.50, and hire purchase charge, a documentation fee and an option to purchase fee, which together with the balance of the cash price were designated (b), the latter total of £25,757.32 to be payable in thirty-six instalments commencing on 26 November 2007, the thirty-sixth and final instalment to include the option fee. The Hire Purchase Price (a) + (b) was £30,743.82.

Mr Webb signed the Hire Purchase Agreement on behalf of the Hirer identified therein, Gwent. Either then or thereafter Gwent paid to Family Finance by cheque the deposit of £4,986.50.

After execution of the Hire Purchase Agreement Family Finance paid to Cardiff Audi by cheque dated 26 October 2007 the amount appearing on the latter’s invoice, £26,986.50. In fact the cheque was in a larger sum and related to two transactions, but that it related in part to the relevant Audi A4 was apparent from the Registration Number thereof being written on the back by Family Finance.

Between 12 June 2007 and 31 October 2007 Family Finance and Gwent entered into thirty-eight similar hire purchase agreements. The monthly payments due under each were made normally until July 2008. By then the fraud had been uncovered. The end-users such as Mr Tebbutt claimed good title to the vehicles for which they had paid, as did likewise Family Finance.

It was in these circumstances that it fell to HH Judge Chambers QC in the Cardiff County Court to decide which of the Appellants and the Respondent bore the loss. There were twelve related actions before him which he tried over three days in December 2009. The core allegation in each action was that by causing an invoice, such as I have described at paragraph 10 above, to be raised, addressed and sent to Family Finance, and by thereafter receiving payment in respect thereof, each of the motor dealers of whom the Appellants are typical contracted to sell the relevant vehicle to the finance house. Thus it was said that the dealers, by releasing possession of the vehicle or by reason of their course of dealing, enabled Mr Tebbutt and the other end-users to acquire title to the vehicle to the prejudice of Family Finance. Reliance was placed upon, inter alia, s.25(1) of the Sale of Goods Act 1979 and s.2(1) of the Factors Act 1889.

On day 1 of the trial and in the light of an application by the Defendants to make a major amendment to their Defence the judge indicated that it might be sensible to determine first the core question whether or not a contract of sale had been concluded between the finance house and the dealers. On day 3 of the trial he indicated that he would hear argument only on that issue and determine it first before proceeding to consider other issues.

In his reserved judgment delivered on 1 February 2010 the judge decided that in each of the twelve claims before him the sending of the relevant invoice followed by the sending of the cheque in response thereto constituted a contract for the sale of the vehicle to which the invoice related. The sending of the cheque was therefore the acceptance of the offer. That conclusion of course paves the way for Family Finance to claim repayment of the purchase price as on a total failure of consideration, on the basis that the dealers have failed to pass good title to the vehicles. In the alternative Family Finance claim damages for breach of contract. However the judge dealt only at this stage with the question whether the dealers had contracted to sell the vehicles to Family Finance and it is his conclusion that they did with which we are alone on this appeal concerned.

The judge heard extensive evidence from six witnesses over three days, much of it of very marginal relevance and much of it ill-informed. It was perhaps for this reason that the judge was economical in his findings, observing at paragraph 12:-

“In the course of a hearing over three days, I learnt a lot about the accounting arrangements of the defendants and a surprising lack of knowledge on the part of a number of people as to the nature of a hire purchase agreement. Every witness was patently honest and anxious to help but in the end there is almost as little that is relevant to say about the circumstances as I have already set out.”

