Shogun Finance Ltd v Hudson

Where a hire-purchase agreement is wholly in writing, the parties are ordinarily identified from the written instrument. A rogue who uses another person's name is not thereby made a party to the agreement. If the named person's signature is forged, that person is not liable, but the court cannot substitute the unnamed rogue as contracting party. The rogue is therefore not the debtor under the agreement for the purposes of sections 27 and 29 of the Hire Purchase Act 1964. The face-to-face principle remains an aid to determining objectively to whom an offer was addressed, but it does not apply where the intermediary lacked authority to make the agreement. In any event, the nature of a credit transaction and the central importance of the customer's identity may displace the usual presumption.

A rogue obtained a Mitsubishi Shogun from a dealer using the identity and forged signature of Durlabh Patel. Shogun Finance Ltd approved a hire-purchase transaction after identity and credit checks, and the rogue then sold the vehicle to Norman Hudson, who was found to be a private purchaser acting in good faith.

The Leicester County Court gave judgment for the finance company. Hudson appealed, relying principally on section 27 of the Hire Purchase Act 1964. The central issue was whether the rogue was the debtor under a hire-purchase agreement, or whether the transaction was ineffective because the finance company intended to contract only with Mr Patel.

1. Appeal dismissed by a majority. Dyson LJ and Brooke LJ held that the hire-purchase agreement, if made with anyone, was made between the finance company and Durlabh Patel, the person named in the written agreement. The rogue was not a party to it and was therefore not the debtor within the Hire Purchase Act 1964.
2. The forged signature meant that Mr Patel could deny liability. That did not permit the court to substitute the unnamed rogue as a contracting party. The case was distinguishable from King's Norton Metal Co Ltd v Edridge Merrett & Co Ltd, where the supposed contracting party did not exist.
3. It followed that section 27(1) could not assist Hudson. The statutory protection in section 27 applies only where the vehicle was bailed under a hire-purchase agreement and the rogue was the debtor under that agreement.
4. Dyson LJ considered the alternative mistake issue. The face-to-face principle is an objective aid to deciding to whom an offer was addressed. It is not a general rule that identity is immaterial. The nature of the proposed contract and all the circumstances may show that the offer was addressed only to the named person. A dealer acting merely as an intermediary or conduit, without authority to make the agreement, does not create the presumption arising from an agreement made face to face by authorised contracting parties.
5. Dyson LJ further held that the customer's identity was fundamental in a credit transaction. The finance company's unchallenged evidence showed that identity determined its credit enquiries and its ability to comply with the statutory regime. Even if the face-to-face principle applied, the facts displaced it.
6. Sedley LJ dissented. He considered that the dealer acted as the finance company's agent for obtaining and communicating identity information and the signed agreement. On that basis, the transaction was in substance face to face with the rogue, the presumption was not rebutted, and Hudson acquired good title as a private purchaser under sections 27 and 29.

• Court of Appeal: appeal from the Leicester County Court dismissed by a majority. The court upheld the judgment for Shogun Finance Ltd.
• Leicester County Court: Mr Assistant Recorder Grant gave judgment for Shogun Finance Ltd on 13 January 2000, with damages agreed at £18,374.52 if the claim succeeded.