Evans & Anor v Finance-U-Ltd

Permission to appeal was granted where the proposed appeal had a real prospect of success and raised important points of principle. The modest value of the individual dispute did not outweigh the wider significance of the issues, particularly in light of the appellant’s undertaking concerning costs. The substantive question whether bankruptcy and proof of debt affected continuing contractual and security rights was left for determination on the appeal.

The respondents bought a motorcar under a regulated loan agreement secured by a bill of sale. The husband was declared bankrupt, followed by the wife. The finance company proved in the husband’s bankruptcy for the full amount due and received a small distribution. The wife later stopped making the instalments.

At trial, His Honour Judge N Chambers QC held that the finance company could no longer exercise its rights under the bill of sale. Permission to appeal was refused on the papers by Sir Richard Buxton. On renewal, the Court of Appeal considered whether the proposed appeal had a real prospect of success and raised issues of sufficient importance to justify permission despite the modest value of the car.

1. Application granted. The renewed application for permission to appeal was allowed.
2. The proposed appeal had a real prospect of success in establishing the validity of the points advanced and raised important points of principle. The trial judge’s answer was not entirely clear.
3. The proposed appeal raised whether proving in the bankruptcy of one joint debtor for the full amount due precluded the finance company from later taking possession of the secured vehicle when instalments were unpaid. It also raised whether contractual rights under a joint loan agreement or bill of sale were lost on the bankruptcy of one or both joint debtors, and whether enforcement of security was unaffected where its existence had been declared.
4. The small value of the vehicle was outweighed by the wider importance of the issue to the finance company, which had numerous similar agreements outstanding. The appellant’s undertaking not to seek an order for costs if successful was material to the exercise of discretion.
5. The court declined to recommend mediation because it would involve further expenditure not covered by the undertaking. The respondents could decide whether to defend the proceedings in light of the costs protection available to them.

The order was to record the undertaking that no order for costs would be sought in the Court of Appeal or below if the appellant succeeded.

• Court of Appeal (Civil Division): Sir Richard Buxton refused permission to appeal on the papers. On renewal, Lord Justice Tomlinson granted permission to appeal and directed that the appellant’s undertaking concerning costs be recorded.
• Cardiff Civil Justice Centre: His Honour Judge N Chambers QC held that, following the husband’s bankruptcy and the finance company’s proof of debt, the finance company was no longer entitled to exercise its rights under the bill of sale.