In that latter regard I should record, since it was alleged to be relevant, that the hire purchase documentation which Family Finance and Gwent used was in three parts. In part 1, although it was not so designated, Gwent expressed its desire to enter into, with Family Finance, a Hire purchase Agreement in respect of the goods described in the Schedule to the Proposed Hire purchase Agreement and represented that Gwent was a company engaged in the business of vehicle leasing. Part 2 was the Purchase Agreement itself, with a pro-forma schedule completed as I have already described, in which Family Finance are identified as the Owners and Gwent as the Hirer. Part 3 is headed “Dealer’s Offer and Warranty” and is also a pro-forma. In the example in evidence relating to Mr Tebbutt’s car the name of Family Finance has been inserted as “Finance Company” and that of Cardiff Audi as “Dealer” so that it provides for Cardiff Audi to offer to sell to Family Finance the goods, details of which are set out in the schedule, i.e. the Audi A4 Avant. Provision is made for various warranties to be given by the dealer, including at sub-paragraph (8) one to the effect that the goods are the dealer’s absolute property, free from any lien or encumbrance, and have not been the subject of any previous transaction with the hirer. The form goes on to recite that “This offer shall only be accepted by your signing the Hire purchase Agreement and that thereupon the property in the goods shall immediately pass to you and we will be responsible for giving possession of the goods to the Hirer.” It is common ground that Cardiff Audi were neither shown this completed pro-forma nor invited to indicate their agreement thereto by signature.

The argument both before the judge and in this court concentrated in large part upon the effect to be given to the words which appear on the reverse side of the New Vehicle Invoice addressed by Cardiff Audi to Family Finance. This page is headed “Terms and Conditions for the Sale of New and Used Vehicles”. The most immediately relevant terms are:-

“1.

DEFINITIONS

“Conditions” means these Terms and Conditions;

“Contract” means a binding contract between you and us for the sale and purchase of a Vehicle;

“Order” means a purchase order for a Vehicle, as set out in a completed order form, instruction sheet or other sales document;

“Part Exchange Vehicle” means a vehicle which we agree can be used as part payment towards the cost of your Vehicle;

“Vehicle” means a new or used vehicle (as the case may be), including any optional extras or additional parts;

“we us our” means Mon Motors Limited, company number 712474 whose registered office address is at Avondale Road, Cwmbran, Gwent, NP44 1TT;

“you, your” means you the individual or business customer named in an Order.

2.

BINDING CONTRACT

2.1

A Contract shall only come into force once an Order has been signed by one of our sales executives. All Contracts shall be subject to these Conditions to the exclusion of all other terms and conditions.

2.2

No variation of any Contract shall be valid unless agreed in writing and signed by or on behalf of both you and us.

2.3

All Contracts are personal to you and you shall not assign your rights or obligations under them without our prior written consent.

2.4

All contracts (including the terms relating to delivery) shall be subject to any additional terms and conditions which the manufacturer or UK importer of your Vehicle may from time to time impose on the sale or re-sale of your Vehicle. A copy of these terms and conditions may be inspected at our office or otherwise made available to you.

. . .

8.

OWNERSHIP OF AND RESPONSIBILITY FOR THE VEHICLE

8.1

You shall be responsible for all loss of or damage to the Vehicle following delivery.

The Vehicle remains our property until all monies owed by you to us on any account have been paid in full, including the full price of your Vehicle in cash or cleared funds.

. . .

15.

HIRE PURCHASE

15.1

You shall be at liberty to arrange with 7 days of the date of an order for your Vehicle to be purchased by a finance company at the price payable in that Order.

15.2

You consent to us telling the finance company the overall price of your Vehicle, how much money we have agreed to deduct from the price of the Vehicle for a Part Exchange Vehicle (if appropriate) and what deposit you have paid to us.”

The judge recognised that the requirement under clause 2.1 for a signed order presented an impediment to his analysis. He held however that the requirement for a signed order could be displaced by the behaviour of the dealers. He concluded:-

“24.

It seems to me that the defendants chose to send to the claimant documents that were expressed to have contractual effect in respect of specific vehicles. On each occasion, the claimant paid the price requested. I find in respect of each of the twelve claims that, when the claimant sent its cheque, it accepted an offer by the relevant defendant to sell the vehicle on the terms and conditions, where applicable, set out on the reverse of the invoice. I find that when the relevant cheque was cashed, insofar as the relevant defendant still held ownership in the vehicle, it passed to the claimant.”

