Hudson v Shogun Finance Ltd

By a majority, the Court of Appeal held that where a written hire-purchase agreement names a real individual as hirer, an impersonating rogue cannot be treated as the contracting party merely because he negotiated the transaction. The named person may deny liability where the signature was forged, but the rogue cannot be substituted as a party.

The rogue was therefore not the statutory debtor and the private purchaser could not rely on the title protection in the Hire Purchase Act 1964. The majority also held, alternatively, that a dealer who merely transmits information is not a contracting agent for the face-to-face presumption. Sedley LJ dissented.

A rogue used a genuine driving licence in the name of Durlabh Patel to obtain hire-purchase finance for a Mitsubishi Shogun through a motor dealer. The finance company approved the proposal, and the rogue sold the vehicle to Norman Hudson, whom the trial judge found to be a good-faith private purchaser.

The Leicester County Court nevertheless gave judgment for the finance company, finding that no hire-purchase contract had been concluded with the rogue. The appeal concerned whether the rogue was the debtor under the agreement for the purposes of sections 27 and 29 of the Hire Purchase Act 1964, and whether the dealer's role made the transaction effectively face-to-face.

1. Disposition. By a majority, Dyson LJ and Brooke LJ dismissed the appeal. Sedley LJ would have allowed it.
2. Written agreement. Dyson LJ and Brooke LJ treated Hector v Lyons (1988) 58 P&CR 156 as binding. Where the written agreement names a real person as hirer, the court cannot substitute an unnamed rogue as a contracting party. Mr Patel could deny liability because his signature was forged, but that did not make the rogue the debtor under the agreement.
3. Statutory consequence. The rogue was therefore not the debtor within sections 27(1) and 29(4) of the Hire Purchase Act 1964. The statutory protection for a good-faith private purchaser under section 27(2) could not assist Hudson, despite the finding that he was not a car dealer and had acted in good faith.
4. Alternative reasoning. Dyson LJ held that the face-to-face principle is an aid to interpreting an apparent oral agreement between persons with authority to contract. The dealer here was only an intermediary for obtaining and communicating information, and had no authority to bind the finance company. Even if the principle applied, the objective circumstances showed that the finance company regarded the customer's identity as crucial to its credit decision and statutory compliance. The presumption in favour of contracting with the person present was therefore displaced.
5. Dissent. Sedley LJ considered that the dealer was the finance company's agent for limited purposes, including ascertaining identity and transmitting the signed documents. He would have treated the transaction as face-to-face, found the presumption unrebutted, and held that the rogue obtained a voidable contract under which title passed before avoidance. Hudson would consequently have acquired good title.
6. Order. Appeal dismissed. The costs order was approved with the stated amendment, and leave to appeal was refused.

• Court of Appeal (Civil Division): appeal dismissed by Dyson LJ and Brooke LJ, with Sedley LJ dissenting, in [2001] EWCA Civ 1001.
• Leicester County Court: the assistant recorder entered judgment for the finance company for the agreed value of the vehicle, £18,374.52.