It is not clear to me what behaviour of the dealers the judge regarded as displacing the requirement in clause 2.1. The mere sending of the invoice cannot of itself amount to a waiver of the requirement, for the act of sending the invoice conveys with it the representations contained therein, not a representation that they will not be relied upon. Mr Andrew Keyser QC for Family Finance suggested that perhaps the relevant behaviour is the acceptance of payment, but that is inconsistent with the judge’s analysis, which is that the contract was formed on the sending of the cheque. That led Mr Keyser to submit in the alternative that perhaps it is more appropriate to analyse the sending of the cheque as an offer and the cashing of the cheque as an acceptance, although he also suggested that “this refinement is not of substantial importance”.

Mr Keyser’s primary submission was that clause 2.1 should not be permitted to affect the nature of the invoice as intimating a willingness to sell to Family Finance. He prayed in aid observations of Lord Bingham in Homburg Houtimport BV and others v Agrosin Private Ltd and another (“the Starsin”) [2004] 1 AC 715 at pages 737-738 to the effect that the Court must seek to give effect to the contract as intended, so as not to frustrate the reasonable expectations of businessmen. If an obviously inappropriate term is used, its language must be adapted to apply to the particular case. Thus Mr Keyser’s preferred analysis before this court was ultimately, although not originally, that the contract was properly to be regarded as express rather than implied. It was he accepted not a clear express contract but nonetheless the wording on the invoice was sufficiently explicit to lead to the conclusion of an express contract.

The distinction between an express and an implied contract is not often of importance but it is or can be significant if the enquiry is as to whether a contract has been made rather than as to its scope and effect. As Mance LJ pointed out in Modahl v British Athletic Federation Ltd [2002] 1WLR 1192 at paragraph 102 page 1222:-

“One distinction exists however in relation to the ease with which an express or implied contract may be established. Where there is an express agreement on essentials of sufficient certainty to be enforceable, an intention to create legal relations may commonly be assumed: Chitty on Contracts, vol 1, p 155, para 2-146. It is otherwise when the case is that a contract should be implied from the parties’ conduct: pp156-157, para 20147. It is then for the party asserting a contract to show the necessity for implying it: see The Aramis [1989] 1 Lloyd’s Rep 213, Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council [1990] 1 WLR 1195, Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal [1983] 1 AC 854 and Mitsui & Co Ltd v Novorossiysk Shipping Co [1993] 1 Lloyd’s Rep 311.”

See also to similar effect the judgment of Mance LJ in Baird Textile Holdings Limited v Marks & Spencer plc [2001] EWCA Civ 274 at paragraph 61. Those observations are particularly apposite here, where the question at the root of the dispute is whether the conduct of the parties can properly be regarded as manifesting an intention to create between them a legal relationship in the shape of a contract of sale.

As stated in Chitty on Contracts, 30^th Ed, Vol 1 at paragraph 1-076, contracts are express when their terms are stated in words between the parties. Here the words exchanged between the parties are to be found in the documents which they exchanged – the invoice and the cheque. The invoice does not, as it is written, contain an offer to sell. It spells out definitively the manner in which a contract between “you” and “us” for the sale and purchase of a vehicle is to come into force, a process in which the sending of an invoice plays no part. Unless therefore the sending of the invoice can be regarded as conveying a message different from what is written therein, the Respondents require something more than the words stated between the parties in order to spell out the conclusion of a contract. Manifestly, they must look to the conduct of the parties.

Irrespective of whether the search is for an express or for an implied contract, reliance in this context upon the observations of Lord Bingham in The Starsin is in my view misplaced. Lord Bingham was there concerned with a document which on any view set out the terms of a contract of carriage. The question was as to the identity of one of the parties thereto. Here the question is rather whether the sending of the document should objectively be construed as an offer to contract. One cannot in answering that question start from the premise that the making of a binding contract was intended, and ignore language which might tend to detract from that proposition. The sending of the document conveys principally the message spelled out therein. In answering the critical question it is highly relevant, indeed essential, to examine such language in the document as bears upon the question whether it should be construed as an offer to contract. Clause 2.1, particularly in the light of the definitions in clause 1, presents a formidable obstacle to the conclusion that the addressing of the document to Family Finance and its sending to Gwent for onward transmission to Family Finance constitutes an offer to conclude with Family Finance a contract of sale. It is not however an insuperable obstacle. There is still room for the implication of a contract if the conduct of the parties is inconsistent with there being no contract, or, to put it another way, if there is no other explanation.

In The Aramis [1989] 1 Lloyd’s Law Reports 213 at page 224 Bingham LJ cited with approval the following passage from the judgment of May LJ in The Elli [1985[ 1 Lloyd’s Law Reports 107 at 115 to the effect that:-

“No such contract should be implied on the facts of any given case unless it is necessary to do so: necessary, that is to say, to give business reality to a transaction and to create enforceable obligations between parties who are dealing with one another in circumstances in which one would expect [that] business reality and those enforceable obligations to exist.”

Those principles were also endorsed and applied by the Court of Appeal in Baird Textile Holdings Limited v Marks & Spencer plc above. Mance LJ observed at paragraph 62 that that the test of any such implication is necessity is clear both on authority and also as a matter of consistency. It could not, he observed, be right to adopt a test of necessity when implying terms into a contract and a more relaxed test when implying a contract, which must itself have terms.

The burden is thus on Family Finance as the party asserting the formation of a contract between themselves and the dealers to demonstrate that the parties manifested an intention to create a legal relationship. They can only do so if they can demonstrate that the implication of a contract is a necessary conclusion because there is no other explanation for the parties’ conduct. If the parties might have acted as they did without a contract coming into existence then there is no necessity to infer one.

In view of the wording in clauses 1 and 2 of the invoice compelling evidence would be required in order to discharge this burden. Taken at face value the sending of the invoice was not an implied offer to sell. It is true that the invoice is addressed to Family Finance and that the amount is said to be “due from” Family Finance. It is also a fair point that if the object of the exercise was simply to enable Family Finance to discharge Gwent’s debt to the dealers, it was unnecessary for the invoice to be made out to Family Finance. But in circumstances where the sending of the invoice was preceded by no discussion or contact between the dealers and Family Finance, considerations such as those cannot displace the clear language of the document which presupposes that, insofar as it relates to an existing or future contract of sale, that contract either has been or will be concluded by signature of a completed order form unequivocally identifying the purchaser. The despatch of an invoice addressed to Family Finance is in such circumstances consistent with an arrangement whereby the finance house is for whatever reason to discharge the existing or future indebtedness of Gwent, without bringing into existence a contractual relationship between Family Finance and the dealers. One reason might be that Family Finance were assisting Gwent by making loans to enable them to purchase vehicles. Such loans might be secured in a manner not involving the finance house acquiring a proprietary interest in the vehicles, or might even be unsecured, or supported by a personal or corporate guarantee. It was for Family Finance by evidence to exclude that possible explanation.

In my judgment Family Finance fell far short of discharging this burden. There was, as I have already recorded, no independent expert evidence as to the nature of the motor trade. There was simply no evidence as to the nature and conduct of that trade on the basis of which the judge could have concluded that the only explanation for the parties’ conduct was the acquisition of the vehicle by Family Finance with a view to letting it on hire purchase to Gwent. Family Finance’s director Mr Lyndon Evans described the nature of the business carried on by Family Finance as “the provision of loans and the financing of consumer goods by means of hire purchase agreements.” Their Managing Director, Mr Ross Phillips, gave no relevant evidence in chief. He gave some evidence in cross-examination which Mr Keyser accepted was not entirely clear. In fairness this reflects in large part some confused questioning and furthermore the transcript appears to be not entirely reliable at various points. Unfortunately at the critical point all parties appear to have been distracted by the judge needing to speak to the Clerk of the Court about some unrelated matter and the questions and answers as recorded become disjointed. However the thrust of Mr Phillips’ evidence was that Family Finance provided loans in a variety of forms. Sometimes they provided funding directly to a vendor, sometimes directly to a purchaser. So far as hire purchase was concerned they rarely dealt with businesses, dealing mostly with individuals. This was for them an unusual transaction.

Other witnesses gave evidence which rightly attempted to assist the judge on what was or was not normal in the motor trade rather than concentrating on particular features of the business of either party which were uncommunicated to the other. Thus Mr Bev Luen, Brand Manager for Cwmbran Motors, said in his evidence in chief that it is not unusual in the motor trade “to invoice finance companies at the request of our customers”. In cross-examination he said that “it is the norm in these cases that they’d do back-to-back finance”. It was not entirely clear what “back-to-back finance” meant, which Mr Luen said “does happen, although not so much these days”. However it seemed to involve the end-user, thus in this case Mr Tebbutt, having a finance plan with either Gwent or Family Finance and the end-user in whose name Cwmbran Motors or here, Cardiff Audi, registered the vehicle having title to it. Mr Morgans, Corporate Sales Manager of Cardiff Audi, in the context of saying that Cardiff Audi had no knowledge of the arrangements between Family Finance and Gwent, observed that “in years gone by, they called it back-to-back finance where Gwent Fleet would borrow money off a finance house and then they would supply their own finance to the registered keeper”. Finally Mr Morgans and Mr Noone, Business Development Manager at Cwmbran Motors, said that it is not unusual in the motor trade as a whole for a company such as Gwent Fleet to ask a dealer such as Cwmbran Motors to issue the invoice to a finance company. They also said that it is not unusual in the motor trade for vehicles to be registered to an individual, despite being invoiced to a finance company. They both said that “this would be appropriate in hire purchase arrangements and personal contract plan arrangements (a type of conditional sale agreement)”. There was no further evidence about contract plan arrangements. The point can be made that a conditional sale agreement, like a hire purchase agreement, is one in which the property in the goods remains in the vendor/owner until, in the first case, a relevant condition has been fulfilled, often full payment of the price, or, in the second case, the option to purchase is exercised. To that extent therefore the witnesses were, on the face of it, describing arrangements which would involve property in the vehicle remaining in the provider of finance. However the evidence tells one little on the critical question whether, in a case such as the present where there is involved a dealer, an intermediary such as Gwent, a finance house and an end-user, it is axiomatic that it will be the finance house in whom property in the vehicle is to be vested at the outset of the transaction.

In my judgment therefore the evidence fell far short of demonstrating that the conduct of Cardiff Audi and Family Finance was consistent only with the creation between them of a contract pursuant to which the vehicle would be sold by the one to the other.

Mr Keyser placed much reliance on a decision of this court, Mummery and Tuckey LJJ, in Iveco Finance Limited v Man Truck & Bus UK Limited [2003] EWCA Civ 1613, which was, he suggested, materially indistinguishable from the present case. I do not agree. Iveco was a finance company associated with Italian vehicle manufacturers, part of the Fiat Group. Man was the UK supplier of trucks manufactured by their associated companies in Germany. Tuckey LJ set out the relevant facts as follows:-

“4.

One of Man's customers was the City Truck Group, a large fleet operator of commercial vehicles in the United Kingdom. City purchased many vehicles from Man, sometimes with the aid of finance provided by finance companies. City had an established line of credit with Iveco. The evidence was that in early December 2001 representatives of City and Iveco agreed on the telephone that Iveco would finance the purchase of six Man trucks. In accordance with its (and most finance companies') practice Iveco were to buy the trucks from Man and then enter into lease purchase agreements with City. Following these conversations, Iveco received six invoices dated 4 December 2001 from Man. Each was on Man's headed notepaper and, so far as is material, in the same terms as follows --

"Invoice To: Deliver To:

[Iveco] City [The head

office address

was given].

INVOICE

To supplying One New MAN [truck] generally as described below."

The make, model, chassis number and registration number was then given for each truck. The date of first registration was stated to be December 01. The chassis price was £28,757. The following details were then given:

"Supplied and Fitted with:

1.

Delivery Package inc. No Plates

2.

Radio Cassette Player

3.

Continental Tyres

4.

Battery Guard/Tailift Isolator Switch

5.

Grey & Adams Fridge Box Body

£38,490.00."

The invoice concluded by stating "the total amount payable", to be £79,015.23, including VAT.

5.

There had been no previous dealings between Iveco and Man and there was no further communication between them before or after receipt of the invoices, apart from the fact that, on 7 December 2001, Iveco paid Man the full amount of its invoices, a total of £474,091.38p.

6.

On the same day Iveco entered into a lease purchase agreement for the six trucks with City in which the equipment was described as "Man [truck] with Gray & Adams fridge box body".

7.

Unknown to Iveco at the time of these transactions, the Gray & Adams fridge boxes had not been fitted to the six chassis. At some time, (the evidence does not disclose when) the chassis had arrived in the United Kingdom. On City's instructions they had been delivered between 8 and 10 January 2002 by Man to Gray & Adams for the bodywork to be fitted. But, on 10 January 2002 city went into administration. After Iveco discovered that the chassis were with Gray & Adams, its solicitors wrote on 29 January demanding the return of the money and when this was not forthcoming proceedings were issued.”

Man claimed that they were entitled to reject the goods as not corresponding with description. Man meanwhile had retained the price for the six chassis and passed on the amount paid for the bodies to City to enable it to pay Gray & Adams when the body work was completed. When City went into administration the six chassis were still with Gray & Adams who asserted a lien over them.

The Court of Appeal upheld the judge’s summary determination that there had been a sale of the goods by Man to Iveco. Tuckey LJ held, at paragraph 14, that judged objectively it was an inescapable conclusion that by sending their invoices Man offered to sell the trucks to Iveco and that, by making payment of those invoices, Iveco accepted this offer. He observed that:-

“The invoice is directed to Iveco. The "total amount payable" is for "supplying" the completed truck "as described below". Whatever Man may have thought they were doing is irrelevant. The fact is that sales to a finance company is a very common method of financing transactions of this kind and that is what I think the documentation which Man created in this case achieved.”

It is apparent that there was in that case lacking the critical feature present in this case, viz language in the invoice inimical to the invoice being construed as an offer by Cardiff Audi to sell to Family Finance. Furthermore the court evidently proceeded upon the basis that involvement of a finance company in a commercial transaction of this sort would very commonly involve a sale to it and indeed that that would be the practice of most finance companies. In the present case the evidence in relation to the involvement of a finance company in the acquisition of a car for private and personal use did not go even so far. In my view Mr Keyser derives no assistance from this decision.

I would therefore allow the appeal and set aside the judge’s finding that in each of the twelve claims the sending of the relevant invoice followed by the sending of the cheque in response thereto constituted a contract for the sale of the vehicle to which the invoice related. I would also set aside paragraph 4 of his order of 25 March 2010, which permits the entering of judgment on each claim for the Claimant with damages to be assessed. I would invite written submissions from counsel as to the appropriate form of order to be made in substitution therefor.

By a Respondents’ Notice the Respondents indicated that in the event that the appeal should be successful the Respondents would seek permission to amend the Particulars of Claim in each case in order to claim “restitution of the monies paid to each Appellant on the ground that they were paid on account of a mistake, namely the mistaken belief that payment effected a contract of sale/purchase of the car”. At the conclusion of the hearing before us we invited the parties to make submissions to us in writing on this topic, should it appear from our judgments when circulated in draft before handing down that it is a live issue. In those circumstances I would just note at this stage that the proposed application seems to proceed upon the basis that the judge below was considering a preliminary issue. He was not. He was conducting a full trial of liability and quantum. The Respondents would need to make out a compelling case to be permitted now to introduce and to rely upon a new cause of action which would be likely, to put it at its lowest, to require further disclosure of documents and further evidence. I have in mind particularly that the amendment, if permitted, is likely to be sought to be met, inter alia, with a defence of change of position.

I agree.

I also agree.